Question

Since employees may differ in terms of their job performance, would it not be more feasible to determine the wage rate for each employee on the basis of his or her relative worth to the organization? Explain.

Answer 1

In an organisation, each employee is different from the other and possess different skill sets, capabilities, and work patterns. Management try to maintain equity and fairness by considering the employees worth and also their experience, qualifications and other factors to fix pay rate. There are various factors viz merit, seniority, technical and risk aspects, that influence the pay package, and benefits.

It is subjective to the organisation to decide on its pay rate based on the performance criteria of the employees or to consider experience and other aspects. But, it is feasible and fair to consider performance in order to fix pay rate and maintain a balance between the efforts and rewards. this would be suitable for the organisation where the performance is a major criteria and no employee feels demotivated if he is working since long time. Therefore, a firm must understand the diversity, age factor, performance, experience and capabilities of each employee to fix a fair wage rate and create succession plan to provide opportunities for the deserving employees.

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