Pay range mobility in salary administration

by on June 25, 2009 · 0 Comment POSTED IN: HR Info Center

Look at salary administration and pay grades both vertically and horizontally

The other market dynamic in salary administration I would point out is that in most organizations is vertical growth, that receptionist could be promoted to a junior secretary, promoted to an intermediate secretary, promoted to a senior secretary and executive secretary.

In that executive role, oftentimes, there’s little to no upward mobility. And so, we create additional room horizontally or additional room to grow within that job range.

The horizontal lines are the midpoint differentials in your salary administration system. It is the percent difference from the midpoint of one grade to the next grade.

Differences in salary administration become further and further apart the higher you move up the organizational chart. This is typically designed to match an organizational chart not necessarily a market dynamic. You’ll see them tend to get higher as you move up the organizational chart as they do in this illustration. In the market, the difference between a junior secretary to an intermediate secretary to a senior secretary, following that career path, there are differences in the market between those jobs but they’re not substantial. They’re fairly small differences in the market.

However, the salary administration difference from an accountant to a comptroller to a CFO, following that career path has much larger jumps higher in the organization. Hence at the top of this V-shape structure, you tend to have much wider midpoint differentials.

Salary administration is centered on market-based pay.
There’s some pros and cons. I would argue that almost always the pros outweigh the cons. And that, and sure relevance, that goes back to what we talked about in this last bullet point focusing limited financial resources, efficient allocation. Money doesn’t grow on trees.

It’s also easy to administer. Many organizations administer it internally by purchasing the salary surveys and re-benchmarking their jobs. Others will simply, as an outside consultant, to help make sure that that benchmarking is updated on a regular basis.

On the downside, if you don’t currently have a market-based system, if you have something that’s somewhat antiquated. For example, a job evaluation system, a point factor system. It can be known as the Hay system.
From the Rapid Learning Institute webinar: “How to Set Pay Ranges That Are Fair and Effective” by Ed Rataj

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