With best practices in mind, we endeavor for a new pay structure design that follows the market midpoint 100%. This means that the midpoint of the market rates for each job position will be the basis for structuring the pay ranges for each job grade. Market rates are data collected from the compensation study.Elena Mason, CEO, Prudential Global Network
As part of our engagements involving market competitiveness review, we consider certain parameters from the information gathered in our due diligence stage to ensure that our recommended pay structure is sustainable, scalable, versatile, equitable, and above all labor regulations compliant. These parameters include: (1) The Strategic Business Issues & Hard-to-Fill Jobs (2) Base Pay Line Policy (3) Compensation Philosophy (4) Structural Design (5) Internal Equity
Strategic business issues go beyond the ability to financially sustain any compensation programs. Of course, budgetary concerns as driven by external forces such as voters, citizens, Board Members, and State Legislature are still paramount among everything else, still, issues like compensation philosophies that describe the organizational belief of how employees must be paid and internal equity are both strategic in nature that must be addressed when developing pay structures.
In addition to the issues described above, “hard-to-fill jobs” is yet another concern that must be addressed when structuring pay and developing plans to manage the pay. Depending on the organization’s competitive pay practices, hard-to-fill positions are usually managed by matching salaries using “dollar-to-dollar” market equity approach. An employee who is about to resign can be encouraged to stay by offering salaries comparable to the other organization. Similarly, a candidate for hard-to-fill position can be offered competitive salaries slightly above or exactly at the market rate.
With best practices in mind, we endeavor for a new pay structure design that follows the market midpoint 100%. This means that the midpoint of the market rates for each job position will be the basis for structuring the pay ranges for each job grade. Market rates are data collected from the compensation study.
At PGN HR, we prepare our recommendations with the following midpoint progression between grades:
It goes without saying that this midpoint progression plan is subject to the approval of the client’s compensation committee and must be aligned with the client’s policy on promotion, and performance based salary increases.
The structural review that we recommend look at salary ranges per grade, and will examine if the structure commensurate with classification levels and pay grades. Best practices dictate that lower grades, should have narrower ranges, and higher grades wider ranges. The range spreads best practices consist of:
- Elena C. Mason, CCP, SPHR, Prudential Global Network