grade and pay structures
TRANSCRIPT
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GRADE AND PAY STRUCTURES
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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
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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
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• 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
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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
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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
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Types of grade and pay structures
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MODEL OF A NARROW-GRADED STRUCTURE
£
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MODEL OF A BROAD-GRADED STRUCTURE
£
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MODEL OF A BROAD-GRADED STRUCTURE
£
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£
Broad band Broad grade
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MODEL OF A JOB-FAMILY STRUCTURE
£
Job families
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MODEL OF A CAREER-FAMILY STRUCTURE
Pay ranges £
Career families
Job Evaluation JE points
Marketing
IT HRM
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A PAY SPINE
Pay spine
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£
MODEL OF SPOT RATE STRUCTURE
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£
MODEL OF INDIVIDUAL JOB RANGE STRUCTURE
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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
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Designing grade and pay structures
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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
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• 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.