Hi Uday...
The salary normalization is intended to equalize the pay levels of different
grades of employees...
This can be done based on the number of years of experience, skill sets, or work out put...
A band or class, similar to the grading method needs to be prepared for each salary grade... and the compensation should then stay within the salary grade designed...
Though used mostly in Government Sector. It was once tried by IBM for it's employees which didn't go as well as was planned.... you can access the case study of IBM at
http://www.vault.com/messages/IBM_Bu...es1298375.html