Accelerate May 2015 - Page 68

Reward Paying employees well in relation to the market can seriously influence attraction and retention rates. Step 5: Pay Structure Design This is the final step in developing your effective pay structure. All the previous steps are needed to arrive at this step. If one of the steps has been completed incorrectly, it could lead to a false or skewed pay structure with dire financial, attraction and retention consequences. You use the salary benchmarking data to align your company’s pay structure to that of the market by either increasing or decreasing the current pay. Reducing the pay level is, however, a very serious decision and needs to be weighed carefully. This is just to illustrate the options available. If your existing pay structure is either lagging the market or just not doing what it is supposed to do, then it is time to review it, in any case, and align it properly with market data. Such a pay structure may contain one salary amount or a range of salary amounts. In designing a range, cost factors need to be considered. The range of salary amounts could include as many as deemed appropriate. Too many could counterfeit the original intention and make it lumpy; therefore, between two to four salary amounts would be more appropriate. Rules or policy would also need to be developed for moving from one salary or range to another. Criteria should also be developed for appointing 68 May 2015