A salary structure is essential in every organization. It is the single most important document in human resources. Build a salary scale and have a salary scale, why bother? It tells you everything you need to know about an organization:
- How the organization positions itself in the market
- The value the organization places on its jobs
- How relationships across jobs are managed
- Possible career progressions
- And where the organization stands on equity and transparency
For an organization to work efficiently and achieve team cohesion, a well-balanced salary scale is crucial as it drives all other critical HR programs — everything from recruitment, staff retention, promotion, and ultimately career development.
Many organizations fail to realize the value of a salary scale. More than just pay ranges, a salary scale, when used correctly, can guide an organization to efficiently execute all its different HR functions and strategies, from managing compensation to managing its people.
Beginning with compensation, though, the fundamental purpose of a salary scale is to provide a framework for managing salaries. Setting competitive hiring rates that facilitate recruitment, establishing pay ranges that show value for experience, and defining the differences in pay from one job level to the next — all these need to be managed carefully to ensure that organizations are attracting and retaining the talent they need while maintaining team cohesion.
Of course, salary scales’ use extends beyond compensation. Learning and development milestones can be defined by the underlying job structure used to build the salary scale, which enables effective career pathing. Salary scales can also facilitate the mechanisms to reward employee development through recognition of skills growth. Finally, a well-designed salary scale demonstrates and promotes fairness and equity within the organization.
To develop salary scales to meet the unique requirements of your organization, you need to start by establishing your job structure, defining your compensation philosophy, and developing your scale design methodology.
This is the first of our blog series on “Building Your Salary Scale.” In our next post, we will be discussing how you can begin to develop your organization’s compensation philosophy and the different elements that need to be considered. Birches Group can help design a salary structure that meets your organization’s needs. Contact us to get started.
Want to know if your existing compensation practices have the elements of a good compensation program or if there are areas that could use some improvement? Take our quick Compensation Program Assessment Quiz to know your score!
Bianca manages our Marketing Team in Manila. She crafts messaging around Community™ concepts and develops promotional campaigns answering why Community™ should be each organization’s preferred solution, focusing on its simplicity and integrated approach. She has held various roles within Birches Group since 2009, starting as a Compensation Analyst and worked her way to Compensation Team Lead, and Training Program Services Manager. In addition to her current role in marketing and communications, she represents Birches Group in international HR conferences with private sector audiences.
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