Grade structure
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The document discusses different types of pay structures used by organizations, including: 1) Narrow-graded structures which have defined pay grades with small ranges and provide scope for progression. 2) Broadbanded structures which reduce the number of grades into wider bands for more flexibility. 3) Career family and job family structures which group jobs by common functions or processes into levels with consistent pay ranges. 4) Pay spines used in public sector with incremental pay points and grades attached. The document compares advantages and disadvantages of different structures.
Grade structure
- 1. PAY STRUCTURE Submitted By: PABAK D. DAS VIDHI RAI
- 2. Grade Structure • Grade Structure consists of a sequence or hierarchy of grades, bands or levels into which groups of jobs that are broadly comparable in size are placed. • It is used as a part of non-financial reward processes.
- 3. Pay Structure • If a grade structure is defined by pay ranges or grades are attached to a „pay spine‟, it is called “pay Structure”. • There may be a single pay structure covering the whole organization or there may be one structure for staff and another for manual workers.
- 4. Pay Structure Contains… • Contain the organization's pay ranges or scales for jobs grouped into grades, bands or job family levels. • Define different levels of pay for jobs by market rate survey & negotiated rates for jobs. • Provide scope for any progression in accordance with performance, competence, contribution or service.
- 5. Role of Pay Structure • To provide a logically designed framework • To determine the position of a job in a hierarchy • To Define pay levels • To determine the scope for pay progression • To monitor & control the implementation of pay practices • To Communicate with employees about career and pay opportunities.
- 6. Features of Pay Structure • Be appropriate to the culture, characteristics and needs of the organization and its employees. • Facilitate the management of relatives and achievement of fair & equal pay. • Be capable of adapting to pressures • Facilitate operational flexibility & continuous development • Provide scope for reward and increase in competence and skill • Clarify reward, lateral development and career opportunities • Should be logical and not complicated for employees • Enable the organization to exercise control over pay policies and budgets.
- 7. ANALYSIS OBJECTIVES CHOICE PROJECT PLANNING INVOLVE & CONSULT COMMUNICAT MANAGEME E WITH NT EMPLOYESS DESIGN PRINCIPLES DESIGN PROCESS IMPLEMENTATION EVALUATION
- 8. Types of Pay Structure • NARROW-GRADED STRUCTURES • BROADBANDED PAY STRUCTURES • CAREER FAMILY STRUCUTRES • JOB FAMILY STRUCTURES • PAY SPINES
- 9. NARROW-GRADED STRUCTURES • „single-graded‟ structure • Universal type of structure in private sector • Pay range is attached to each grade (Between 20%-50% above minimum) • „Reference Point‟ or „Target Salary‟ is referred to the fully competent individual • Provide Scope for Pay Progression
- 10. Example: A company have following pay In Broadbanding we reduce the scales; number of pay scales: • Scale/Grade 1: Rs 8,000-10,000 • Scale/Grade 1: Rs 8,000-15,000 • Scale/Grade 2: Rs 9,500-11,500 • Scale/Grade 2: Rs 14,000-24,000 • Scale/Grade 3: Rs 11,000- 14,000 • Scale/Grade 3: Rs 22,000-30,000 • Scale/Grade 4: Rs 12,500-15,500 • Scale/Grade 5: Rs 14,000-18,000 • Scale/Grade 6: Rs 16,000-20,000 • Scale/Grade 7: Rs 18,000-22,000 • Scale/Grade 8: Rs 20,000-24,000 • Scale/Grade 9: Rs 23,000-28,000 • Scale/Grade 10: Rs 25,000- 30,000
- 11. FORMULA OVERLAP PERCENTAGE: • Maximum of a pay range of Grade A - Minimum of a pay range of Grade B Maximum of a pay range of Grade B – Minimum of a pay range of Grade B If Scale 1 is Rs 8,000- 15,000 Scale 2 is Rs 14,000-24,000 Then, = 15,000-14,000 24,000-14,000 = 10%
- 12. ADVANTAGES & DISADVANTAGES Advantages: Disadvantages: • Provide a framework • Up gradation for managing relatives • Can represent an • Ensures equality extended hierarchy • Easily controlled, • May restrict flexibility managed & explained
- 13. Broad banded Pay Structures • „Broad banding‟ means that the number of grades is compressed into a relatively small number of much wider „bands‟. • Managed more flexibly • Attention is paid to market relativities. • There are four or six bands in such structures. • Jobs may be placed in the bands purely by reference to market rates or by a combination of job evaluation and market rate analysis.
- 14. Broad banded Pay Structures GRADE JE Range £ A 1000+ X 900-999 X B 800-899 X 700-799 X C 600-699 X 500-599 X D 400-499 X 300-399 X E 200-299 X 100-199 X (X= reference point)
- 15. Broad banded Pay Structures Advantages Disadvantages • managed more flexibly & adapt • Broad banded structures are to market rate easily. harder to manage than • Role specific and performance narrower – graded structures. management focus on reward. • It can be difficult to explain to • Dismantles the overly people how broad binding structured and bureaucratic works. approach of typical multigraded structure.
- 16. CAREER FAMILY STRUCTURES • Consist of jobs in a function or occupation (Ex. marketing, operations, finance, IT) • Jobs are related through the activities carried out and the basic knowledge and skills required. • But the levels are differentiated through responsibility, knowledge, skill or competence needed. • In effect, a career structure is a single – graded structure in which each grade has been divided into families. • Job evaluation indicates the same range of scores. Similarly, the pay ranges in corresponding levels across the career families are the same.
- 17. JOB FAMILY STRUCTURES • Based on common processes (ex. IT, finance, HR) • Divided into 3-5 families and again sub-divided into levels (5-7) • Levels are defined in terms of accountability, skills and knowledge • No commonality (each job family has its own grade and pay structure)
- 18. Strategic Decision Develop Career/ Job Family Structure Choose and Choose method define families of job evaluation Decide and define levels Develop role Validate through profiles and match job evaluation to levels Conduct market survey and decide pay ranges Formulate and Calculate agree assimilation ITERATE assimilation cost policies COMMUNICATE IMPLEMENT
- 19. PAY SPINES • Pay spines consist of a hierarchy of pay or spinal column points between which there are pay increments and to which are attached grades. • Public sector, agencies and charities (adopts public sector approach) • Consist of a series of incremental „pay points‟ (lowest to highest) • Increments are between 2.5-3 %