Pay Structure
Pay structure can easily be defined as the levels of payments made to different jobs and group of jobs by the relative internal value which is determined by the evaluation of the job, as established in the market survey in exceptions negotiated rates for jobs which provides a scope for the pay progression according to the performance service competence and contribution.
Narrow graded structure
A narrow graded structue in the Figure 1 we can see it has a no of boxes that is a sequence of grades in the job i.e 10 or more brackets which are stated as a job profiles or the required matching jobs which are set under the same category. In this structure progression is usually linked to the performance.
Figure 1 Narrow Graded Strucutre
Advantages and Disadvantages of Narrow graded structure
Advantages
- It is easy to understand as the large no of grades enables the distinctions to be made between the levels of responsibilities.
- The structure facilitates control ensuring the same jobs profile or the same value jobs are being paid equally.
- It clearly indicates the employee pay relativities
Disadvantages
- The structure makes the hierarchy more rigidity in process-based organization
- It is inappropriate in an organisation which is delayered
- There are too many grades which would be creating a constant pressure for upgrading which would at last lead to an unjustified upgrading.
Broad Banded structure
Broad banded strucutres compress the maulti graded strucutres into four or five bands which is shown in the figure 2. The strucuture was much more flexible then the conventional strucutres and the bands were not more than five and the limitations were also minimised. They depended on the competence and the responsibilites as a wider aspect.
Figure 2 Broad Banded Structure
Advantages and Disadvantages of Broad Banded Structure
Advantages
- Its is much more flexible in comparison.
- It perfectly fits into the organizations that are functioning with new style.
- The structure provides a role specified and a performance oriented rewards for the individuals and even over throws the bureaucratic structures of rewards.
- Less time is consumed while analyzing and evaluating the jobs due to the less no of levels.
Disadvantages
- The structure kind of restrict scope for promotion.
- It is difficult to justify the pay structures to the employees.
- This structure seems to be much easier then the narrow graded structure but it is more complex and difficult to me managed.
- The employees make an expectation of pay opportunities which have been fulfilled in many cases if proper control is maintained in the systems.
- The system is complex which makes it difficult to be understood by the people and how would they be affected with it.
Pay Zones
As the development started to make a stop with the jobs promotions in the organization with the broad banded structure, the employees started criticizing the broad banded structure and to make a scope the pay zones were introduced which were made for individual jobs or the group of jobs, which made limits to the pay progression which can be seen in the Image 3.
Image 3 Broad Banded structure with pay zones
Developing a Broad Banded Pay Structure
When we are bargaining it is sure we are bargaining over pay as a fundamental aspect and the details of a broad banded pay structure have to be negotiated with the union.
I suggest the following steps to develop and install a broad banded pay structure
- We should decide on the pay structure with is most appropriate for progression in an organization.
- Make an estimate of the no. of bands that we require thru analyzing the structure of the organization and thru various roles carried out at different levels.
- Decision should be made on the with of bands, the pay zones, anchor points and the degree of overlap in any is needed to be considered.
- job evaluation exercise should be carried out which would help to define the boundaries of the band and band structure should be revised as it is appropriate.
- A pay survey should be done to establish the market rates.
- Next step would be positioning the jobs in the bands whether its single or in groups on the basis of the size on the basis of the market rates evaluation on the jobs. This whole step would be based on the judgment of priority which is to be given to the external and internal relativities. This decision also has to be made on the basis of the policies which the organization is to provide to the market relativities which would help them drive pay decisions.
- The pay zones should be decided on the basis of the progressive pays and for adjusting the levels of pay subjected to any change in role.
- Deciding onto the job role evaluation to define the band boundaries with respect to guiding the band with their positions and dealing with the queries regarding the new roles or vales which are equal.
- Study the present rate of payments made to the employees and identify whether there is any need for increment or not and any cases where protection is necessary.
- Make a proper plan to manage the whole structure which includes the job evaluation with allocating the roles the bands, payment reviews must be made, fixing up of salaries for the recruitment purpose or whether to follow a change or not in the role, data maintenance on market rates and to make pay review decisions should use the performance management process which would assist in deciding.
- A proper brief and training should be given to the managers on the new structure developed and their roles should be explained in managing the pays.
- Proper communication of the details of the new structure which is developed and how it would be affecting the staff.
Recommendation of how to over come disadvantage of broad banded
As per my study and analysis for the success of broad banded pay structure in an organization requires that the top managements have a very clear goals who would be understanding the pros and cons of a commitment, with all managers in the HRM and compensation are well trained and qualified to handle the issues in the organization relating to payments.
Before considering to move to a Broad Banded pay structure the company should always consider that the broad banded structure that the managers in the organization are well aware of and can even interpret the market payments data and schemes goin on. The control points in the structure are never precise for an individual jobs. Broad banded structure increases the potential of the employees in the organization to float on the upper level of the band.
Finally as with these structures the organization should carefully study the advantages and disadvantages of the broad banded structure and ensure that it fits into the organization with its culture and the goals the company has set for its self.
References
- Michael Armstrong and Helen Murlis. Reward Management. london: kogan page.
- Michael Armstrong(2008). employee reward management and policy. 2nd ed. london: kogan page. 3.
- http://www.lge.gov.uk
- http://www.lge.gov.uk/
- http://www.hrconsultant.com/
