Employee Remuneration refers to the reward or compensation given to
the employees for their work performances. Remuneration provides basic
attraction to a employee to perform job efficiently and effectively.
Remuneration leads to employee motivation. Salaries constitutes an
important source of income for employees and determine their standard of
living. Salaries effect the employees productivity and work
performance. Thus the amount and method of remuneration are very
important for both management and employees.
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Methods of Employee Remuneration
- Time Rate Method: Under time rate system, remuneration
is directly linked with the time spent or devoted by an employee on the
job. The employees are paid a fixed pre-decided amount hourly, daily,
weekly or monthly irrespective of their output. It is a very simple
method of remuneration. It leads to minimum wastage of resources and
lesser chances of accidents. Time Rate method leads to quality output
and this method is very beneficial to new employees as they can learn
their work without any reduction in their salaries. This method
encourages employees unity as employees of a particular group/cadre get
equal salaries.
There are some drawbacks of Time Rate Method, such as, it leads to
tight supervision, indefinite employee cost, lesser efficiency of
employees as there is no distinction made between efficient and
inefficient employees, and lesser morale of employees.
Time rate system is more suitable where the work is non-repetitive in nature and emphasis is more on quality output rather than quantity output.
- Piece Rate Method: It is a method of compensation
in which remuneration is paid on the basis of units or pieces produced
by an employee. In this system emphasis is more on quantity output
rather than quality output. Under this system the determination of
employee cost per unit is not difficult because salaries differ with
output. There is less supervision required under this method and hence
the per unit cost of production is low. This system improves the morale
of the employees as the salaries are directly related with their work
efforts. There is greater work-efficiency in this method.
There are some drawbacks of this method, such as, it is not easily
computable, leads to deterioration in work quality, wastage of
resources, lesser unity of employees, higher cost of production and
insecurity among the employees.
Piece rate system is more suitable where the nature of work is repetitive and quantity is emphasized more than qualit
