Cost
Structure Setting and Adjustment | Definition | A pay structure is a collection of pay rates or pay ranges.Structure setting and adjustment is the process of developing, adjusting, and maintaining a pay structure. |
Purpose | Pay structures are used to help organizations: * maintain pay levels that are competitive with the external labor market, * maintain internal pay relationships among jobs, * recognize and reward differences in level of responsibility, skill, and performance, and * manage pay expenditures.Structure setting and adjustment provides a systematic way to manage pay structures. |
Elements of a pay structure | A pay structure is defined by several elements, including: * coverage – the occupations, positions, or persons included, * the number of pay ranges or grades, * the differences between pay ranges, and * range width – the difference(s) between the range minimum and maximum. |
Types of pay structure | Common approaches to establishing pay structures include: | | Approach | Common characteristics: | | Traditional (Grades) | * separate structures for each employee type (e.g., nonexempt, salaried nonexempt, exempt, executive), function, or occupation, * many ranges or grades (often 10 or more), * narrow ranges (15% – 50% for professional positions), and * small to moderate differences between grades. | | Broadbanding("Broad grades") | * separate structures by employee type, * relatively few ranges (4 to 6 bands are common), and * wide ranges (50% to 80% for white-collar non-managerial positions).Federal broadbanding: * maintains distinctions between developmental and full performance level positions, * may include technical and administrative support occupations, and * typically has more grades and narrower ranges than "pure" broadbanding. | | Career Banding | * one or few structures, * few ranges (4 or less), and * no or extremely wide ranges (150% or more). | | Market
Purpose | Pay structures are used to help organizations: * maintain pay levels that are competitive with the external labor market, * maintain internal pay relationships among jobs, * recognize and reward differences in level of responsibility, skill, and performance, and * manage pay expenditures.Structure setting and adjustment provides a systematic way to manage pay structures. |
Elements of a pay structure | A pay structure is defined by several elements, including: * coverage – the occupations, positions, or persons included, * the number of pay ranges or grades, * the differences between pay ranges, and * range width – the difference(s) between the range minimum and maximum. |
Types of pay structure | Common approaches to establishing pay structures include: | | Approach | Common characteristics: | | Traditional (Grades) | * separate structures for each employee type (e.g., nonexempt, salaried nonexempt, exempt, executive), function, or occupation, * many ranges or grades (often 10 or more), * narrow ranges (15% – 50% for professional positions), and * small to moderate differences between grades. | | Broadbanding("Broad grades") | * separate structures by employee type, * relatively few ranges (4 to 6 bands are common), and * wide ranges (50% to 80% for white-collar non-managerial positions).Federal broadbanding: * maintains distinctions between developmental and full performance level positions, * may include technical and administrative support occupations, and * typically has more grades and narrower ranges than "pure" broadbanding. | | Career Banding | * one or few structures, * few ranges (4 or less), and * no or extremely wide ranges (150% or more). | | Market