Professional Documents
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SHRM Notes Sana
SHRM Notes Sana
Chapter No.06
→ Pay Structures: e.g. Grades & ranges.
Definition: A pay structure is a -collection of wage grades, levels or brands
linking related. Jobs within a hierarchy or series. It provides a frame- to
implement reward strategies and policies.
Salary ranges Salary range is the Span between the minimum and maximum
base salary organization and will pay for a specific job of jobs or group of
job.
Salary Structure: Salary structure is a hierarchical ranges group of jobs and
salary and within an organization. Salary structure are often expressed as pay
grades or job grades that reflect the value of a job in the external market.
Why are pay structures important?
Pay structures are important for the following reasons:
a) Helping mentor & control company expenses. Well Defined pay
structures help well
Companies monitor the amount of money spent on salaries and control if and
when additional or new money is allocated for raise, employees, with set
salary ranges. In place, the accountants have strict parameters for budgeting
and financial planning.
B) Informing employees of current and future salary expectations. Pay
Structures provide employees set figures for expected earnings. This
improves transparency open communication between employees and
employers.
c) Remain Competitive and an employer. Using current market salary data
ensures employers offering are competitive salaries compared to other
businesses in their industry. This well help organizations attract and retain
the best candidates for open positions.
D) Helpful for calculating raises
Having defined pay grades for employees alleviates some of the subjectivity
in determining pay crises. Employers and employees should understand the
pay structure in place and their corresponding pay grades.
e) Create fair and impartial opportunities raises: Adhering to market
standards and predetermined pay grades. Helps employers ensure fair, honest
and opportunities for pay raises.
Benefits of pay structures:
Introducing the right pay Structure, that meets both the needs of your
organization and your workforce, can provide your business with all kinds of
benefits, including.
•Fairness: Creating an appropriate pay structure will help to ensure that your
treat your workforce farily.Employees will understand exactly where their
role fits into the organization and that a fair process exists to determine both
their job grade and pay free unthankful bias.
• Transparency: Having a rational fair and transparent place will enable pay
structure in staff to understand how pay managed within the organization.
Will also inspire confidence in and potential committed employee’s recruits
that you're to fairies, including equality of pay based on objectives factors
like fair job evaluations.
•Motivation: Understanding the open to career and pay progression avenues
is hugely motivating for employees. It allows for open dialogue between
about what's required to progress pay or grade within the business and, as
such, prevents less productive discussions between employees and line
managers with no real focus.
• Engagement: Rey components to creating employee engagement ism. I
employee feeling fairly treated, understand. Long their what steps can be
taken to progress Career Knowing Where they sit within organization and
how their contribution adds to the overall effort
• Supporting Management: Pay discussions can be difficult conversations
for managers to have. With their team. Or potential new hires. A clear pay
structure provides clarity in how to "manage pay, supporting better decision-
making around pay progression etc.
• Pay budgets: A pay structure. A basis for pay decisions and Creates
affordability. By understanding where your employees fit against the within,
above your pay or below the band decisions and allows structure in forms for
effective allocation of pay budgets. If not always saving you money, the most
value it will ensure you get. It From
Common Types of Pay Structure
Most common types of Pay structure are.
1) Traditional: Traditional pay
Traditional pay Structures are divided into multiple pay grades. In a
traditional structure, there are more pay grades, and the pay grades scope than
in other types of structures. Types of employees, like marketing associate be
given or customer a service agents may salary range, and pay grade, are
determined based on that range. The
Pay grades can be broken down as follows
-Pay grade 1: $40,000+ $42000 per year
-Pay grade 2: $ 42001 - $44,000/year
-Pay grade 3: $44001 -$46,000/year
-Pay grade 4: $46001-$48000/year
-Pay grade 5: $48004 -$50000/per year
Traditional pay grades structures. More controlled than other types of pay
Structures due to the slim pay grades. In these systems, managers have fewer
opportunities to offer raise. However, traditional pay offer structures prevent
employees from reaching their maximum Salaries too quickly, which can
help with employee retention of they know they have room for growth.
2) Broadband: Broadband pay structures divide employees into types instead of
specific titles. For example, broadband structures may create divisions for
administrative jobs, service jobs and executive jobs. The salary ranges are pay
Structure wider than those of a with fewer pay grades. Traditional this structure
offers greater flexibility for pay raises but less control over employees with the pay
differences between same job types. Employer may offering employee risk and
Salary too early in their maximum Career, which limits earning potential. Managers.
Should have open communication with top executives. Concerning when and how
to raise employed pay to avoid this challenge.
3) Market-based: Market-based Structures determine on salary ranges pay grades
based and a current market analysis of comparable positions and salaries. Salary
ranges are designated for specific jobs as opposed to job type. For instance, an
organization using a market-based pay structure may analyze data for average
salaries a hotel and create a salary range
In line with these "figures
Salary ranges may be larger using market based pay structure. Like in broadband
structures, but the pay grade often narrow as in traditional.
4) Step pay: Step pay structure incorporate clearly defined pay progressions for certain
jobs within an organization. They pay increases often result from time with the
company and adequate performance industries may use the step pay structure when
detailed performance analysis is difficult. Law enforcement and government
agencies often use step pay structures.
5) Hybrid: Some companies choose to use multiple pay structures within that
Organization. They may delegate pay Structures by department job type salary
ranges.