Principle: REMUNERATION OF PERSONALS

Every individual joins the organization with the main aim of earning his bread and butter. The wages or salary which he earns for his work helps him to fulfill the basic and other needs of life. The wages or salary must be in equality with the work done by him so that he gets satisfied and can perform better.

Fayol is of the view that each employee must get fair remuneration so that the employee as well as the owner gets the same amount of satisfaction. The remuneration system must be such which provides for the adequate remuneration to the employees, motivates the employee to perform better, and may ensure safety & security, raise standard of living of the employees.

A fair wage system is one that guarantees equality between the work done and the payment received. Such a system satisfies the owner in terms of the work completed by an individual employee and satisfies the employee in terms of payment received by him. This creates a healthy organizational environment and relation between the management and the employees.

Positive impacts of this principle:

•  It creates good relation between workers and management;
• Employees get motivated;
•  It declines the labor turnover rate;
•  Employees feel satisfied with their wages and thus contribute their best effort;
•   It raises the standard of living of the employees; and
•  It develops the society indirectly.

Consequences of violation of this principle:

•   Employee’s efficiency decreases;
•  Conflict between management and employees;
•   Labor turnover rate will be more;
•   The immediate result is incomplete work; and
•  Hard to achieve organizational objective.