A salary grade/range structure is a market driven tool for effectively managing
base pay for multiple jobs within an organization and can accommodate multiple
locations using geographic differentials if necessary. Such a structure enhances
the employer's ability to effectively recruit, retain and reward employees.
The structure also provides for greater consistency in pay related decisions
and increased probability of legal compliance and internal equity. The structure
is easily understandable by managers, supervisors and employees and can be
linked to the performance management system.
The Human Resource Department (THRD) works with clients to develop such structures
using a proven market driven and internal worth qualitative job ranking process.
First, THRD ranks all non-bargaining unit jobs into clusters based upon market
worth. Job market pricing is completed utilizing highly reliable local, regional
and national salary surveys such as Watson Wyatt (ECS), Economic Research Institute
(ERI), Hewitt, Abbott-Langer as well as other specialized industry surveys.
Client job descriptions are carefully matched to job descriptions in the surveys.
The first draft of salary ranges is developed using the market pricing after
discussion with the client on where the organization wants to position their
salary range midpoints relative to market and taking into consideration their
overall total rewards package (i.e. pay, benefits and paid time-off).
Next, THRD meets with the client to thoroughly review the market worth rankings
and apply the internal worth component using compensable factors. Based upon
input from key members of the client management team regarding internal worth
of the job (not person), the clusters are qualitatively rearranged to reflect
a combination of market and internal worth. Some jobs may be leveled or consolidated
where warranted. If there are jobs where THRD recommends a Fair Labor Standards
Act classification review (i.e. exempt or nonexempt), the client will be advised.
The salary ranges are revised to reflect the new clusters which become salary
grades.
During the project, THRD and the client representatives also review all job
titles to build a meaningful hierarchy of titles for the organization. This
enhances the employer's career pathing and succession planning. HRIS
considerations are also reviewed.
THRD then reviews actual current employee pay rates to determine how employee
pay rates compare to the new proposed salary grade/range structure. THRD will
identify and quantify any pay issues and assist in the preparation of a strategy
for costing and addressing those issues. Such potential issues are hiring rates,
employees below minimum, employees over maximum, inconsistencies in pay rates
for employees in the same job, gender inequities and pay compression. THRD
will review and estimate the cost and timetables of various alternative solutions
and present a report of findings and recommendations.
THRD then assists in the employee communications process introducing the new
salary grade/range structure to the organization.
The new salary grade/range structure will be capable of being internally maintained
and updated in the future as needs warrant. Client representatives will be
able to evaluate new jobs and job changes and rank the jobs appropriately.
To discuss a salary grade/range structure for your organization, contact
us.
