We do not recommend this approach. When implementing pay-scales/ranges the company needs to ensure that the pay-scales fits the company’s operational requirements as well as ensure alignment to the company’s remuneration policy, philosophy and positioning in the market. The following should be considered –
A. Pay Element
- Basic vs Total Guaranteed Package.
B. Position in market
- Lead vs match vs lead-match approach – How competitive the company would like to be bearing in mind the cost implications.
- Projection of the market data and age correction of market data.
C. Reference point
- Market Positioning/Pay policy line – Market 50th Percentile as reference point
D. How many pay scales?
- Different target markets – National or Industry Specific;
- Diversity of jobs – Functional areas or Job levels;
- Diversity of grading procedure – Bargaining Unit levels;
- Internal equity vs external competitiveness – Separate pay scales developed for certain skills, professions, key skills, core, critical skills, specialised etc.; and
- Organisational Structure – Pay scales or holding company vs per business units
E. Type of pay scales
- Job-Based; or
- Job Family Grade Based.
F. Range Spread
- Range spread (minimum to maximum);
- Midpoint-to-midpoint differential;
- Slope / Gradient; and
- Midpoint-to-midpoint differential (slope/gradient)
G. Range overlap•
- It is common practice to have range overlap to provide sufficient progression within a range.
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