Skip to main content

Compensation Management| How to design salary band structure


Compensation Management| How to design salary band structure

Jobs salary grade scale or simply salary band structure acts as a guide for the HR department in the event of making offers for new hires for a role in the organization.

Based on this information, the hiring manager and the HR can make an informed decision on what to offer for the selected candidates. Alternatively, for the purpose of considering a fair & equitable pay grade scale, the new entrants are benchmarked against the similar employees (i.e., existing employee) for the position he/she is being hired for.

To limit the salary-related discrepancies and further to ensure internal compensation uniformity in the organization, salary band /grids are utmost importance criteria for every professional organization out there.

In general practice, the salary grid is prepared & maintained by the HR team with the highest confidence. Besides, this information is being made available for a few senior management team members only just for their respective teams. As a norm, organizations consider pay information highly confidential subject.

Despite being strictly confidential matter, the fact is compensation has always been a crispy hot topic of discussion at the coffee-table among close associates at the workplace. As a result, it is the accountability of the HR team to structure fair & equitable pay grades inline with individual roles & responsibilities.

Following example will help everyone understand the way and means to prepare pay grade scale/ salary bands which are again unique to each organization. Note: Figures are in Rupees, Salaries are yearly not monthly for each position, imaginary salary figures shown for software engineers.

Compensation Management| How to design salary band structure
Salary Band (Figs. In INR yearly salary count)
While designing compensation bands, for ensuring external parity - benchmarking compensation with Industry plays a critical role. How an Organization positions itself in relation to the industry competitors can strongly influence its ability to hire and retain the desired talents. Tools like compensation surveys act as a source of information to obtain comprehensive data on base salaries, allowance categories, incentives plans and the benefits program in practice amongst peer group companies. Generally, organizations can either take the help of third-party resources or alternatively can buy ready-made compensation survey reports from consulting organizations such as Hewitt, Watson& Wyatt and mercer.

A company starting up, a new HR department or a unit in a new city or country can acquire prevailing compensation data with the help of such survey reports. Instead, any organization can enrol them to participate in such annual surveys conducted by these consulting organizations too.  

Following standard steps can be imitated by any such organizations who all are intending to do so.

1.    Recognize the scope of the survey
2.    Spot the correct industry competitors for benchmarking
3. Arranging the right internal compensation data for the survey
4. Comparing & Mapping correctly the industry data with internal data. Specifically in relation to positions, job descriptions and salary bands.
5.   Recognize the position of the company as compared to the market and benchmarking where it wants to be as compared to the market & why so?

Hope above mentioned short guidance with regards to the salary band structure will be of help.


Labels:

Comments

Post a Comment

Please do not add any spam link in the comment box

Popular posts from this blog

Employees Provident Fund Organization (EPFO) for International Workers

Employees Provident Fund Organization (EPFO) for I NTERNATIONAL  W ORKERS A long-pending initiative of The Government of India was for International workers or the employees posted overseas or in other countries.  Consequently, for the benefit of both for the employers and employees government of India has entered into an agreement with several countries to ensure – 1.   that the employees of the home country do not remit contribution in that country 2.     that employee gets the benefit of the totalization period for deciding the eligibility for pension , 3.     that they may get the pension in the country where they choose to live 4.   that employers are saved from making double social security contributions for the same set of employees For that reason, the EPFO has been authorized to issue the Certificate of Coverage (COC) to the employees posted to the countries having signed Agreement with the Govern...
Post a Comment
Read more

Human Resource Management certification (HRM Certification) from premium institutes for working professionals and freshers

Human Resource Management Certification (HRM Certification) from Premium Institutes for Working Professionals and Freshers I have been addressed on numerous occasions during most recent a while crosswise over numerous social gatherings by working experts including fresher's about the sensible Human Resource Management certifications. The principal reason for this bit of composing today is to respond to those requests so far as I could gather in an extremely limited ability to focus time. Being a piece of dynamic business condition today, it is basic for each expert to cop up with the consistently changing needs and requirements of the organizations. Moreover, for freshers, it is fundamental to stamp their move cautiously before they enter the vivacious expert world. In spite of the fact that it's anything but difficult to have goals as opposed to making it a reality till the time you don't know enough about your best course of action. Key anxieties of working...
1 comment
Read more

Toxic Workplace Cultures Hurt Workers and Company Profits

TOXIC WORKPLACE CULTURES HURT WORKERS AND  COMPANY PROFITS Toxic workplaces —where employees dread going to work, don't feel they can be honest with their manager, and may witness or experience sexual harassment or age discrimination—are a primary reason workers quit their jobs. They often hold the managers in their workplaces responsible for creating the toxicity.  In July, SHRM commissioned research on toxic workplace cultures and what happens to the employees who work in them. " The High Cost of a Toxic Workplace Culture: How Culture Impacts the Workforce—and the Bottom Line ," released today, found that many workers consider culture and managers to be closely connected.  TOXIC WORKPLACE CULTURES HURT WORKERS AND  COMPANY PROFITS
Post a Comment
Read more