Grade structure

PAY STRUCTURE

Submitted By:
PABAK D. DAS
VIDHI RAI

Grade Structure

• Grade Structure consists of a sequence
or hierarchy of grades, bands or levels
into which groups of jobs that are
broadly comparable in size are placed.

• It is used as a part of non-financial
reward processes.

Pay Structure

• If a grade structure is defined by pay
ranges or grades are attached to a „pay
spine‟, it is called “pay Structure”.

• There may be a single pay structure
covering the whole organization or there
may be one structure for staff and another
for manual workers.

Pay Structure Contains…
• Contain the organization's pay ranges or
scales for jobs grouped into grades, bands
or job family levels.

• Define different levels of pay for jobs by
market rate survey & negotiated rates for
jobs.

• Provide scope for any progression in
accordance with performance, competence,
contribution or service.

Role of Pay Structure
• To provide a logically designed framework

• To determine the position of a job in a hierarchy

• To Define pay levels

• To determine the scope for pay progression

• To monitor & control the implementation of pay
practices

• To Communicate with employees about career
and pay opportunities.

Features of Pay Structure

• Be appropriate to the culture, characteristics and needs of the organization
and its employees.

• Facilitate the management of relatives and achievement of fair & equal pay.

• Be capable of adapting to pressures

• Facilitate operational flexibility & continuous development

• Provide scope for reward and increase in competence and skill

• Clarify reward, lateral development and career opportunities

• Should be logical and not complicated for employees

• Enable the organization to exercise control over pay policies and budgets.

ANALYSIS

OBJECTIVES

CHOICE

PROJECT PLANNING INVOLVE &
CONSULT
COMMUNICAT
MANAGEME E WITH
NT EMPLOYESS
DESIGN PRINCIPLES

DESIGN PROCESS

IMPLEMENTATION

EVALUATION

Types of Pay Structure
• NARROW-GRADED STRUCTURES

• BROADBANDED PAY STRUCTURES

• CAREER FAMILY STRUCUTRES

• JOB FAMILY STRUCTURES

• PAY SPINES

NARROW-GRADED STRUCTURES

• „single-graded‟ structure

• Universal type of structure in private
sector

• Pay range is attached to each grade
(Between 20%-50% above minimum)

• „Reference Point‟ or „Target Salary‟ is
referred to the fully competent individual

• Provide Scope for Pay Progression

Example:
A company have following pay In Broadbanding we reduce the
scales; number of pay scales:
• Scale/Grade 1: Rs 8,000-10,000 • Scale/Grade 1: Rs 8,000-15,000
• Scale/Grade 2: Rs 9,500-11,500 • Scale/Grade 2: Rs 14,000-24,000
• Scale/Grade 3: Rs 11,000- 14,000 • Scale/Grade 3: Rs 22,000-30,000
• Scale/Grade 4: Rs 12,500-15,500
• Scale/Grade 5: Rs 14,000-18,000
• Scale/Grade 6: Rs 16,000-20,000
• Scale/Grade 7: Rs 18,000-22,000
• Scale/Grade 8: Rs 20,000-24,000
• Scale/Grade 9: Rs 23,000-28,000
• Scale/Grade 10: Rs 25,000-
30,000

FORMULA
OVERLAP PERCENTAGE:

• Maximum of a pay range of Grade A - Minimum of a pay range of Grade B

Maximum of a pay range of Grade B – Minimum of a pay range of Grade B

If Scale 1 is Rs 8,000- 15,000
Scale 2 is Rs 14,000-24,000
Then,
= 15,000-14,000
24,000-14,000
= 10%

ADVANTAGES & DISADVANTAGES

Advantages: Disadvantages:

• Provide a framework • Up gradation
for managing relatives • Can represent an
• Ensures equality extended hierarchy
• Easily controlled, • May restrict flexibility
managed & explained

Broad banded Pay Structures
• „Broad banding‟ means that the number of grades is compressed
into a relatively small number of much wider „bands‟.
• Managed more flexibly
• Attention is paid to market relativities.
• There are four or six bands in such structures.
• Jobs may be placed in the bands purely by reference to market
rates or by a combination of job evaluation and market rate analysis.

GRADE JE Range £
A 1000+ X
900-999 X
B 800-899 X
700-799 X
C 600-699 X
500-599 X
D 400-499 X
300-399 X
E 200-299 X
100-199 X (X= reference point)

Advantages Disadvantages

• managed more flexibly & adapt • Broad banded structures are
to market rate easily. harder to manage than

• Role specific and performance narrower – graded structures.

management focus on reward. • It can be difficult to explain to

• Dismantles the overly people how broad binding

structured and bureaucratic works.

approach of typical
multigraded structure.

CAREER FAMILY STRUCTURES
• Consist of jobs in a function or occupation (Ex. marketing, operations,
finance, IT)

• Jobs are related through the activities carried out and the basic
knowledge and skills required.

• But the levels are differentiated through responsibility, knowledge,
skill or competence needed.

• In effect, a career structure is a single – graded structure in which
each grade has been divided into families.

• Job evaluation indicates the same range of scores. Similarly, the pay
ranges in corresponding levels across the career families are the
same.

JOB FAMILY STRUCTURES
• Based on common processes (ex. IT, finance, HR)

• Divided into 3-5 families and again sub-divided into levels
(5-7)

• Levels are defined in terms of accountability, skills and
knowledge

• No commonality (each job family has its own grade and pay
structure)

Strategic Decision
Develop Career/ Job Family
Structure

Choose and Choose method
define families of job evaluation

Decide and
define levels

Develop role
Validate through
profiles and match
job evaluation
to levels
Conduct market survey
and decide pay ranges
Formulate and
Calculate agree assimilation
ITERATE assimilation cost policies

COMMUNICATE

IMPLEMENT

PAY SPINES
• Pay spines consist of a hierarchy of pay or spinal column
points between which there are pay increments and to
which are attached grades.

• Public sector, agencies and charities (adopts public
sector approach)

• Consist of a series of incremental „pay points‟ (lowest to
highest)

• Increments are between 2.5-3 %

Grade structure

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