Pay Scale Design
A pay scale (also known as a salary structure) is a system that determines the range in which an employee should be paid based on one or more factors such as the employee’s level, rank or status within the organisation, the length of time that the employee has been employed, the difficulty of the specific work performed and volume of work.
In light of the Equal Pay for Work of Equal Value legislation, defensible pay structures have never been more important. A well designed pay structure will ensure competitiveness in a tightening skills market, whilst containing costs and ensuring internal equity amongst staff and external equity with the market.
In designing a pay scale, market practice and best fit principles are catered for. These may include:
- Principles of internal and external equity;
- Grades and scales reflect organisation and work design;
- Flexibility to respond to internal and external pressure;
- Allows superior performance to be rewarded;
- Consistency in decision-making and application of remuneration policy;
- Offers career movement, linked to additional pay opportunities and possibly career ladders;
- Stakeholder approval &
- Legally defensible.