2-intro - grading pay

8/15/2019 2-Intro - Grading Pay

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Grading structures: options

and considerations in design

And it is not just about pay!

Developing Competency Based

Salary Structure Workshop


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2

Agenda

Understanding the dynamics of pay

Definition of grading

Why grading?

The use of grading in managing pay

Various options in designing grading structures:

grading is organization specific

Summary and conclusions


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3

What are you paying employees for and what doyou want to pay them for?

Understanding the dynamics of pay

Job/Role

CompetenciesPerformance

Working conditions and environmentMarket


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!

Understanding the dynamics ofpay

Pay for Position

Pay for Performance Pay for People

Job/Role

CompetenciesPerformance

Working conditions and environmentMarket


5/38

"

job weight

age

years in service limited job scope

experience

job weight

age

years in service limited job scope

experience

from to

otpt ! reslts "#what#$

performance

inpt ! competencies "%how#$ job weight

market vale

broad job scope / mlti!availability

experience

otpt ! reslts "#what#$

performance

inpt ! competencies "%how#$ job weight

market vale

broad job scope / mlti!availability

experience

Trends in what to pay for

&ifferentiating factors

#lue or white collar

organisation type

phase of de$elopment

la#our mar%et

need&desire to #e inno$ator

'a(or de$elopments in reward #ase


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)

Definition grading

* grading + classification is a ,for the organization- logical grouping&clustering of

the different (o#s #y their relati$e (o# weight

Which (o#s ha$e a similar $alue for the organization and

do we thus consider as e.ual? Which (o#s do we consider as higher or lower?

has a #ig impact on the company culture/ atmosphere

and the employee attitudes

defines the status of each employee


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Why grading?

1rganizations use grades as a reference framewor% for the organization & easy

administration to ma%e the results of (o# e$aluation easier to

communicate and to manage to pro$ide more transparency as a #asis for remuneration management

* grading is #asically the cornerstone of all 45

processes/ most typically 6areer paths 7romotions 6ompensation 8 9enefits policy

Training 8 De$elopment


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The characteristics of anoptimum grading structure

*pplica#le across the current organization

;leow in maintenance

=asily lin%ed into a num#er of other 45 systems and

processes eg 7erformance 'anagement/

Succession 7lanning/ 5ecruitment/ De$elopment/ etc


9/38 @

Where do we situate a gradingexercise?

Job &escription

Job 'dentification (

Job ( Recriter

J ob h ol de r( ' r in a

& iv is io n ( ) m an R e so rce s

Reporting to ( )ead of &epartment* )R &epartment

&ate ( +pril ,--,

.rganisation chart(

Jobdescription

Evaluation Grading

Company DATE: #######

JOBTIT! Depart"

ment

# $O W" %O W P &O B S O' (C CO )$ T(B T OT ( P &O *+

SOT P$TS SOT , P$TS SOT P$TS P$TS S%&T

%ead of *inancial Transactions *inance !II"- ./0 !-1 -2 344 D0c 3-. 496 (.

Telecom e5pert Support *"I1. ./0 !-1 -2 344 !"01 336 479 (3

a7yer egal !1I- ./0 ! -1 -2 344 !"01 336 479 (3

%ead of %eads Prod+ !I1- ./0 !-1 -2 344 D0"c 336 479 (3

J

O B S

Job &escription


Job ( Recriter

J ob h ol de r( ' ri na

&ivis ion ( )man Resorces

Reporting to ( )ead of &epartment * )R &epartment

&ate ( +pril ,--,

.rganisation chart(

Job &escription


Job ( Recriter

J ob h ol de r( ' ri na


Reporting to ( )ead of &epartment * )R &epartment

&ate ( +pril ,--,

.rganisation chart(


10/38 AB

Exercise

5an% the following (o#s from highest to lowest (o#

size: 'anagement 6onsultant 9us dri$er

6ar mechanic 5esearcher & product de$elopment Doctor 7rofessor

7ilot Secretary


11/38 AA

From job grades to salarystructure

Co#s

, 0 1 2 3

Salary

Job ranking Salary structure

1

0

,

2

Job grades or job structure


12/38 A2

AA AB @ : 0 ) " ! 3 2 A

ow !rading is lin"ed to pay Monthly

Base Pay Ranges

10,000

80,000

+20%

-20%

+20%

-20%

30,000

+20%

-20%

Salary scale

(e.g. ‘x % to ‘y %!

Brea"th o#

gra"e

$ra"es Ban"s&e'els


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Salary evolution

Bonus pay-out + Salary Database

Determining indi#idual pay

P E O P L E

NAME FUNCTION Grade ASE SA! ONUS ENEFITS

P456'7

Recriter

1 012-- 0-8 car

&.59.J:;56' +ccontant 1 215.'

