For all the great work that employees do of course there is a price to pay for businesses, and that comes in the form of remuneration, aka wages or a salary!
It is often these financial incentives that allow businesses to attract the best and most highly skilled workers.
A business may also offer some sort of benefit to attract and keep hold of employees. Monetary benefits are extra payments that an employee will receive on top of their salary. These may include a share of the business profits, pension contributions and bonuses.
You may think that wages and a salary are the same thing – but you’d be wrong. There is a subtle difference!
Money paid by a business to its employees in return for their work is known as a wage. Wages are usually paid weekly, and are often worked out based on the number of hours an employee works.
Therefore, if a job has an hourly pay rate, the wage can be worked out using this formula: Hours worked x hourly pay rate.
Salaries are similar to wages in that it is the money paid to an employee in return for their work. However, unlike wages they are paid monthly, and the salary figure is usually shown as the amount an employee will earn over the entire year. Therefore, if a person gets paid £48,000 a year, then they will earn £4,000 a month.
The level of skill an employee has will often determine the amount that they are paid for their job. A highly-skilled worker is likely to command a higher wage or salary than someone with a low skill level, as those skills are very valuable to the business.
The amount an employee is paid for their job will be determined by three key factors: the general wage or salary that is usually paid for that job, the level of experience that the employee has, and their level of skill related to the job in question.
Employees will often receive a bonus on top of their wage or salary if they reach certain business targets, such as certain number of sales or profit level.
Employees can also expect a higher wage in some cases for working unsociable hours such as nights and weekends.
There are also external factors that a business must consider when setting wages or a salary for their employees.
Owing to economic problems around the world in the last few years, a country’s unemployment level is an increasingly important parameter in determining wages and salaries for employees.
As there are fewer jobs available during a financial crisis, people are often willing to work for a lower wage or salary.
When businesses are deciding on an employee’s salary or wage, they will also acknowledge the average amount of pay for that position, both within their own company and the amount paid for similar positions in other companies.