Making A Difference With My Business

3 Tips For Developing A New Pay Structure In Your Business

At regular intervals, each business needs to refine its pay structure to stay competitive within the market and be certain their employees are receiving fair compensation. When it is time to develop a new pay structure, there are ways you can achieve a structure that suits your business needs.

1. Decide Where You Stand In The Market

Not only do you need to compare yourself to similar businesses as a whole, but you need to take into consideration the type of jobs you have. For example, a hospital will need to compete with other hospitals in their area, but there will be smaller facilities, such as urgent care centers and doctor's offices that will have similar jobs. Ideally, your pay ranges will be on par with these facilities or even exceed them.

In rare cases, you might be able to offer a lower pay rate, but you will need to compensate for this. Perhaps your business offers a better benefits package, or you are a well-known research institution. Both factors could help you edge-out your competition for talent, even if the pay is somewhat lower.

2. Hire A Salary Consultant

The major benefit of hiring a salary consultant is they likely have inside information about pay structures that you cannot access. When you discuss your needs with your salary consultant, you will give them information on your current pay structure and salary ranges for each position. You will also tell them about your budget and what you wish to accomplish. Generally, your consultant will want you to modify your existing salary structure. This might include developing pay bands and assessing the value for each position.

For example, jobs that have many employees, such as sales associates or teachers, are often placed in lower pay bands because you need many employees in these jobs. Conversely, managerial positions, surgeons, administrators, and executives tend to be placed in the higher pay bands because there are fewer of them and they often have a higher perceived value in the organization.

3. Construct Meaningful Salary Ranges

When you construct salary ranges within each pay band, your goal is to create a system that offers appropriate compensation for each job and gives you a little leeway for different employees within those jobs. No two employees within a specific job will have the exact skills or seniority within the company. An employee for a specific job who has more skills or has worked with your company for several years can be paid on the higher end of the salary range, whereas a new person with minimal skills would receive the lower-end salary.

Developing new salary ranges within your pay structure also means current employees may fall outside the structure. You and your consultant can determine the best way of dealing with this issue. Those who are currently paid less than the new structure dictates can receive a pay raise or if they have been with your company for a while, you might prefer to offer them a different position in a higher pay band. Employees who are currently receiving higher pay than is dictated by the new pay structure can be harder to remedy. You and your consultant can discuss a better way of mitigating this issue without cutting their pay.

Developing a new pay structure is necessary as the market changes. By hiring a salary consultant company like Fox Lawson & Associates, A Division of Gallagher Benefit Services Inc. you can devise the best approach for the businesses and your employees while staying competitive.