Given the low to non-existent salary increases and tremendous job losses that have characterized the recession, most employers have felt little need to focus on their salary structures. Many have even forgone the 2-3 percent annual structure increases that were typical before the economy collapsed.
But there is more to maintaining effectively salary structures than simply tweaking the ranges by a couple of percent. Like a lot of projects that have a big ramp-up, salary structures tend to be put aside after they are created and implemented. However, if structures are to remain an effective means for distributing salary dollars, they need to be audited and realigned periodically.
Here are some questions you may want to ask:
Does the compensation structure still mirror the organization structure? This question will be particularly relevant if you have added levels to job families or if your organization has merged with another. You want to ensure, for example, that the distance between grades of supervisor and subordinate remains appropriately spaced.
Has the supply or demand for employees in certain fields shifted since the structure was designed? If so, jobs in relevant families should be re-priced and re-graded.
Are the market reference points for benchmark jobs still relatively close to their respective range midpoints? If not, the jobs in question may need to be re-graded, or the structure may need to be adjusted.
Do employees mass disproportionately into a few grades? Conversely, are there several grades that go virtually unused? It is generally expected the number of employees in each grade will decrease as the organization structure is ascended. However, an extremely uneven distribution of employees by grade probably means that the structure needs to be realigned.
If your salary structure becomes obsolete, eventually it will be nothing more than an obstacle to navigate around in the eyes of hiring managers. Taking the time to give your salary structure a check-up will ensure that it continues to be perceived as a useful and relevant management tool.
Does the compensation structure still mirror the organization structure? This question will be particularly relevant if you have added levels to job families or if your organization has merged with another. You want to ensure, for example, that the distance between grades of supervisor and subordinate remains appropriately spaced.
Has the supply or demand for employees in certain fields shifted since the structure was designed? If so, jobs in relevant families should be re-priced and re-graded.
Are the market reference points for benchmark jobs still relatively close to their respective range midpoints? If not, the jobs in question may need to be re-graded, or the structure may need to be adjusted.
Do employees mass disproportionately into a few grades? Conversely, are there several grades that go virtually unused? It is generally expected the number of employees in each grade will decrease as the organization structure is ascended. However, an extremely uneven distribution of employees by grade probably means that the structure needs to be realigned.
If your salary structure becomes obsolete, eventually it will be nothing more than an obstacle to navigate around in the eyes of hiring managers. Taking the time to give your salary structure a check-up will ensure that it continues to be perceived as a useful and relevant management tool.
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