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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, my guess is, it will be unlikely that you will find a lot of experience out there of the sort of system that your CEO desires, and that in itself is probably saying something (as Robey's 'hate it' experience of something like this seems to indicate) - indeed, you could even ask your CEO if they have come across any such system in their own career path ... and if so, were they 'happy' with it !

    The message back to the CEO probably needs to be along the more practical lines of "the job to be done for the business/organisation comes first, the qualifications/experience are then attached to it" - if you try and set up a new salary system on the basis of the latter rather than the former, I think you'll experience problems with 'equal pay for work of equal value', transparency, etc (and your CEO will then have a different 'hate' to deal with if those problems arise) and anyway, there will have to be a 'system' in place one way or another with its own distinct categories, ranges, etc, so you may well end up just replacing one system 'hate' with another over the course of time.

    I agree with Robey's conclusion on this, probably best to probe further with your CEO as to what exactly it is that they 'hate', it could be more to do with 'system/policy constraints' in practice rather than the underlying nature of the system itself.

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  • Hi Danielle, my guess is, it will be unlikely that you will find a lot of experience out there of the sort of system that your CEO desires, and that in itself is probably saying something (as Robey's 'hate it' experience of something like this seems to indicate) - indeed, you could even ask your CEO if they have come across any such system in their own career path ... and if so, were they 'happy' with it !

    The message back to the CEO probably needs to be along the more practical lines of "the job to be done for the business/organisation comes first, the qualifications/experience are then attached to it" - if you try and set up a new salary system on the basis of the latter rather than the former, I think you'll experience problems with 'equal pay for work of equal value', transparency, etc (and your CEO will then have a different 'hate' to deal with if those problems arise) and anyway, there will have to be a 'system' in place one way or another with its own distinct categories, ranges, etc, so you may well end up just replacing one system 'hate' with another over the course of time.

    I agree with Robey's conclusion on this, probably best to probe further with your CEO as to what exactly it is that they 'hate', it could be more to do with 'system/policy constraints' in practice rather than the underlying nature of the system itself.

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