How to design salary structure

Types of Salary Structure

Salary structure defines the range of pay ratesfor every job classification, and it usually includes compensation factors like experience

Creating A Salary Structure

There are several steps to designing a pay structure: 1

Best Practices For Creating An Effective Salary Structure

1. Conduct a thorough job analysis to determine the required skills, knowl… 2

Key Takeaways

The salary structure must be consistent across all employees in the same job position or level

How do companies design a salary range?

The two most common methods companies use to design base salary structure ranges are market pricing using external market data and focusing on internal pay equity

Most companies use a market-pricing approach with current salary survey data for individual jobs, to design and adjust salary range structures (Figure 1)

How do I design a pay structure?

Analyse pay across the industry The third step in designing a pay structure is to analyse pay across your industry for each job role you have laid out

This can be done based on your own research, or, for a more realistic idea, you can use Paydata’s salary benchmarking tool to ensure that what you are offering is fair and competitive

What is a salary structure?

A salary structure outlines an organization’s approach to employee compensation levels for each job position within the company based on factors such as experience, education, skills, and responsibilities

Adding structure to how you determine salaries and raises ensures that earnings are consistent, fair, and competitive with industry standards

Best practices for creating an effective salary structure

Conduct a thorough job analysis to determine the required skills, knowledge, and experience for each position.
Determine the relative value of each role within the organization based on its level of responsibility, scope of duties, and market demand.
Identify comparable positions in the industry and use them as a benchmark to establish competitive salary ranges.

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