Struggling with Unequal Pay in IT: Should Promotions Be Based on Experience or Skills?

Grading and Leveling System in IT Software Company

I am working as an HR Manager in an IT software company. We do not have any grading or leveling system within our organization and are currently facing issues regarding unequal payouts. Additionally, we don't have any career growth plan in place.

Current Levels in Our Organization

Though we have created a few levels as follows:
- D1 CMD
- D2 Director
- P1 President
- P2 Vice President
- P3 Assistant Vice President
- M1 General Manager
- M2 Assistant General Manager/Deputy General Manager
- M3 Senior Manager
- M4 Manager
- M5 Team Lead
- L1 Senior Executive
- L2 Executive

Challenges in Mapping Salaries

However, we are finding it difficult to map salaries against each grade due to ambiguity in the pay scale with respect to departments. Please help me figure out how I can implement this. What should be the criteria for moving from one grade to another—experience or knowledge/skills?

Regards, HR

Dear HR Manager,

You have mentioned that you are from the IT industry. However, what is your product or service? What is the employee count?

Challenges in Mapping Salary Against Grades

Your question: However, finding it difficult to map salary against each grade as there is ambiguity in PayScale with respect to departments. Please help me out, how can I get this implemented.

Reply: You are finding it difficult to map salary against each grade because there is a high employee attrition rate in the IT sector. The high attrition has created a skill shortage. Because of the skill shortage, the bargaining power of the job candidates increases. This pushes the salaries upward. Since the salaries keep on increasing, it becomes difficult to select a candidate that fits in the salary bracket of a particular grade.

Criteria for Moving Between Grades

Your question: What should be the criteria for moving from one grade to another? Experience or knowledge skills?

Reply: While moving upward from the lower grade, you need to define promotion criteria. For each level, you need to define knowledge, skills, and experience level. This is a herculean task. This will require doing job analysis deeply.

Comments on the Levels Created

The IT companies work on a flat organizational hierarchy. In contrast, you have created a hierarchy that has 12 levels. Otherwise, my suggestions are as below:

a) You can squash M2 level of DGM/AGM. There is no need for it.

b) After M4, you may insert the level of Assistant Manager.

c) M5 level for the Team Lead is equivalent to a traditional "Supervisor." Therefore, it cannot be a part of the managerial cadre.

d) You may not have two "Executives," one senior and another junior. Therefore, instead of "Executive," you may convert this level into "Assistant" or just Software Developer.

The above suggestions are based on my common sense. I do not have a deep understanding of the IT industry in general and your company in particular.

Thanks,

Dinesh Divekar