Performance Management Systems and Strategies

VARIOUS CONCEPTS OF COMPENSATION

Wages is any monetary compensation paid to an employee for the services he/she renders. Primarily, wages in any form provide financial support for the labour, or it is a price paid for the labour. In organizations, wages are divided into two broad categories: base wages and other benefits or allowances. Benefits or allowances are essentially made available to prevent the erosion of wage income in real terms. The basic salary is the real wages and the basic salary with allowances represents money wages. Some of the allowances, however, are statutory in nature. Good organizations, however, voluntarily pay more allowances over and above the statutory requirements. Although we make the distinction between the terms ...