NRC: Job grades, job evaluation, and Jobscore.
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Introduction to Salary Structures.

An organisation's salary structure consists of salary levels for either individual jobs or groups of jobs. Each level in the structure is referred to as a grade, similar to a rung on a ladder. To cover different classes job, for example different levels in the organisation or different job functions, more than one structure may be used. These structures are made up of one or more sets of job grades and each grade has either a single salary or a salary range associated with it. To administer salaries in a structured manner requires a logical method for establishing the structure, assigning jobs to levels in the structure, and setting salary levels for the structure. This paper describes such methods.

There are four main types of salary structure:

  • Graded
    A graded structure is a sequence of job levels. These levels are referred to as grades. All jobs in a particular level or grade are broadly of equal value to the organisation. Each grade may have a single salary or a range of salaries associated with it. Where there is only a single salary associated with a grade, all employees whose job falls in the same grade are paid at the same rate. Where each grade has a range of salaries the level of pay, within the grade range, for individual employees in the grade could depend on their performance or their length of service. It is an import to ensure that jobs of close to equal value to the organisation are in the same grade.
  • Individual job ranges
    An individual job range structure places each separate job in its own grade, with its own salary range. In other words, there is only one job to a grade. Such a structure is useful where the job content for individual positions varies widely, or where flexibility in response to rapid organisation change or market-rate pressure is vital. Here distinct differences between jobs are not blurred by grouping them in a rigid grade structure.
  • Maturity curves
    Maturity curves, salary progression curves, or career curves, link increases in salary over a long period to increases in maturity or experience of the employee. They are best used for professional, scientific or other highly qualified staff who are carrying out work in which their contribution is almost entirely related to their professional capacity, rather than to a fixed set of duties which allows them to be firmly placed in some hierarchy of jobs. This system assumes that incumbents will develop within their discipline at some standard rate related to their experience. A range of salaries at each step on the scale allows for additional merit pay.
  • Rate for age
    A rate for age system is an incremental scale where for certain jobs a specific rate of pay, or a defined pay bracket, is linked to the employee's age. Rate for age scales are usual for young employees under training or for junior clerical, service or technical staff carrying out routine work. The assumption is that they are on a learning curve and that their value to the organisation is directly linked to experience and maturity. A range of salaries at each step on the scale allows for additional merit pay.

Desirable features of a salary structure:

  • Appropriate to the organisation in terms of the size of the organisation, the degree to which the organisation is changing, the need for employee mobility, and the type and level of employee to be covered.
  • Enables labour market wage pressures to be met and the need to give individual employees special (performance related) rewards without undue cost or distortion of the overall salary structure.
  • Treats varying levels of role responsibility and incumbent performance consistently.

A further consideration is whether an organisation should have more than one grade structure in place. The advantage of having just one structure to cover all staff is that a consistent approach to grading and salary control can be adopted across all levels in the organisation. A single structure is easier to explain and understand, and borderline cases that may otherwise fall between separate structures are avoided. However there are arguments for and against this.

Jobscore concerns itself with the establishment and management of graded and individual job range structures, and their corresponding salary levels.

Jobscore, and this paper, concentrate on graded structures. An individual job range structure can be considered a special case of a graded structure where each individual job is in its own grade. Jobscore measures job content and is therefore inappropriate for maturity curve and rate for age structures because those structures are independent of job content, concentrating rather on the single dimension years of experience.

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Copyright 2004 National Remuneration Centre, Melbourne.