NRC: Job grades, job evaluation, and Jobscore.
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Page 14

1.3.2 Aligning Grades to Market Salaries.

A further factor to consider is how salary levels for grades should be aligned to market rates. The most appropriate reference point to align with the market is the midpoint of the grade salary range. The midpoint salary of a grade is the salary that represents the value to the organisation of any job in the grade where the performance of the jobholder is assessed as fully competent. The midpoint salary should not normally be below the median of the aggregated market rates for the jobs in the grade.

The organisation's salary policy will however determine the relationship between market rates and the midpoint of the grade salary ranges. For example, the organisation may adopt a high paying policy relative to the market, such as setting the grade midpoints at the third quartile or even the ninetieth percentile of the market. Such stance may however prove expensive and inherently inflationary. Many organisations aim for a median market position. (Refer further to Section 4.0 Using Surveys to set Salary Levels.)

General increases in salary levels following negotiations, cost of living increases, or market movements are dealt with by applying the increase to the grade midpoint, maximum and minimum salaries. For example, applying a 3% across-the-board cost of living increase to the structure shown in Figure 4 above gives:

Figure 4a. (Figure 4 after a 3% across-the-board increase.)

NRC salary surveys provide the relationship between Jobscore job points and salaries in various markets.
Historical and forecast salary movements in those markets are also given.

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Copyright 2004 National Remuneration Centre, Melbourne.