Tag: scale design

BUILDING YOUR SALARY SCALE: ANALYZING BENEFITS

Written by Kai Donesa on . Posted in Resources.

Analyzing your benefits package is a step that can’t be missed. In many labor markets around the world, benefits are an essential part of total compensation. Particularly in developing markets, some benefits are mandatory, others may be cultural, and some given to address certain realities on the ground. Whether you are a local organization or an international one, it is essential to have a policy that aligns with your market’s local conditions.

Additionally, benefits are also an important part of a company’s Employment Value Proposition (EVP). Determining which benefits your company provides, the frequency it is provided, and grade levels eligible to receive them can be used a strategy to attract and retain talent, showcase company culture, and be seen as an employer of choice.

Once you have aligned your total compensation against the market, designing your benefits package will begin by ‘backing out’ your benefits to arrive at just base salary. From there, you can assess which benefits to keep and maintain, and which ones to change.

When examining your benefits package, here are three things we suggest you keep in mind:

  • What benefits are considered mandatory in your market? – different countries have different mandatory benefits. Some countries have mandatory bonuses on top of base salary, others may have mandatory housing or transportation allowances, while others have government-mandated health and pension contributions. As an employer, you will need to follow what is prescribed by law, especially if you are an international organization.
  • What benefits are common practice in your market? – knowing which benefits are commonly provided by most employers in your market can also help when designing your benefits package. Of course, it is not necessary to follow every single benefit provided. But those that are given by majority of the companies could be considered and examined further against your budget and policy.
  • What benefits are considered tax-advantageous to your staff? – depending on your market, some benefits can be considered taxable and others non-taxable. When thinking about benefits, employers can provide contributions or cash benefits that do not trigger a tax deduction from staff or maximize its non-taxable portion as much as possible.

Further, when designing your benefits package, employers also need to think about the grade levels that each benefit will apply to. Unless it is mandatory, not all benefits need to be provided to all grade levels and in the same manner. There are some benefits that are given to certain grade levels due to the nature of their jobs. Incentive-based benefits and representational benefits are more common for roles in managerial levels, while cash allowances and transportation benefits are more commonly provided to general and process-based grade levels.

Benefits can also be used by employers to encourage desirable behaviors from their staff. A classic example is using performance bonuses to reward achievement and a job well done at the end of the performance year. Another is the use of loans, seniority allowances, or even company-sponsored savings plans to promote staff retention. Sometimes, companies also hold activities that foster workplace culture among their employees, from team lunches, happy hour, to corporate social responsibility events. In our many years of conducting salary surveys and collecting data from employers in over 150 countries, we have certainly seen a lot of creativity from employers when using benefits that highlight their unique company culture.

When analyzing your benefits, we must remember that, in the end, benefits are cheaper than salaries. Base salary, bonuses, and allowances all come from the same internal budget, so every dollar that goes into providing more benefits will take away from the budget for other components of your staff’s employment package, such as pension and salary increases.

Birches Group can help your organization design a benefits package that aligns with your policy while meeting local conditions. 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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BUILDING YOUR SALARY SCALE: MEASURING YOUR MARKET POSITION

Written by Kai Donesa on . Posted in Resources.

Measuring your market position is a critical step in building your salary scale. Once your target comparators have been narrowed down and the target percentile has been identified, analyzing your salaries against your chosen external market to arrive at recommendations that will frame your overall pay structure is when strategies around recruitment and retention begin.

There are several ways to go about measuring market position. Here are some steps that you can consider:

