The Principle of Remuneration of Personnel [Explained]

What is Remuneration of Personnel Principle?

The principle of remuneration of personnel states that the employees should be paid a fair salary, and the salary should reasonably align with their contribution and effort.

The remuneration given should be reasonable and acceptable to both employees and the organization. The manager should determine the wages considering the capability of employees, their living standards, financial condition, and the goals of the organization.

Fair pay must-have qualities such as enhancing employees’ living standards, securing the job, and encouraging them to do even harder. A fair pay system creates satisfaction in the employees, and they feel motivated – it is natural that motivated employees always do better, a better working environment is maintained, a better relationship is built, turnover is decreased, and in turn, it helps to attain goals more effectively and efficiently.

When employees are not paid a fair price for their contribution. This arises conflicts in the organization, employees do not want to work, it becomes hard to get the desired goals, the morale of employees decreases, the loyalty of employees also decreased, and it overall severely affects the organizational performance.

The basic reason, people join the work, organization is for the money of their contribution, they work well when they get paid well. Thus, a manager should establish a fair pay system. In addition, he should make basic wage fixed, and introduce monetary and non-monetary incentive plans to further encourage employees to do better.

Positives of remuneration of personnel principle of management:

  • Supports achievement of organizational goals.
  • Employees get motivated.
  • Employee turnover is decreased.
  • Quality employees are more motivated to work.
  • Better relationship between employees and management.
  • Increases the satisfaction of employees.
  • Raises the employee’s living standards.

Results of not following remuneration of personnel principle:

  • Employee turnover is high.
  • Employees become demotivated.
  • Difficult to achieve organizational goals.
  • The conflict between management and employees.
  • Since turnover is high the management further has to bear the cost of recruiting new employees.

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