Most organisations start small and manage pay on a person-by-person basis. This is known as a spot salary system, where the going rate for the job is paid. It can be challenging to make these systems work effectively, but we can help ensure that pay stays linked to the market and rewards individual performance, while reflecting the differences between jobs.
As organisations grow, it becomes harder for managers to manage pay without a more formal pay structure. On a practical level, pay decisions tend to be delegated, so a framework is needed to maintain consistency.
On a strategic level, issues like succession planning and individual’s pay and career progression need to be thought out if you are to get the best out of your people. A structure with stepping stones that enable staff to move from one level to the next as they grow will help greatly.
There is no one-size-fits-all solution to grade structure design. We will look at what works well and what issues you have with your current system, and also take account of how you see your organisation developing. We will design some options that we think will suit you now – and in the foreseeable future.
The structure that suits you will depend on a range of factors. Above all, it needs to fit in with how your organisation works if it is going to succeed. These are designed so that roles that are of broadly similar characteristics are grouped together, reflecting the organisation’s structure. This makes managing individual pay and benchmarking against the market much simpler. There are variations that are based around:
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the skills and competencies needed in jobs at different levels (career families)
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function or job type (job families), which can enable flexibility in pay to reflect different market rates
Pay progression
You need to consider how you will enable your employees’ salaries to increase. Their pay progression could be linked to general market movement, to a measure of their performance and/or competence, or to a combination of both. Pay can be linked to incremental points or managed more flexibly within a pay range. There are pros and cons to each approach and what works well for one organisation might be a failure in another.
Pay should not be viewed in isolation and the introduction of a new structure may be planned as part of broader HR changes, such as the introduction of a competency framework or the development of a new performance management system. We can advise and assist with changes of this nature too.
Whatever approach you choose, we will design a structure that meets your needs, using our job sizing and pay benchmarking expertise. We will cost out the options for you and analyse the impact on individual staff. We can also conduct an equal pay impact assessment and help you to implement the structure smoothly.
Contact us to talk about how we can review your grade structure.
