Hi!
The Compensation Structure in an organization is being designed and developed thru the Job Evaluation (JE) program. This program teaches you how to create job hierarchy within your organization. The hierarchy is called Job Grades (JG). The number of JG that you can create depends on the type of JE System that you are using. If you use the classical method, then you can create more JGs than when you use Broad Banding.
Each Job Grade carry a minimum, midpoint, and maximum rate. The rates are determined by using market data, called Compensation Survey. This survey shows you the prevailing market rate per position in the industry where your company belongs. You use the data to benchmark your company's position and decide which figure to use, i.e. the low percentile, the median rate, the high percentile, or the mean.
Each JG has a spread. The size of the spread is dependent on the amount that you would like to put in each JG.
Statistical tool? Yes. The computation of the spread, the range, the midpoint, the median, the mean, the low and high percentiles, etc. all need statistical tools.
Best wishes.
Ed Llarena, Jr.
Managing Partner
Emilla Consulting