The structure of job rates provides a rough outline for the internal wage structure of the firm but it seldom completely determines it. The reason is that the firm must decide on the specific rate of pay for individual workers in each job category and the method of compensation.
Two basic types of compensation methods are used to determine individual pay rates. The first bases pay on the amount of worker input supplied to the job, the second bases pay according to some measure of output produced by individual worker or a group of workers.
The first type of arrangement commonly takes the form of time payment such as wage per hour or salary per year, while the second encompasses pay plans related to individual output group output such as profit-sharing plans.
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