What Is Salary and Wage Administration?

Maintaining a company's payroll is one function of salary and wage administration. Employee retention is an important responsibility of those responsible for salary and wage administration.


Salary and wage administration is the process of compensating an organization's employees in accordance with accepted policy and procedures. An important component of a successful organization's policy for administering salaries and wages is monitoring and evaluating all employees' compensation to ensure that they're being paid appropriately, both with respect to others in the same organization and to the marketplace as a whole. This process is often an integral function of the organization's human resources department, but in general, the larger the organization, the more likely is is that it will be handled by a separate department. 

The first element of salary and wage administration, the periodic payroll, is a critical component of any organization's functioning. If payroll is incompetently processed, the employer itself could conceivably collapse. Employees' personal budgets and plans are contingent upon getting paid regularly, and if compensation is late, short, or missing even a single time, morale is severely affected, as is confidence in the employer's stability. Whether an employer utilizes the services of a third-party payroll service or handles all payroll functions internally, it will usually devote significant resources to making sure that employees are paid the right amount on time.

The second element of salary and wage administration — monitoring and evaluating employees' compensation — is an ongoing function. This includes evaluating the elements of each job in the organization and classifying it according to a number of different criteria, including the nature of the work itself, the amount of supervision necessary, the physical exertion normally associated with the job, and the amount of training necessary to do the job proficiently. The underlying idea is to determine, as nearly as possible, the value of each job to the employer, and compensate employees accordingly. From time to time, especially in the absence of collective bargaining, the results of this monitoring and evaluation process will result in adjustments being made to wages and salaries. In a collective bargaining environment, these evaluations will be important in determining any such adjustments, although other considerations may affect adjustments to wages and salaries.

In the United States, jobs are also evaluated as to whether or not they're exempt from wage-and-hour laws relative to overtime pay. Most production and clerical jobs, for example, are considered non-exempt; that is, even if pay is administered on a weekly basis and called salary, from a legal point of view, the jobs are considered to be hourly. 
When a non-exempt worker works in excess of the statutory requirements, usually 40 hours in a calendar week, they must be paid a premium in addition to their regular hourly pay. Most executive and supervisory workers, and some higher-level clerical staff, are considered exempt, which means that they're paid a flat rate every pay period regardless of the actual number of hours worked. In general, exempt employees are paid more than non-exempt. The US Department of Labor has specific tests employers can apply to every job to determine if it's properly classified as exempt or non-exempt.

Classification of jobs is only one element of the ongoing evaluation process that's an important component of salary and wage administration. Employers need to maintain a competitive edge in the marketplace, and one way to do so is to employ the very best people. Savvy employers will strive to maintain a competitive edge with respect to compensation because they understand that their employees are constantly on the alert for better opportunities, and the total compensation package is one of the most important elements of an employee retention strategy. Employee retention, in turn, is an important responsibility of those responsible for salary and wage administration.

Human Resource Management & Wages and Salaries Aspect

Human Resource Management is a distinctive approach to employment management which seeks to achieve competitive advantage through the strategic deployment of a highly committed and capable workforce, using an integrated array of cultural, structural and personnel techniques. Extensive training and culture management programs, individualized reward management systems, as well as a range of employee involvement mechanisms, all operate towards achieving enhanced employee contribution. It is a whole range of notions on management theory, style and practice. Perhaps most usefully considered as a generic term that covers the entirety of work organization, working terms and conditions and representational systems, HRM can be depicted as being concerned with all those activities associated with the management of people in organizations (Boyd 2003).

Businesses rely on effective human resource management (HRM) to ensure that they hire and keep good employees and that they are able to respond to conflicts between workers and management. HRM specialists initially determine the number and type of employees that a business will need over its first few years of operation. They are then responsible for recruiting new employees to replace those who leave and for filling newly created positions. A business’s HRM division also trains or arranges for the training of its staff to encourage worker productivity, efficiency, and satisfaction, and to promote the overall success of the business. 
Finally, human resource managers create workers’ compensation plans and benefit packages for employees. Personnel Management is the development of a set of values that regards individual employees as important productive entities; the conscious utilization of these value judgments in making decisions affecting those individuals; and the acquisition of a pattern of thinking, or rational analysis, which attempts to achieve the most effective and satisfactory utilization of human...

Wages and Salaries

In the national accounts, in accordance with the System of National Accountswages and salaries include the values of any social contributions, income taxes, etc., payable by the employee even if they are actually withheld by the employer for administrative convenience or other reasons and paid directly to social insurance schemes, tax authorities, etc., on behalf of the employee. Wages and salaries may be paid in various ways, including goods or services provided to employees for remuneration in kind instead of, or in addition to, remuneration in cash.
Wages and salaries in cash consist of wages or salaries payable at regular weekly, monthly or other intervals, including payments by results and piecework payments; plus allowances such as those for working overtime; plus amounts paid to employees away from work for short periods (e.g., on holiday); plus ad hoc bonuses and similar payments; plus commissions, gratuities and tips received by employees.
Wages and salaries in kind consist of remuneration in the form of goods and/or services that are not necessary for work and can be used by employees in their own time, and at their own discretion, for the satisfaction of their own needs or wants or those of other members of their households.


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