Salary Administration

Salary Administration refers to all components of wage administration and pay structure:

• Monitoring salary structures and pay grades for exempt and non-exempt staff and making recommendations for update when necessary
• Conducting internal and external market analysis to determine comparability and equity with existing University positions
• Providing salary and benefits data for federal, state, and private compensation surveys
• Developing career ‘ladders’ for existing job series to provide versatility in compensation options

Principles of wage and salary administration

The main principles that govern wage and salary fixation are three:

• External Equity
• Internal Equity
• Individual Worth

1. External Equity

This principle acknowledges that factors/variables external to organization influence levels of compensation in an organization. These variables are such as demand and supply of labour, the market rate, etc. If these variables are not kept into consideration while fixing wage and salary levels, these may be insufficient to attract and retain employees in the organization. The principles of external equity ensure that jobs are fairly compensated in comparison to similar jobs in the labour market.

2. Internal Equity

Organizations have various jobs which are relative in value term. In other words, the values of various jobs in an organization are comparative. Within your own Department, pay levels of the teachers (Professor, Reader, and Lecturer) are different as per the perceived or real differences between the values of jobs they perform.

This relative worth of jobs is ascertained by job evaluation. Thus, an ideal compensation system should establish and maintain appropriate differentials based on relative values of jobs. In other words, the compensation system should ensure that more difficult jobs should be paid more.

3. Individual Worth

According to this principle, an individual should be paid as per his/her performance. Thus, the compensation system, as far as possible, enables the individual to be rewarded according to his contribution to organization.

Alternatively speaking, this principle ensures that each individual’s pay is fair in comparison to others doing the same/similar jobs, i.e., ‘equal pay for equal work’. In sum and substance, a sound compensation system should encompass factors like adequacy of wages, social balance, supply and demand, fair comparison, equal pay for equal work and work measurement.

Current Trends in Salary Administration

Automated Payroll will be entirely GDPR-friendly: Payroll automation is founded on the idea that employee data is seamlessly available across locations and interfaces. The GDPR went into effect in the middle of last year; any new payroll management solution being introduced to the market will now be GDPR-compliant.

1. Payroll will be Audit-ready from Day One

Instead of scrambling at quarter-end or year-end to collate and reconcile payroll information, employers will adopt automated report generation that allows electronic submission, without any complex bureaucratic formalities.

2. Gig Workers will enter your Payroll

The distinction between pay rolled employees and third-party workers will start to fade as companies increasingly rely on gig workers. This goes beyond blue collar jobs, encompassing high-value projects led by experienced consultants and the enlightened ‘digital nomad’.

3. Bots will Guide Query Resolution

Employees running from one department to the other, trying to get queries answered from HR, finance, or even accounts, is a familiar picture to us all. In 2021 AI-based chatbots (deployed as standalone apps or part of a larger employee service suite) will be a common answer to this problem.

4. Manual Payroll will Finally become Obsolete

With payroll automation finally becoming extremely cost-effective as well as easy-to-deploy, a larger number of small businesses will abandon manual, paper-driven processes. This will be driven by increasing familiarity with tech and a boom in the payroll solutions market.

5. Weekly or Monthly payroll won’t be the Only Way

Some solutions have already started rolling out flexible payroll systems that align wages to a specific date every month or even support one-time payments as part of a company’s regularized disbursal cycle. Interestingly, this is perfectly in-line with gig worker requirements.

“Payroll companies like Gusto are increasingly offering alternatives to bi-weekly or monthly pay periods. For example, Gusto recently launched Flexible Pay, which allows employees on-demand access to funds without having to wait until payday, for little or no cost,” said Rick Chen, Communications Lead at Gusto.

6. Unbanked Employees will be Welcomed

Contrary to popular belief, a huge portion of the global population remains unbanked, even in developed economies. Platforms like Gusto will help bring this workforce segment into the payroll management ambit, easing access to the salaries they have rightfully earned.

7. Disbursal will be Instantaneous

Taking off from the widespread popularity of mobile payment applications, payroll management will also explore instant payment options, so that workers do not have to wait for a certain period after their shift/project/seasonal tenue with a company has ended.

8. Financial Wellness will be Part of the Package

By advocating the need for financial wellness, employers can make sure their workforce is equipped to maintain a certain quality of life and correctly utilize their allocated wages. In 2019, financial wellness benefits will be a way to drive employee satisfaction without constant pay hikes.

9. Pay Transparency will be the Norm Everywhere

From ensuring that salary and wage levels are kept private, progressive employers will look at sharing salary levels publicly from white-collar ranks to part-time workers. This will go a long way in reinforcing employer brand, communicating the values of fair pay and equality.