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Can you work out salaries without a grading structure?

Danielle

Hi All

We are looking at reviewing how we work out salaries. At the moment we have a graded structure from 1 to 10 (mostly up to 7 though as from then it's Director levels) and we work out what grade we want a position to be and pay accordingly within a range.

However our new CEO HATES this method and wants to remove "grades" from roles so that we pay purely by how experienced/ qualified each individual is.

Does anyone have any experience on systems that don't use grading when creating pay levels?

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  • Hi Danielle

    A 10 "Grade" structure with 3 "grades" for the directors seems like an awful lot unless you are a massive organisation. It may well e that your new CEO is pushing back against the scheme bureaucracy of the structure and the inflexible attitudes that grading structures can give rise to.

    I think that spot salaries can and do work and can make the organisation far more focused on what an individual delivers and what value they bring. Inherent in them are equal pay challenges so you need an excellent system behind it to support the salaries you are placing people onto. It becomes much harder to defend - but the risk "may" be worth it for the flexibility and energy it gives.

    But I personally wouldn't build a structure just around experience / qualifications but around what they are doing for you.
  • in reply to Keith
    I’d agree totally with Keith that so very many salary grades and bands is unnecessary - almost imho to the point of insanity.

    My own past experience is that almost any range of employees’ jobs fall into just a few broad levels of complexity / scarcity / responsibility etc - for example: junior admin; senior admin / supervisory; junior and middle managerial / functional specialist; senior managerial / directors.

    That’s just four bands from top to bottom. If you stack them from bottom to top in appropriately-broad bands, you should be able easily to accommodate everyone, both almost by common sense into the appropriate band and then you have a lot of leeway because it’s broad in range as to both where to place them therein and future headroom.
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  • in reply to Keith
    I’d agree totally with Keith that so very many salary grades and bands is unnecessary - almost imho to the point of insanity.

    My own past experience is that almost any range of employees’ jobs fall into just a few broad levels of complexity / scarcity / responsibility etc - for example: junior admin; senior admin / supervisory; junior and middle managerial / functional specialist; senior managerial / directors.

    That’s just four bands from top to bottom. If you stack them from bottom to top in appropriately-broad bands, you should be able easily to accommodate everyone, both almost by common sense into the appropriate band and then you have a lot of leeway because it’s broad in range as to both where to place them therein and future headroom.
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