Frank Hobson Consulting
practical human resources support
Pay structures
Best Practice? What Best Practice?
Surveys regularly show that there is no such thing as best practice when it comes
to reward structures. This time it is an e-
The survey asked respondents to say which of eight categories of pay and grade system they used (there are at least eight). The most common was in place in only 30% of organisations and the other seven used by between 15% and 25% of those surveyed. And yes, that will add up to more than 100% because only around half the respondents used just one approach for all staff. My guess is that those with only one structure are likely to be smaller organisations or in the public sector where internal comparisons tend to have greater importance. Even within any particular type of grade structure there are considerable variations in practice. This is not surprising as every organisation has a unique combination of circumstances, skill sets, reward history and, above all, ability to accept new approaches.
Trend to fewer grades
There are some trends that do show up in the survey. Of those that are planning to
make changes most hope to reduce the number of grades. This is always a good idea.
The fewer grades the more likely that individuals will see the logic of their own
grading. After all, it is hard to complain if an upgrade would put you into the same
grade as your boss. I often approach the issue of how many levels by asking what
is the fewest number of grades we can get away with. Start with a small number of,
say three or four and think through all the difficulties that might follow. Then,
if really necessary, add a grade and see how many problems disappear. Eventually
you get to the situation where the problems are few, and localised. Then look at
ways of resolving them without adding back a grade. Far too many structures in the
past had an extra grade level just so that the Chief Executive's secretary could
be a grade higher then the directors' secretaries. I have written before on how a
'felt-
Clearly you need the ability to reflect significant growth within jobs and allow
for genuine progression. Job family and career family approaches are gaining in popularity
as a way of meeting specific pay market pressures without over-
Dos and Dont's
Respondents were asked to pass on any advice (dos and don'ts) for developing new
structures and for managing existing ones. Many of the tips on developing new structures
emphasised the importance of thorough preparation, management and staff involvement
and detailed implementation. (I particularly liked the ones that stressed the need
to buy in expert help). Lots emphasised the importance of management buy-
- get everyone to agree why you need to change and that change is necessary.
- then draw up an outline pen-
portrait of the intended result and get whole- hearted commitment to that; - develop and test the proposed system in all its detail and rules;
- draw up and implement a comprehensive communications and roll-
out plan.
The tips, in the survey, put forward for managing an existing structure emphasised
the need to keep it simple, maintain flexibility and make sure that managers and
others remain fully involved -
Plus ca change
One finding that has stayed very consistent over this and previous surveys is that
around one-
Frank Hobson
