Pay structures tell employees how organizations value its jobs, what job and compensation advancement opportunities are available, and how competitive the pay practices are compared to other organizations. Not only does a pay structure integrate an organization’s internal requirements, it also enables a comparison to competitors in the HR marketplace.
Base pay often reflects the value of the work itself and disregards differences in contribution of individual employees. It is important to note that the following are all factors that affect the development of a pay structure:
- Policies: Compensation techniques and objectives
- Internal Equity: Work analysis, descriptions, evaluations and structures
- External Competitiveness: Market definitions, surveys, policy lines and pay structures
- Employee Contributions: Seniority or performance based, merit guidelines and incentive programs
- Administration: Planning, budgeting, communicating and evaluating.
- Base pay structures will differ for the following groups of employees:
- Executives
- Senior Managers
- Top-Level Operating Managers
- Mid-Level Operating Managers
- Low-Level Operating Managers
- Professionals/Technical
- Administrators/Supervisors/Coordinators
- Sales Personnel
- Salaried: Hourly (Non-Union and Union)
- Regular: Full-Time or Part-Time
- Temporary: Full-Time or Part-Time
- Special Groups:
- Employees in foreign work cites
- Corporate Directors
- An organization determines the base salary range for all job positions through:
- Market Pricing
- Point-Factor – Job Evaluation
- Whatever It Takes – Ad Hoc Decisions
- Broadbands
- Slotting Into Grades
Pay structures are designed to easily able to adjust to changes in the labour market and market based pay systems are continuing to influence pay structures. Organizations are working to maintain a competitive, fair and defensible system.
Changes to an employee’s base pay can be made as they go through their careers in the following ways:
Change in Job: A change in duty assignment can entail either a promotion or a demotion; and a change in a salary grade or band.
Pay-for-Performance: An employee may also receive a change in base pay for their performance in the same job.
Merit Increase: The employee demonstrates job performance and productivity that are consistently above what is normally expected or required. Just the same, an employee’s salary may be reduced based on poor performance.
Market Influences: Shifts in the market have the potential to place more value on jobs that are affected by this shift. As such, these jobs – being more valued – will pay greater.
EMEND works in partnership with clients to:
- Determine the pay structure architecture
- Determine a pay policy line using data transformations and statistical analysis
- Acknowledge the need for more than one pay structure
- Analyze job data; and identify lowest and highest rates of pay
- Determine progression from lowest to highest pay rate
- Develop the base pay and grade structures
- Determine how best to interlock multiple pay structures
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Overtime Pay
EMEND also consults in the area of overtime pay and helps clients with issues like:
• Are all employees eligible for overtime pay?
• Do managers and supervisors quality for overtime pay?
• When does an employee start earning overtime pay?
• How is overtime pay calculated?
• What if an employee earns a salary, rather than hourly pay?