9ranslator

0

,0---

,-8 car

W.&6+ 5pecialist ,

,'7

:conomist

, ,12?- ,-8 car

+R=+9 +rchitect ,0?@< 28

=+5'> =enefits specialist ,0--@ 28 lnch allA

):RM'9+B:

>awyer

01,,,

28 lnch allA

lnch allA

Job &escription


Job ( Recriter

J ob h ol de r( ' r in a


Reportingto ( )ead of&epartment * )R &epartment

&ate ( +pril ,--,

.rganisation chart(

Job description Evaluation Grading

Company DATE: #######

JOBTIT! Depart"

ment

# $ OW" %O W P &O B S O' (C CO )$ T(B T OT ( P &O *+

SOT P$TS SOT , P$TS SOT P$TS P$TS S%&T

%ead of *inancial Transactions *inance !II"- ./0 !-1 -2 344 D0c 3-. 496 (.

Telecom e5pert Support *"I1. ./0 !-1 -2 344 !"01 336 479 (3

a7yer egal !1I- ./0 ! -1 -2 344 !"01 336 479 (3

%ead of %eads Prod+ !I1- ./0 !-1 -2 344 D0"c 336 479 (3

J O B S

Job &escription


Job ( Recriter

J ob h ol de r ( ' r in a


Reporting to ( )ead of &epartment * )R&epartment

&ate ( +pril ,--,

.rganisation chart(

Pay structure


14/38A!

$ptions in designingclassifications%gradingstructures


15/38 A"

!rades are organi&ation specific

* classification&grading is a management tool and should supportthe goals of the organization

t should reflect the organizational structure

The grading structure must fit with the internal EF$alue of wor%FFperceptions of the company

The starting point of grades will often #e tied to internalpopulations: management/ specialists/ clerical/ #lue collar

The choice of the width of grades is also companyGspecific as itwill #e the #asis for remuneration/ promotion and mo#ility policies

6opying a classification of another organization/ competitor/sector leader/ E'ost *dmiredF wonFt wor% 9enchmar%ing is not a solution


16/38 A)

Decision points in designing a jobgrading structure

The num#er of structures

The num#er or le$els&grades and width of

classes&grades

1$erlaps? 'ethod&approach for determining (o# weight and thus

positioning of (o#s in grades

9orderGmanagement: processes to determine how togo o$er #order ,assessment/ reGe$aluation of (o#s/

role of 45 as system owner/ promotion panels-


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!rading ' ow it can loo" li"e ()*"Traditional#$ One Structure

arro) $ra"es Broa" Ban"s


18/38 A

!rading ' ow it can loo" li"e (+*

CEO

Directors

Management

I

Project

Manager Sr. Experts

Experts

Officers

- C

Supervisors

I

Supervisors

II

SUPPORT STAFF I

SUPPORT STAFF II

SUPPORT STAFF III

SUPPORT STAFF IV

Management

II

Project

Manager

Directors

Supervisors

I

Experts

Officers

- S

Junior Officers

- S

SUPPORT STAFF I

SUPPORT STAFF II

SUPPORT STAFF I II

SUPPORT STAFF IV

C

O

R

E

S

U

P

P

O

RT

Multi%le Structures

2

3

!

"

#

$

%

&'

&&

2

3

!

"

#

$

%

&'

&&


19/38 A@

!rading ' ow it can loo" li"e (,*

O&erla%%ing Grades


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2B

"Tec'nical !adders#

!rading ' ow it can loo" li"e (-*

re#erencele'el an" *ont range

LEGAL

STRATEGI

LA""I"G

#R $

%&&'"IATI%"S

(I"A"EI"(%R&ATI%"

TE#"%L%G)

S)STE&S $

%ERATI%"S

*9

#ead o+ o,icy $

,anning

Assistant -irector.

#R

Assistant

(inance

-irector

Assistant

-irector. IT $

/usiness

,anning

#ead o+ rojects

#ead o+

%perationa,

Ser0ices

Assistant

-irector.

rocure1ent $

Syste1s

*2

Asst Secretary

Lega,

#ead o+

o11unication

(inancia,

ontro,,er

*7

In+or1ation

Syste1s

&anager

*6

rincipa,

Lega, %++icer

Land &anager rincipa, Syste1s

-e0e,oper

Syste1s

%perations

&anager


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2A

!rading . how it can loo" li"e (/*

Creating %arallel ladders "Job Grades# and "(ersonal Grades#


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22

0roadbanding #ersusnarrow grades


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23

Two fundamental types of gradingstructure

small #ands Similar (o# weight #y grade ncrease in responsi#ility H promotion 6areer perspecti$e in terms of Eclim#ing the hierarchyF

#road #ands >imited num#er of #roader grades

Co#s of significantly different (o# weights are in the samegrade ncrease in (o# weight: not necessarily promotion in grade


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2!

