grade & pay structures

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Performance & Compensation Management by Shah M Saad Husain

Performance & Compensation Management

Chapter 5

Grade and PayStructures


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Performance & Compensation Management by Shah MSaad Husain

Grade Structure

It consists of a sequence of grades, bands orlevels into which groups of jobs that arecomparable in sizeare placed

A grade structure becomes a pay structure whenpay ranges, brackets or scales are attached toeach grade, band or level


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Pay Structure

They are defined by the number of grades theycontain and the span and width of the payranges attached to each grade

Pay structures define the different levels of payfor jobsby reference to their relative internalvalue determined by !"# to e$ternal relativitiesdetermined by market surveys#

They provide a scope for pay progression inaccordance with performance, competence,contribution or service


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Incidence of Grade and PayStructure


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Types of Graded Structures


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Narrow-graded, Broad-banded and Broad-graded Structures


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4 Career !ami"y Structures

It consists ofjobs in a function or occupationsuch as marketing, %&, finance

These jobs are related through the activitiescarried out and the basic knowledge and skillsrequired

The levels of responsibility, knowledge, skills orcompetency needed differ' (areer families mayhave ) to * levels


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# Career !ami"y Structure


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$ %ob !ami"y Structures

It differs from a career family structure as inthe latter there is a common grade and paystructures

The families in a job family system have ineffect their own pay structures

The size of jobs and rates of pay can varybetween the same levels in different jobfamilies


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%ob !ami"y Structures


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Broad Banded Structure superimposedon a Career%ob !ami"y Structure


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Broad bands di'ided into Career!ami"ies


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(esigning a new Grade and Pay Structure


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Developing a Grade and Pay Structure


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Interrelation of Factors affecting Individual Pay


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Criteria for C)oice of Structure

+arrowgraded structure may be considered when-

The organization is large and bureaucratic

Pay progression is e$pected to occur in small butrelatively frequently steps

.ignificance is attached to status as indicated by

grading

.ome but not too much scope for pay progressionis wanted


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/roadgraded structure may be considered when-

0hen relatively limited number of grades e$ist

An e$isting narrowgraded structure was in placeearlier

It is considered that pay progression through grades

can be related to contribution and that it is possible tointroduce effective control mechanisms


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/roadbanded structure may be considered when-

1reater fle$ibility in pay determination and

management is required

It is believed that job evaluation should no longer

drive grading decisions

The organization has been delayered



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(areerfamily structure may be considered when-

There are distinct families and different career paths

within and between families can be identified and

defined

There is a strong emphasis on career development in

organization

&obust methods of defining competencies e$ist

It is believed to be inappropriate to vary pay structures

between families


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!ob2amily structure may be considered when:

There are distinct market groups that need to be

rewarded differently

The range of responsibility and the basis upon

which levelse$ist varybetween families


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(esign *ptions


3'

+umber of grades, bands or levels

4' The width of the grades the span of pay

ranges#

5' The differentials between grades

6' Pay range overlap

7' Pay progression


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Pay +ange (esign

1.List the jobs within eachgrade and their actualrates of pay

2.Set out the range of payfor each job holder and

calculate their averagerate of pay3.Determine the market

rates for benchmarking.!elate the organi"ation#s

pay levels to marketrates$.%alculate average

market rates for benchmark jobs in each grade

&.%ompare the practice andmarket reference points ineach range

'.()amine the paydi*erentials between

reference points inadjacent grades+.Decide on the range of pay

around the reference point1,. Decide on the e)tent to

which pay should overlap

11. !eview the impact of payrange suggested one)isting pay to calculateimplementation costs

12. !eview the decisions



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Additional Reading



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Broad-banded Structure (esign

1. Decide on theobjectives

2. Decide on the numberof bands

3. Decide on the bandinfrastructure

. De-ne the bands

$. ncorporate jobfamilies

/. 0repare role pro-lesfor benchmark jobs

&. atch the benchmarkroles to the bands

'. btain market prices+. Decide on reference

points1,.Decide on "ones11.De-ne the pay ranges

of the bands12.De-ne bands in terms

of ( scores

13.4llocate non5benchmarkroles to bands

1.%ommunicate outcomes



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Career !ami"y Structure (esign

1. Select and de-necareer families

2. Decide on thenumber of levelsand de-ne them

3. dentify6 de-ne andmatch benchmarkroles

. %onduct analyticalmatching

$. 4ttach pay rangesto levels

/. 7alidate

relativitiesbetween careerfamilies



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Types of Grade and Pay Structure


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Types of Grade and Pay Structure


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(e'e"oping Grade and PayStructures


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grade & pay structures

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