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 salary and wage administration policy 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. Salary and wageadministration 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.
IMPORTANCE OF WAGES 1. Wages are most important component of labour costs, which also include non-wage costs such as employers social contributions and taxes. 2. Wages represent an important variable taken into account by employers in their attempt to improve their competitive position in national and international markets. 3. Importance of wages within labour costs, collecting information on the different components of labour costs while identifying how far they influence employers decision with regard to employment, investment and capital relocations. 4. It may be direct use of governments, trade unions and employers to better understand the role played by wage and labour costs in a highly competitive and globalized environment.