How Do I Create a Fair Pay Structure with Grades for Different Employee Roles?

Hi Seniors,

Could anyone assist me on how to differentiate employees with different pay structures based on grades? We are planning to formulate a pay structure with grades in our company. Currently, we have a list of designations for our employees:

1. Directors
2. Project Coordinator
3. Project Manager
4. Team Lead
5. Sr. Software Engineer
6. Software Engineer
7. Flash Programmer
8. Sr. Flash Programmer
9. Web Designer
10. Software Test Engineer

We also have Middle Management Staff:
1. Sr. HR Executive
2. HR Executive
3. Administrator
4. System Administrator
5. Accounts

Please guide and suggest me on this!

Thanks in Advance. 😊
Esther

Hi Kirubaemmu,

First things first, you must understand the importance of these job positions in your organizational chart to establish the nature and level of the jobs. The next step is to classify them into job ladders and job families, vertically and horizontally, in a way that fits into your grade structure pay bands. Basically, this exercise is judgmental of the position and nature of the job, which is determined based on the current market price of the job to fit into a particular grade.

I hope you understand my point, and this will help you in building a pay structure. Please acknowledge my advice by return mail so I know what is missing.

Cheers,
Sawant

Hi Sawant,

Thank you for your prompt reply. I appreciate your valuable insights. As you mentioned, it is essential to classify into job ladders and job families. Could you please provide a brief explanation to help me understand this concept better?

If I am correct, the classification would look like this:

Job Ladder:
1. Directors
2. HR/Admin
3. Project Manager/Project Coordinator
4. Software Engineers/Flash Programmers/Flash Designers
5. Trainees

Job Families:
1. Directors
2. HR:
a. Sr. HR Executive
b. HR Executive
3. Admin:
a. Admin Head
b. System Admin
4. Accounts
5. Managers:
a. Project Managers/Coordinators
6. Software Engineers:
a. Team lead
b. Sr. Software Engineer
c. Software Engineer
d. Software Trainees
7. Flash:
Same as the 6th point

Thank you,
Esther

Hi Esther,

The concept of Employee Banding and levels within banding may help. Check it out.

Geetha

Hello,

Job Families are groups of occupations based upon work performed, skills, education, training, and credentials.

Job ladders are career progression paths in your organization. You have to see a particular job can move from a minimum one level to the maximum level. Accordingly, you may assess experience, qualifications, or expertise to move to different levels within one job occupation organized into pay bands from low to maximum.

This exercise shall be done for all job positions where these positions have movement as a career path or job ladder through promotions to move upwards in your organization, which can be an indicator as a grade.

Some occupations may have limitations, but due to the market pricing of such jobs, they are specialized into occupations like Engineers, Professionals, Finance, Commercial, and Administration, etc. This is in order to maintain internal and external equity.

Regards

Sawant

Yes, we do this exercise every year after annual merit increases and promotions to set grade structure and internal equity right. We have to see the total number of jobs in the organization as per the organization chart. Then, each job shall be codified with job analysis, and descriptions are written for further evaluation of the job to fit into salary grade codes. The organization chart mentions such grades for each position.

This is regarding only salary grade structure. Then comes your benefits structure for different grades, which includes guaranteed cash, also called fixed allowance, and operational allowance, etc.

Regards,

Sawant

The steps generally include:

Job Analysis

Job Evaluation (Various methods are used in job evaluation)

Grading (Based on grades, a pay structure can be established)