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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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  • We are just about to embark on job evaluation, banding and pay grading!!

    We currently have a system where people have been paid what managers have thought they should be paid, with a lot of discontent in the business over 'my job is more important than theirs', 'I have more skills than them', etc, and I think a clear structure will allow us to remove that.

    It will provide transparency and justification for the salaries we pay.

    We are going to try to minimise the number of bands, as I agree, 10 is a lot. Perhaps a more simplified structure with room within the grades to allow some options of salary based on the experience and qualifications (if these are required for the role).

    By removing a grading system, Robey rightly points out you are at risk of equal pay issues.
  • in reply to Ashleigh
    Ashleigh, I'm going to be tackling such a project this year, would you mind sharing how you are going about it? It would be great to have another to bounce ideas with. Claire
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  • in reply to Claire
    Hi Claire,

    We are not a very large organisation (175 headcount), therefore it may not be as detailed as larger organisations. I don't want to create a monster of a project and ultimately want the end result to be simple and straightforward as well. It's also my first time carrying this out!
    I need to start with the basics so initially I am working with the management team and staff to have clear job descriptions as a starting point. Part of this is that we now have values within the organisation that are used as part of a competency framework depending on the role and these are being used in the evaluation and part of our appraisal process (also very new to the company).
    Once I have those completed, I plan to use a very simple point factor rating, including the value level of the role, their level of supervision of other staff and their responsibility in the role (defined to allow for those stand alone specialist roles). These will then provide scores for each role.
    Once I have this information (and will work with a small team of staff and managers to score this), I can then look at how this fits into bands across the business and how many we need. Following this, we can look at the pay grading options within the bands so that people can see progression opportunities linked to their role. This will involve looking at current salaries, benchmarking and affordability for us as a business. As we have very specific areas of the business (sales, warehouse, office), we will have to consider how this will impact when we apply salary to these bands and may need separate ones for each area.
    Let me know if you want to have a chat about this further.