Struggling with a Complicated Salary System? Seeking Advice on Simplifying It as a New HR Manager

Dear All, I have joined the new organization 3 months ago as HR Manager. I want to make changes in the existing salary system. The issue is that presently they are giving various grades based on qualifications, experience, etc., but it is not being followed properly. I want to make it simple and transparent. Making changes in the existing system is very difficult and complicated. So please suggest a new process or guide me on how to solve the existing one. Please reply early.

Regards,
Sanika

The first thing is that if employees are on the payroll, you can't make any changes to their salary. However, if you remove employees one by one from their service and then rehire them, you can make changes accordingly. On the other hand, if employees are not on the payroll, you can make changes as you wish.

For any further questions, feel free to write to me.

Regards

First, you must make your plan on paper on how you want to change the salary structure that involves basic pay, DA, HRA, conveyance, city allowance, education allowances, remote allowances, production bonus, bonus, gratuity, medical benefits, LTA, etc. There are various allowances according to the company's needs. Then, you should discuss this plan with your management and try to convince them:

1. For a smooth salary structure, first, establish the designation levels.
2. Then decide the grade levels based on qualifications and work experience after discussing with management.
3. Next, determine the percentage (%) of CTC for basic pay, HRA, and other allowances.

By drawing on your past experience, you can create the new structure.

Regards,
Rajiv Singh

Just a quick one. Most of the members observed that a change in pay structure for an existing employee is not suggested as it may translate into a dispute. I am not ready to buy this, please. If the CTC is assured and communicated to concerned employees regarding the objective and benefits of the modification, then surely, employees with a rational mindset would welcome the changes. It all depends on how efficiently the project is handled.

Any takers?

Regards

First, take into consideration that you can change the grades or designations suitably after consulting with management and employees. However, be careful when making any changes in the existing salary system. You cannot make any modifications to the basic pay + VDA, but adjustments can be made to allowances such as special allowance, etc.

I hope this information is helpful to you.

Regards,
Rajeev Dixit

Hi Sanika, your question is related to the salary structure, so you can seek advice from your company's labor law consultant. They will guide you better than us.

Thanks & Regards,
Husein

First, you should check which components entitle the employee to receive income tax benefits. Then, adjust the salary structure accordingly.

Regards,
Vijay Bhandari

Dear Respected Members,

Approach to Organizational Structure Changes

In my opinion, the best approach to an issue like this, before altering the organization structure and ensuring that existing employees are not affected, is to conduct research on the existing educational levels in the organization. Outline and group these levels, also taking into consideration the years of experience they have.

Table 1 in Attachment

Irrespective of the designation you give, which is considered a label and differs from one organization to another, it is not that significant. It's always wise to have a separate table for basic salary and allowances. It's also wise to have three salary levels: Entry Level, Middle Point, and Roof or High End versus Grades.

Table 2 in Attachment

When you do the allowance, tie it to the grade you give.

Table 3 in Attachment

Once you have done this, you can work on the designation "labels." Depending on your approach, you can give them any label.

• Consider education and experience.
• Consider professionalism: "What are they good at or specialized in?" Labels may include Specialist, Professional, Engineer, Manager, Executive, Director, Assistant, Semi-Professional.

You need to consider the percentage difference between a bachelor with 2 years of experience and one with 5 or 10 years. Or a master's holder with 1 year of experience, etc.

This is where the three segments of basic salary come in handy. The maximum part will tell you what your end limit of that grade is.

Do consider the fact that employees may require an increment in their basic salary, so you need to take that into account.

Once all that is done and you know who is placed where, you can either upgrade some employees' basic salary or allowance or change their designation.

Hope my suggestion will help you get started. It's very basic but practical.

Regards,