  • Focus on Salary Ranges – salary ranges provide a more stable and realistic view of the labor market, rather than using incumbent salaries as a reference. We know that incumbent salaries are person-based, and rates can vary significantly depending on who is sitting in those roles. When building a salary scale, salaries need to be based on the nature of the job and the value the organization is willing to pay for it with reference to similar job levels in the external market. Further, incumbent salaries are extremely volatile especially in developing markets. Using salary ranges provides context and is based on actual market movement, as well as serving as ‘bookends’ that can take away outliers in your analysis.
  • Assessing Your Market Position – when measuring market position, a common approach is to average all benchmark jobs in the same grade level in your organization, while also considering the number of incumbents associated with each data point as the weighted average. Using the recommended salary survey in your compensation policy, you can then begin to measure your market position for each grade level using your findings and assess them against the external market.
  • Less Emphasis on Occupational Variance – over the years, too much importance in terms of pay has been placed on certain occupations simply because they are considered ‘hot jobs.’ But the truth is, occupational variance, when measuring market position, is not as meaningful as you think. When assessing pay, adjustments are applied to the salary scale, which is generic, and not to specific occupations. Moreover, market data results would sometimes report higher pay for certain industries giving an illusion that those functions are paid higher than other jobs of similar levels in the market. But what that higher number simply means is that there are more data points reported for those specific roles, therefore pulling the overall average compared to other jobs with less data points reported.
  • Do Not Forget the Four Job Clusters – in our previous article, It Starts with Jobs, we discussed that the labor market does not move at the same pace for all grade levels. This is especially true in developing markets. In our Community approach, we believe that the labor market has four job clusters – General, Process, Design, and Leadership – each one moving at different paces depending on the availability of talent in each unique market. In highly dynamic markets, it is common for grade levels found under the Leadership cluster to move much quicker than grade levels under the General, Process, and Design clusters. Due to the specific skills required and level of contribution expected from the Leadership cluster, jobs at these grade levels are usually harder to recruit therefore resulting to significantly higher differences in pay. On the other hand, jobs under the General, Process, and Design clusters are more widely available which explains the more gradual pay movement. Since this is the reality in most labor markets, it follows that setting pay should not just be one number but instead, requires a more tailored approach depending on the organization’s needs and objectives.

With the steps that we have recommended when measuring your position against the market, we must not forget that internal cohesion between grade levels is just as important when building your salary scale. Being able to balance external competitiveness while maintaining fair pay relativities internally is what organizations need for an effective and well-designed pay structure. Birches Group is ready to help your organization design a salary scale that meets your needs. Contact us to learn more.

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.

Follow us on our LinkedIn for more content on pay management and HR solutions.

SALARY SCALE DESIGN eBOOK: STRATEGY, STRUCTURE, AND SYNTHESIS

Written by Bianca Valencia on . Posted in Resources.

The salary scale is the single most important document in human resources. 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
• 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.


Designing a salary scale requires skill and expertise, balancing the internal considerations and team dynamics with the external market. It’s an art form, not just math.

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SALARY SCALES: DEFINING YOUR ORGANIZATION’S REACH

Written by Bianca Valencia on . Posted in Resources.

A company’s salary scale is a reflection of its pay philosophy. A salary scale illustrates an organization’s values in terms of how it positions itself in the market and a demonstration of its internal pay policies – whether career-based or project-based. But more importantly, salary scales can tell us everything we need to know about an organization – from its internal cohesion explicitly differentiating the value they are willing to pay at each job level, to how they approach the symmetry between experience and responsibility.

In addition, organizations use salary scales as a tool to manage staff. Its structure shows the relationships of work from one grade level to the next, variable, or predictable movement within the organization, and expectations around career can be identified.

Types of Salary Structures

The three most common salary structures applied by most organizations is the traditional, broadband, and step pay structure.

  • Traditional Structure – typically has multiple grades, each with established salary ranges providing for a well-defined progression path from one job level to the next. Because of its straightforward design, career progression is clearer and easier to communicate because differences between job levels are very distinct and pay and career movement can be done in a controlled manner.
  • Broadband Structure – has fewer bands with multiple job levels grouped into each band. Many organizations find this structure to be more flexible where career progression can be done through lateral movement within each band and salary increases can be provided without necessarily warranting a promotion. However, differences between job levels is not as distinct in the broadband design which could be a cause confusion among staff.
  • Step Pay Structure – is made up of multiple grades, and each grade has several steps representing scheduled pay increments every year. The step pay structure’s rigid design allows for clear and predictable pay movement within each grade, but is linked to staff tenure/time rather than skills growth.

Tailoring Your Salary Structure to Support Multiple Employment Scenarios

Once an organization has decided on their salary structure type, each grade should now be tailored to illustrate different employment scenarios that can be expected in that organization.

