Factors Influencing Wage and Salary Administration


The term Wage and Salary Administration denotes the process of managing a companies compensation programme. The goals of compensation administration are to design a cost-effective pay structure that will attract, motivate and retain competent employees.

Compensation may be defined as money received in the performance of work plus many kinds of services and benefits that organization provides to their employees.


The wage payment is an important factor affecting the labor-management relations. The factors affecting the wage and salary administration are divided into two categories as follows,

01. External Factors

The external factors are the factors that are not under the control of the management of the organization, some of them are as follows,

  • Demand and Supply of Human resources
  • Cost of living
  • Trade unions bargaining power
  • Governmental legislation
  • Psychological and social factors
  • Economic growth of the country
  • Technological development
  • Prevailing market rates, etc.

02. Internal Factors

The internal factors are the factors which are from the side of the management of the organization and can be controlled to some extent by the Hr managers of the organization. Some of them are as follows,

  • Ability to pay
  • Job requirements
  • Management Strategy
  • Employees performance
  • Employees Seniority
  • Employee luck, etc.
wage and salary administration

Objectives of Wage and Salary Administration

essentials of a good incentive plan

Incentive Schemes