|
 There
are many grades (or levels) within a pay structure, the purpose of
pay grades is the ability to use a compensation range within
multiple jobs which are grouped in similarity of the value both
internally and compared to external market data.
The number of grades will vary based on the findings from market
research, as well as the company’s compensation philosophy. The
organizations philosophy regarding development of a consistent
protocol for setting pay levels for each job in the organization may
be one of the following:
Key questions to help you develop a customized pay structure:
-
Are you going
to make your basic salaries competitive?
-
To what
extent are the monetary rewards you offer your employees going
to take the form of salary, performance bonuses, or benefits,
etc?
-
Are you going
to award bonuses on the basis of individual performance, tie
bonuses to company results, or use a combination of both?
-
Does the
organization want frequent “promotions”?
-
Narrow pay
ranges and more grades allow for more frequent promotions and a
greater perception of “growth and advancement” than wider ranges
and fewer grades.
-
Does the
organization want “earned” promotions?
-
If you
believe in promoting employees only when duties and
responsibilities change significantly, the distances between
midpoints of ranges may be as substantial as 15% or more.
List all the jobs
in the company, group them by major function (management,
production, and technical, administrative, financial, etc.), rank
them according to their relationship to the organizations mission.
Examining your existing jobs:
-
Is it
difficult to attract and retain key contributors?
-
Is turnover
excessive? Where?
-
Are you
readily able to fill jobs at all levels and in all
classifications?
-
How closely
do the jobs in your department relate to mission?
-
How
indispensable are the jobs in your department?
-
How difficult
are the jobs, do they require special skills or training?
-
Do the
positions generate revenue or support revenue-producing
functions?
-
Do political
or other factors make a particular job important?
|
 |