0roadbanded pay structure

Base

Salary

Grade

E3tra pay possibi,ities

"e re+erence sa,aries


25/38

2"

Why broadbanding? A changingorgani&ational en#ironment

4ierarchical strong structure

Taylorised

6entralized

Co# specific (argon

*d hoc solutions

Io strategic connections

7eople are a resource

;lat + networ%s

,;le


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2)

Why adopt broadbanding?

To deGemphasize status/ hierarchy and (o# size To reduce pressure for promotion and reGgrading

To accommodate more fle


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20

1is"s and disad#antages ofbroadbanding

5is% of Jthe s%y is the limitK

Dri$e for promotion disappears

Status differences disappear

>ower positioned (o#s are #eing referred to higher

reference salaries/ #enefits

Salary #enchmar%ing is more difficult

The most documented negati$e effect of#road#anding is a drastic increase in salary costs


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2

Pa y 'ncrease =dgets

Brades and Ranges

Perf ormance Management

>oosening the reigns in one area

puts increased tension on the others

>oosening the reigns in one area

puts increased tension on the others

Three ways to control pay23


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2@

4anaging pay in broad bands


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3B

nctional

Process &riven

121

2

3

4567

8

9

10

11

9ime =ased

7etwork

R e l i a

b i l i t y

C l e x i b i

l i t y

C s t o m e r

9 e c h n o

l o g y

Wor" 5ulture should be considered indesigning a grading structure

;our Wor% 6ulture 'odels


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3A

Process &rivennctional

Process &riven

7etwork

12 1234

567891011

9ime =ased

Ai)s *pply specialized

technologies Iew applications G same

technology >imit ris%s

*ork +esign

4ierarchy

Specialized position

Tas% team

(eo%le Manage)ent

;unctional e


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32

nctional

Process &riven

7etwork

12 1234

567891011

9ime =ased

-e.ards

Salaries and increases #ased

on proficiencies and team

competencies

S%illG#ased $alueGadded #ands

6ompetencyG#ased

TeamG#ased output incenti$es

6areerG#ased #enefits

Ai)s

6ustomer satisfaction

6ontinuous impro$ement

6ustomers&indi$idualized

ser$ices&products

*ork +esign 6ustomer dri$en processes

Wor% teams

5oles

(eo%le Manage)ent

TeamG#ased

7rocess proficiencies and

team competencies

(er,or)ance Manage)ent

7rocess not an e$ent

TeamG#ased

7roficiencies and

competencyG#ased

6rocess Wor" 5ulture


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33

nctional

Process &riven

7etwork

12 1234

567891011

9ime =ased

Ai)s

Temporary alliances

'ar%et creation&penetration

'o#ility

*ork +esign

Situation determined roles

5elationships not structure

Venture dri$en

(eo%le Manage)ent

De$elopment of personally

rele$ant proficiencies&

competencies

=


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3!

nctional

Process &riven

7etwork

12 1234

567891011

9ime =ased

-e.ards

Salaries and increases #ased

on proficiencies and

competencies

4ighGle$erage incenti$es #ased

upon program success

7ro(ect milestone incenti$es TeamG#ased e.uity

6areerG#ased #enefits

Ai)s

5esponsi$eness/ fle


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3)

To sum up333


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30

To sum up

IS NOT

+ different representation of the

organiDational strctreE

spplementaryF company!specific

+ means to grop jobs based on

assessments of varios criteria

+ framework to define different

levels/ ranges of pay based on

relative internal vale and external

relativities

+ system that provides

recommendations regarding pay

Replacing the organiDational strctreE

contradictory

Changing the natre or content of jobs

or where they fit in the organiDational

strctre

+ set of rigid rles that spport leveling

and abolition of niGeness

+ HManagerI "it will not make the

decision for yo$

IS

Lrading:


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And 8t9s 7ot :ust About 6ay

Lrading can facilitate:

Differentiating internal contri#ution

Designing wor% and organization

Understanding&defining career paths

7lanning for succession and continuity >in%ing professional #eha$iors and characteristics with wor%

and wor% le$els& grades

I)%acting %ay decisions is only one o, t'e

%ur%oses o, Grading

I)%acting %ay decisions is only one o, t'e

%ur%oses o, Grading

2-intro - grading pay

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