What many do not realize is that there is more to building a salary scale than just simply setting minimum and maximum salaries at each level. There are two other things to keep in mind when designing your salary scale, and that is your Span and your Inter-Grade Differential. To put it simply, the span of your salary scale is the difference between the minimum and the maximum salary of each grade level. This ultimately defines the range of pay for work at any position. Your inter-grade differential, on the other hand, refers to the overlap between one grade level to the next. This allows you to differentiate the level of responsibility between grades. Organizations need to keep in mind that the spans of certain grade levels would depend on the nature of the jobs in that grade. For some jobs, their nature is to progress deeper into their grade resulting to more complex and highly-skilled work, some are expected to advance to the next higher grade, while for others, the nature of their role does not change.

In the case of project-based jobs, it would be logical to apply narrow spans for their grade levels because their roles are not designed to be short-term depending on the project. Career-based jobs, on the other hand, would have wider salary ranges to support growth in skills, moving them deeper into the grade or advancement to the next higher grade over time. Lastly, there is also time-based jobs where their nature does not change justifying a wide salary range but does not allow for much discretion for pay increments or career advancement.

Below are three examples of salary scales showing different employment scenarios, number of grade levels and overlaps between salary ranges:

The salary scale above is an example of a traditional structure with multiple grade levels with each grade mapped to one job level. Salary ranges for each grade is defined showing the value the employer has established for each level of work, and movement from one grade level to the next is clear.

The salary scale above is an example of a broadband structure that has fewer grade levels/bands, but with multiple job levels present in each grade. As staff accumulate more skills and experience, pay increases and progression can be provided through lateral movement within each band without necessitating a promotion.

The salary scale above is an example of a project-based employment scenario which also has grades or bands like the first two structure types above.  What makes this structure different is that each grade/band is designed for roles that have short lifespans to reflect the project timing, without the possibility of promotion. A structure like this is only appropriate for project-based organizations with definite term contracts. Project-based structures often have higher minimums reflecting the need for employers to reach experienced talent that can “hit the ground running.”  Employers utilizing such a structure should also consider project completion bonuses to improve retention.

A salary scale is essential for any organization. It affects all other areas of HR – from recruitment, to pay management, career development, and promotion. But we recognize that not all organizations have the capacity to design a salary scale. Birches Group has extensive experience in designing salary scales to fit the needs of organizations from different sectors and markets. Contact us to learn more.

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.

SALARY SCALE CASE STUDY: INTERNATIONAL POTATO CENTER (CIP)

Written by Bianca Valencia on . Posted in Resources.

The International Potato Center (commonly known as CIP) is part of the CGIAR consortium of research centers dedicated to agricultural research and food security.  With headquarters in Lima, Peru, and country offices in 20 developing countries, CIP was facing stiff competition for talent and other issues with their pay structure.  CIP engaged Birches Group to help revamp their compensation strategy and local pay structures, while still maintaining a linkage to the other CGIAR centers, all of which participate in Birches Group surveys.

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SALARY SCALE CASE STUDY: RIGHT TO PLAY

Written by Bianca Valencia on . Posted in Resources.

Right To Play, headquartered in Toronto, Canada, was experiencing challenges in attracting and retaining talent for their programs in more than 20 developing countries around the world. Their compensation system was still based on a cost of living approach, rather than cost of labor. Internal job grading had been developed, and the focus shifted to salary structures. Right To Play was a long-time participant in the NGO Local Pay surveys and agreed to partner with Birches Group to implement the “Pay Right Project.”

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SALARY SCALE CASE STUDY: INSTITUTE OF INTERNATIONAL EDUCATION (IIE)

Written by Bianca Valencia on . Posted in Resources.

The Institute of International Education developed a strong, market-driven approach to compensation for their field offices, including salary structures and a consistent grading system.  But they lacked the internal resources to maintain the structures across a very diverse group of countries.  They faced additional challenges in selected markets due to economic volatility, and the response time from headquarters HR was slow.  IIE engaged Birches Group to assist in maintaining the salary structures and to guide the organization towards a policy-driven approach for special measures.

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SALARY SCALE CASE STUDY: ELIZABETH GLASER PEDIATRIC AIDS FOUNDATION (EGPAF)

Written by Bianca Valencia on . Posted in Resources.

The Elizabeth Glaser Pediatric AIDS Foundation was seeking assistance with the management of their compensation program.  Prior to engaging Birches Group, they centralized the responsibilities for pay management at headquarters and created salary structures.  But the team recognized the need for professional guidance and expertise, choosing a co-sourcing arrangement with Birches Group.

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