Chapter 8: Reward Management
• A wage is the payment made to manual workers and is usually expressed as a rate per hour.
• In Hong Kong, “wage’, nowadays known as “Relevant Income”, includes all remuneration, allowances, tips, overtime pay, hardship, per-diem allowance, etc. capable of being expressed in terms of money, payable to an employee in respect of work done.
• A salary is a fixed periodical payment to a non-manual employee.
• In Hong Kong, it is expressed either in monthly or annual terms, implying a more stable employment relationship than that of wage earners. Salaried workers are usually referred to as ‘staff’.
Employee Benefits and Services
• Those are offered by an organization to its employees in order to allow them to work without worrying about other practical problems.
• Employee benefits include legally required payments (e.g. MPF, Employees’ Compensation Insurance, welfare plans and paid time-off, i.e annual leave, sick leave, maternity leave and paternity leave).
Total Reward Concept
• A total rewards program includes all the methods (cash payments, e.g. salaries, commissions, other incentives, equity, bonus, etc.; and non-cash benefits, e.g. medical and other employee protection insurance schemes, free tranportation, free meal, birthday leave, education sponsorship, claim on mobile phone expenses, etc.) used by employers to pay employees for the work they provided for the organization.
• An effective total rewards package includes a variety of components that help attract, retain and motivate employees who have skills needed by the organization.
II. WAGES STRUCTURES
A. Wages Structures
• The foundation of a manual worker’s earnings is his or her basic time wage, which is subject to supply and demand in the labour market. The worker is paid by hourly rate and can be fined for lateness.
• In addition to the basic rate, the worker will often receive other payments, the most common examples of which are:
1. overtime pay
2. shift / roster pay
3. special additions, e.g. danger money, dirt money, wet money for work under abnormal working conditions, etc. 4. meal allowance
5. travel allowance
6. attendance allowance
7. overseas work per diem allowance
8. merit length of service additions
9. cost of living allowances for employees who work in remote locations 10. policy allowance, e.g. miscellaneous extra payments
11. payments by results bonus, e.g. sales commissions, target bonus, tips as special bonus especially popular in food and beverage industry etc.
B. Salary Structures
• A salary differs from a wage in many aspects, reflecting the different attitudes traditionally held by an employer towards the firm’s non-manual employees compared with manual workers.
1. A salary is usually all-inclusive; there are no additional payments of danger money or productivity bonus. 2. A salary is progressive, in most cases increasing annually; whereas a wage-earner reaches the standard rate for the job early in adult life does not get annual increases. 3. A salary is often regarded as personal to the individual, but a wage is the sum paid to all workers in a particular job. 4. A salary is often confidential, but there is no secret about a wage. 5. A salaried employee can also be paid on allowances mentioned above with wage earners; in addition he or she can be entitled to year-end double pay bonus, merit/length of service allowance, living allowance, hardship allowance, children allowance, education allowance, bonuses/awards/commission of any nature.
III. PAYMENT SYSTEMS
3 principal purposes of a payment policy:
• To attract sufficient and suitable employees
• To retain employees who are satisfactory
• To reward employees for effort, loyalty, experience and achievement
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