HR Assignment management help on: Pay structures

Question : Discuss two approaches to developing an effective pay structure??

Solution

Introduction

Pay structure is the relative pay of different jobs that come under the job structure and how much they are paid which is decided under the pay level (Shields 2007). The two approaches for developing the pay structure are broad banding and job family modeling.

Two approaches for developing pay structures

Broad banding: This approach is based on compressing the hierarchy of pay grades into smaller number of wide bands. Each of the bands in the pay grades hierarchy spans the pay opportunities which have been previously covered by several separate ranges of pay. The approach is increasingly getting attention in front of compensation specialists for its ease and flexibility in formulation and implementation of pay structures. The broad banding approach varies under different strategies in HR and rewards, influencing the design of the pay structure (Deb 2009).

Job family modeling: Job family is regarded as the group of jobs. The approach of job family modeling is used for development and defining of the pay structures which involve the following steps:

• Identification of the groups in which the kind of work carried out is similar but all of them are performed at different levels.
• Analysis of the essential nature of each of the identified groups or the families of the job.
• Establishment of the levels of work which are carried out within each of the job family.
• Defining of the differentiating factors between each level of the groups in the family in context of the role size.
• Production of the role specifications that is functional or generic in nature.

The most important and considerable advantage of this approach for development of the pay structure is that it is a very systematic manner of performing the function of defining the role of the job as well as managing the growth of the career of employees in the organization, providing of reward and compensations that are flexible in nature, and promotion of attaining higher performance in the organization through increasing the ownership of the employees (Deb 2009).

Conclusion

            The pay structure has to be developed properly so that both the employees and the organization could strive for productivity and better performance of the business operations. The two approaches discussed for developing pay structures are broad banding and job family modeling. The former is effective in meeting the needs of flexible organizations, and the latter is effective in development of systematic pay structures.

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