A faulty pay framework can have a huge knock-on effect to the rest of the business; impacting retention, employee engagement, organisational design and more. When it comes to addressing wide-ranging business challenges, Reward should be firmly on the agenda, and one solution is creating a modern, future focussed pay structure or framework. 

A pay structure supports delivery on …

1. Fairness

Creating a pay structure ensures that you are treating all employees fairly. They understand where their role fits into the organisation and that a fair process exists to determine both job level/grade and pay.

2. Transparency

Sharing your pay structure, and the process of developing it, with employees and potential employees inspires confidence. It creates an open and trusted conversation about pay.

3. Motivation

Understanding the avenues open to progress career and pay is hugely motivating for employees. It allows for an adult to adult conversation about what is required to progress pay or grade within the business and prevents less productive discussions between employees and line managers with no real focus.

4. Engagement

Some of the key components to creating employee engagement are: feeling fairly treated, understanding how to progress your career, knowing where you sit in the organisation and how your contribution adds to the overall effort. A clearly communicated pay structure supports all those things.

5. Supporting Management

Pay discussions with their team or potential new hires are probably some of the most challenging conversations managers have. A robust pay framework, that has market value and internal equity built in, instils confidence and supports better decision making around pay.

6. Pay Budgets

A pay structure creates a basis for pay decisions and allocation. Understanding where your employees fit against the pay structure – within, above or below the band – informs your pay decisions and allows for effective allocation of pay budgets. If not always saving you money, it ensures you get the most value from it.

But wait…! How do I go about creating a pay structure?

Creating your pay structure takes three ingredients. First, external pay benchmarking insight that allows you to build a pay structure that is competitive against the market. Second, internal job evaluation that allows a fair and unbiased approach to levelling different jobs, in different functions with different skills and responsibilities. And finally, your current pay data, to ensure what you design is costed and ultimately affordable. You may already have all or some of these ingredients in place – it will take all three to ensure your pay structure is robust, competitive and fair.

Please get in touch if you’d like more information or a chat about updating your current pay structure or developing a new one. You can email james.bigus@innecto.com or call 020 3457 0894.

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