Keep Note of these common Policies & Practices in Designing Salary Structure

by Ravi Dutt Sharma Digital Marketing

To set out pay ranges employers usually make salary structures and with the job profile the minimum and maximum scales are set for every employee associated with each salary grade or band. By doing so, employers can use a salary structure to help manage compensation in an optimal way.

At Gapeseed Consulting we provide our Payroll services to maximize productivity by channelizing timely and accurate salary processing, efficiently handling the reimbursements, managing loans and advances. We provide complete HR Payroll solutions to our clients/enterprises.

Here are some common Policies & Practices in Designing Salary Structure for your organization, with some special considerations for international developing markets:

Establish your compensation philosophy. Each employer needs a policy which outlines their desired market position. A well-planned and structured compensation policy provides valuable guidance for the development of a salary structure. In large organizations, there is often a corporate policy which forms the basis for local policies.

Gather market data. Get to know about your comparators with respect to the compensation policies. Most employers prefer at least two survey sources. Most organizations do competitive market surveys. Your competition might be paying very competitively which results a better employee satisfaction.

Identify benchmark jobs. Benchmark jobs are those that are representative of roles found across many organizations – standard roles such as Manager, Accountant, Payroll Administrator, Secretary,

Clerk and Driver. Benchmark jobs are easy to understand and match to, and will appear in multiple surveys, enabling the use of multiple sources.

Measure your market position. There are several ways to do this. If you have a lot of benchmark jobs, tabulate the average of all of the roles in the same internal level or grade. Weighted averages incorporating number of incumbents associated with each survey data point is a common approach.

Select the market reference from the survey most appropriate under your policy.

Calculate the compa-ratio. This is the ratio of your data to the market — 100 means fully comparable, while a ratio under 100 indicates a below market position, and over 100, above market.

There are different approaches to summarizing the data — by position, by grade, etc. Whatever approach you use, the compa-ratio analysis will illustrate which parts of the organization are competitive against the market and which ones require some attention!

Check your budget. This is a critical step you can calculate the average difference between your current scale and the market. This indicates about how much of an increase would be required to make your scales fully comparable to the market. Your internal budget constraints, though, will dictate how close to this ideal you can achieve.

Start allocating. This is the start of an exercise which will repeat many times, until you get the desired result. Build a model of your organization, ideally with the number of incumbents in each grade. Using your overall percentage of market and budget numbers see how close you can get to fully comparable to the market, and how much it will cost, later tweak the data a bit.

We hope this this would give you an idea about the common Policies & Practices in Designing Salary Structure. If you want to read more about pay grades and Salary Ranges you can click here else feel free to drop us an email at info@gapeseedconsulting.com or you can also call us +91-9599444630 else drop us a line here