GRADE AND PAY STRUCTURES

Ian

Could you add one more like this but with a woman rather than a man?

Thanks

Michael

A grade structure consists of a sequence or hierarchy of grades, bands or levels into which groups of jobs that are broadly comparable in size are placed.

GRADE STRUCTURES

3

A pay structure defines the different levels of pay for jobs or groups of jobs by reference to their relative internal value as determined by job evaluation, to external relativities as established by market rate surveys and, sometimes, to negotiated rates for jobs. It provides scope for pay progression in accordance with performance, competence, contribution or service.

PAY STRUCTURES

4

• For jobs at the top level, or those not covered by pay structures. These often do not have room for conventional progression.

• These can be topped up by incentives.

• Related more to individuals rather than jobs themselves, exist in small medium sized organizations.

• Jobs such as cooks, cleaners etc.

Spot Rates

Grade and pay structures should:

• be appropriate to the culture, characteristics and needs of the organization and its employees;

• facilitate the management of relativities and the achievement of equity, fairness, consistency and transparency in managing gradings and pay;

• provide scope as required for rewarding performance, contribution and increases in skill and competence;

GUIDING PRINCIPLES: GRADE AND PAY STRUCTURES

Grade and pay structures should:

• clarify reward, lateral development and career opportunities;

• be constructed logically and clearly so that the basis upon which they operate can readily be communicated to employees;

• enable the organization to exercise control over the implementation of pay policies and budgets.

GUIDING PRINCIPLES: GRADE AND PAY STRUCTURES

Types of grade and pay structures

MODEL OF A NARROW-GRADED STRUCTURE

£

MODEL OF A BROAD-GRADED STRUCTURE

£

MODEL OF A BROAD-GRADED STRUCTURE

£

£

Broad band Broad grade

MODEL OF A JOB-FAMILY STRUCTURE

£

Job families

MODEL OF A CAREER-FAMILY STRUCTURE

Pay ranges £

Career families

Job Evaluation JE points

Marketing

IT HRM

A PAY SPINE

Pay spine

£

MODEL OF SPOT RATE STRUCTURE

£

MODEL OF INDIVIDUAL JOB RANGE STRUCTURE

Individual job ranges 30%

Multi-graded 23%

Broad-banded 23%

Spot rates

Broad-graded

Job family

Pay spine

Career family

23%

21%

18%

18%

14%

e-reward grade and pay structures survey 2007

TYPES OF GRADE AND PAY STRUCTURES

n = 98 (private sector 67%, public sector 33%)

NB (1) 44% had more than one structure

NB (2) 43% of senior executives had individual job grades or spot rates compared with 28% of other staff

Designing grade and pay structures

do consult, consult, consult and then decide on the system

that fits the business strategy

don’t underestimate the time and cost involved

do communicate and be

transparent

don’t expect quick results!

do keep it simple

don’t be surprised if your staff are completely underwhelmed by your efforts

E-REWARD GRADE AND PAY STRUCTURE SURVEY RESPONDENTS’ DOS AND DON’TS

• Link to the company strategy – how will the structure help the business?

• Plan the development/introduction – it will take time.

• Involve line managers from the outset.• Keep the structure simple to allow flexibility.• Have a clear communication plan.• Think through how salaries will be managed,

jobs will be evaluated, the annual salary planning process will operate.

CONCLUSIONS

This resource is part of a range offered free to academics and/or students using Armstrong’s Handbook of Reward Management Practice, 3rd edition, as part of their course. For more academic resources and other FREE material, please visit www.koganpage.com/resources and then click on Academic Resources.