Wages and Salary Administration In Hospitality Industry – A Survey

Sanjeev Kumar Saxena

The administration of wages and salary is the most important task in personnel administration. Mere determination of the wage structure is not enough; it must be properly implemented and administered. This calls for keeping track of various changes on which wages depend and comparing them with the established standards. Wage survey, wage plans and job evaluation are the three important methods used for this purpose. These methods have to be applied with prudence. Wage and salary are also subject to a variety of legislation and in this context, compliance with existing legislative measures is very important.

The aim of a wage and salary policy is to recognise the value of each job, provide stability in earning, allow individuals to reach full earning potential and to ensure that all staff share in the organisation’s prosperity. Therefore an attempt was made to find out from the personnel manager/general manager/managing director/owner of 40 hotels of Rajasthan, the factors determining wage and salary structure, duration of wage revision and the per cent of labour turn-out due to non satisfaction with wage and salary structure.

Wage levels in a organisation are determined by factors like the organisation’s ability to pay, supply and demand of labour, job requirement, cost of living index, prevailing wage rate, trade union bargaining power, psychological and social factors. Suitable levels have to be set after consideration of all these factors. Therefore an attempt was made to assess the main consideration for determining the wage and salary structure in the selected hotel units.

Refer To Table-1.

The analysis in Table-1 signifies that the selected hotel units like to use more than one of the identified bases for determining wages and salary structure but the most common factors are prevailing wage rate and the organisation’s ability to pay, that is, 80 per cent and 72 per cent respectively by all categories of hotels. Their representatives say that competition demands adherence to the same relative wage level, and trade unions encourage this practice so that their members can have equal pay for equal work and geographical difference can be eliminated. But during the research it was found that in certain cities, prevailing wage rates are very low whereas organisational ability to pay is more. This has led to frustration in employees and labour turnover in these hotels has been maximum. Supply and demand of labour, job requirements, cost of living index are the next important factors in determining wage and salary structure. Whereas trade union bargaining power and psychological and social factors are only involved in five-stars and are 16 per cent only.

Duration of pay revision

By keeping in view the natural expectation of employees to gain higher wage and salaries as their experience curve yearly takes an upward trend and to avoid frustration in employees on not getting a timely pay hike, several organisations have decided the duration of wage and salary revision.

Refer to Table-2.

Table-2 shows that more than 60 per cent of the selected hotel units are following a yearly increment policy. But less than 20 per cent of the three-, two-star, heritage and unapproved hotels follow a two yearly/three yearly increment policy. It was also found that 20 per cent and 30 per cent of the two-star and unapproved hotels respectively do not have fixed duration of increments.

Labour turn-out

It is seen that most financially sound organisations take into consideration the prevailing wage rate factor while fixing the wage and salary structure of their employees. This may engineer a sense of frustration in employees leading to heavy labour turn-out. In this regards, an attempt was made to find out the per cent of labour turn-out due to non-satisfaction with wage and salary structure.

Refer to Table-3.

Table-3 reveals that per cent of labour turn-out due to non-satisfaction of wage and salary structure is 10-15 per cent in 50 per cent of five-star hotels (including chain hotels) surveyed because they give more weightage to prevailing market rates rather than giving much importance to the organisation’s ability to pay. In more than 50 per cent of the two-, three-, four-star and heritage this percentage is between 0-5 per cent and in unapproved hotels the percentage of labour turn-out is very low due to loyalty towards the owner, social causes and illiteracy of the employees.

Conclusion

Hotels must realise that satisfied human resource is a valuable asset for the organisation. An organisation pay must be competitive and equitable. This will not only ensure the cooperation of their managerial and non managerial personnel but also reduce the percentage of labour turn-out besides maintaining industrial peace. If an organisation fails to do so, it attracts criticism from social reformers and trade unions. Therefore the business organisation must develop a balanced package of wage and salary administration in a most appropriate and effective manner.

Note: For the purpose of research, 40 hotels have been selected from Rajasthan that includes six five-star, two four-star, ten three-star, five two-star, seven heritage (converted palaces) and ten unapproved hotels

The author is faculty and research scholar (human resource management), Institute of Hotel Management, Govt Polytechnic Campus, Residency Road, Jodhpur