Which of the following statements about Fayol’s principle of remuneration of employees is NOT correct?
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → Under this principle, the overall pay and compensation should be fair to both employees and the customers.
Option (1) Under this principle, remuneration should be just and equitable, so that the working of the company is smooth. — True. Just and equitable pay builds a congenial atmosphere and good relations between workers and management. As a result the company works smoothly.
Option (2) Under this principle, the overall pay and compensation should be fair to both employees and the customers. — False. Pay should be fair to employees and the organisation, not to employees and customers. Customers do not pay the wages; the company does. So the company's paying capacity is the other side of the balance.
Option (3) Under this principle, the pay of employees should be within the paying capacity of the company. — True. Fair pay must stay within the paying capacity of the company, or the business itself would suffer.
Option (4) Under this principle, employees should be paid fair wages that give them at least a reasonable standard of living. — True. Fair wages should give employees at least a reasonable standard of living. This is the employees' side of the balance.
NCERT (2026-27 Edition): “(vii) Remuneration of Employees: The overall pay and compensation should be fair to both employees and the organisation. The employees should be paid fair wages, which should give them at least a reasonable standard of living. At the same time it should be within the paying capacity of the company. In other words, remuneration should be just and equitable. This will ensure congenial atmosphere and good relations between workers and management. Consequently, the working of the company would be smooth.” |