Pay structure is the thoughtful arrangement of pay levels within a hierarchy. These levels of responsibility, or grades, can be linked to the value of the position within the organization or through market pricing.
Why is a pay structure so important? An organization’s pay structure is the embodiment of its pay philosophy. And that impacts an organizations ability to attract and retain the best talent.
Being aware of prevailing wage rates in the external marketplace is critical to an organization’s success. Establishing a pay structure combined with market pricing offers organizations an efficient, consistent process to continually monitor external pay rates and readily adjust internal rates to maintain competitiveness.
Market pricing is a process that gathers and interprets external salary data to establish the worth of jobs, as represented by both the data and the scope of the job in a comparable company size, location, and industry.
Employees now have greater access to pay rates found online. However, this data might not be scientifically collected or representative of a company size, location, or industry. So it’s imperative that an organization responds with a well defined pay strategy and structure to both communicate and respond to employee inquiries and a dynamic marketplace.
Established pay structures are easy for employees to understand and once set-up can be readily realigned with the market every year. Additionally, pay structures aid organizations in keeping internal pay equity.
MRA’s Compensation professionals have extensive experience creating competitive, fair and defensible wage plans that attract and retain the right talent.