Salary Structure
Creating a Competitive Salary Structure
INTRODUCTION
Each employee in an organization is paid a salary. Salaries vary greatly, with executives earning as much as (or greater than) 100 times an entry-level employee's salary. This variation is not by chance. It is rationally established through a salary structure – a hierarchy of salaries.
Organizations develop this structure based upon internal factors (such as current rates, job relationships, and custom) and external factors (such as labor markets and laws). Salary structures integrate these factors to create a hierarchy, in which every job of the organization has its place.
Before establishing a salary structure, you must first have a job structure: a hierarchy of your organization's jobs based upon their value to the company. Distance Learning Center Courses 33 (Conducting Job Analysis) and Course 34 (Installing Job Evaluation in Your Organization) teach you how to create a job structure. For the purposes of this course, we will assume that you have conducted job evaluation for your company, established a job structure, and are now ready to create a salary structure.
We will teach you how to do this by:
plotting your organization's jobs on a matrix drawing a line through the scattering of dots
using this line to determine median salary rates, with which you can establish salary ranges
You will then learn how to administer and maintain this salary structure, including how to audit it using research software.
DEVELOPING A SALARY STRUCTURE
The job structure (covered in DLC Course 34 on Job Evaluation) presents the compensation decision maker with a hierarchy of the jobs in the organization. A dollar value now needs to be placed on this hierarchy. This value is available from either:
the jobs' current salary rates
OR
market data collected from salary surveys
Current Rates
The present wage and salary rates in an organization will clearly influence any changes made in its current salary
INTRODUCTION
Each employee in an organization is paid a salary. Salaries vary greatly, with executives earning as much as (or greater than) 100 times an entry-level employee's salary. This variation is not by chance. It is rationally established through a salary structure – a hierarchy of salaries.
Organizations develop this structure based upon internal factors (such as current rates, job relationships, and custom) and external factors (such as labor markets and laws). Salary structures integrate these factors to create a hierarchy, in which every job of the organization has its place.
Before establishing a salary structure, you must first have a job structure: a hierarchy of your organization's jobs based upon their value to the company. Distance Learning Center Courses 33 (Conducting Job Analysis) and Course 34 (Installing Job Evaluation in Your Organization) teach you how to create a job structure. For the purposes of this course, we will assume that you have conducted job evaluation for your company, established a job structure, and are now ready to create a salary structure.
We will teach you how to do this by:
plotting your organization's jobs on a matrix drawing a line through the scattering of dots
using this line to determine median salary rates, with which you can establish salary ranges
You will then learn how to administer and maintain this salary structure, including how to audit it using research software.
DEVELOPING A SALARY STRUCTURE
The job structure (covered in DLC Course 34 on Job Evaluation) presents the compensation decision maker with a hierarchy of the jobs in the organization. A dollar value now needs to be placed on this hierarchy. This value is available from either:
the jobs' current salary rates
OR
market data collected from salary surveys
Current Rates
The present wage and salary rates in an organization will clearly influence any changes made in its current salary