Evaluating pay structure of an organization and comparing it with that of other competing organizations is important to make sense of the best pay structures.
Basis for determining comparison of organizations
One of the basis to determine the organizations to compare is through the use of a market survey, product niche, and company success. A market pay survey is an administrative tool that can be used to choose pay levels. Results and benchmarking from the combination of surveys can be used to show how different organizations pay. The survey data can then be used as a basis for comparing organizations (“Critical Evaluation”, 2016). Organizations that manufacture similar products or offer similar services should be compared based on their pay structures. The level of company success should also be used to compare organizations. Startup companies would have a different pay structure compared to highly successful companies that have been operating for several years.
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Consequences of a pay structure that is out of line
Having a pay structure that is out of line to that of competitors can affect the attitudes, willingness to commit, and cooperation of employees. Paying employees less than other employees would lead to diminished self-worth and employee dedication would suffer. These employees may not work hard or contribute significantly to the organization. Some employees may choose to leave the organization for other companies that offer better pay, this would negatively impact employee retention.
Recommendations to ensure improve motivation
One recommendation to improve motivation is to ensure equality of pay. The equity theory and incentive pay options notes that employees are usually more concerned about the inequity of pay rather than the pay (Oxley and Pandher, 2016). Offering incentives would assist employees feel that the sense of inequity is lowered. Employees should also be made to feel that they have that they participate in the decision making process of the pay structure.
Comparison of pay structures
Different organizations use different pay structures. The organization studied makes use of pay grades where employees are put into groups of Grade 1, Grade 2, and Grade 3. Customer support specialists and customer technicians could be put in the same grade if the nature of work demands similar education and skills. Other companies make use of other pay structures that include broadband and job family structures. Broadband is similar to the pay grade but makes use of few and wider bands with a maximum band of 100%. Job family structures makes use of a job family based on the skills and competencies ("Pay & Salary Structures - Ashworth Black", 2018). For instance, Information Technology would be put in a job family while customer care would be put in a different job family.
References
Oxley, J., & Pandher, G. (2016). Equity ‐ based incentives and collaboration in the modern multi-business firm. Strategic Management Journal , 37 (7), 1379-1394.
Critical Evaluation- SHRM. (2016). The Society of Human Resource Management (SHRM), 41-45.
Pay & Salary Structures - Ashworth Black. (2018). Retrieved from http://www.ashworthblack.co.uk/pay-salary-structures/
