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TYPES OF GRADE & PAY STRUCTURES

Grade and Pay structures provide the framework for managing pay
although grade structures are increasingly used as part of nonfinancial reward processes
Grade Structures
Consist of a sequence or hierarchy of grades, bands or levels into
which jobs are placed
Various structure exists for e.g (M1-M8), ( 3 13)
Single structure with a sequence of narrow grades or relatively few
broad bands
Grades / bands / levels can be defined in many ways or combos like:
o Job evaluation points i.e. jobs are allocated to a grade, band or
level if their job evaluation scores fall within a range or bracket
of points
o In words or designations i.e describe the characteristics of work
carried out in the jobs that are positioned in each grade or level,
define key activities, competencies, knowledge and skills
o By reference to benchmark job or roles that have already been
placed in the grade / band / level
Pay Structures
Provides a framework for managing pay. Grade structure becomes a
pay structure when we associate ranges and pay brackets to them.
Contain the organizations' pay ranges or scales for jobs
Define the different levels of pay for jobs or group of jobs by
reference to their relative internal value as determined by job
evaluation

Provide scope for pay progression in accordance with performance,


competence and years of service

RATIONALE FOR GRADE & PAY STRUCTURES


Grade and Pay structures are need to provide a logically designed
framework within which an organization's pay policies can be
implemented
Enable the organization to determine where jobs should be placed in
hierarchy, define pay levels and the scope for pay progression
Its a medium thru which organization can communicate the career
and pay opportunities available to employees

CRTITERIA FOR GRADE & PAY STRUCTURES


Grade and Pay structures be appropriate to the culture,
characteristics and needs of the org and employees
Facilitate the management of comparison, equity, fairness,
consistency and transparency in managing grading and pay
Be capable of adapting to pressure arising from market rate changes
and skill shortages
Facilitate operational flexibilities and continuous development
Provide scope as required for rewarding performance, competence,
skills
Clarify reward, lateral development and career opportunities
Enable org to exercise control over the implementation of pay,
policies and budgets

TYPES OF GRADE & PAY STRUCTURES


Narrow Graded / Single structure
Consists of a sequence of job grades into which jobs of broadly
equivalent value are placed
Pay or Salary ranges are defined with Min Mid & Max
Pay ranges provides scope for progression related to performance,
competencies or contribution
Differential between pay ranges are typically around 20% and there
is usually an overlap between ranges which can be as high as 50%
Overlap provides flexibility to recognize highly experienced
individual at the top
One advantage is that they provide a framework for managing
relativities and for ensuring that jobs of equal value are paid equally
Enable the process of fixing of rates of pay and pay progression
practices
Disadvantage is if there are too many grades there will be constant
pressure for upgrading, leading to next grade
Also reinforce importance of promotion as a means of progression
Broad banded pay structure
Means that the number of grades is compressed into a relatively
small number of much wider bands
Range of pay in each band is therefore wider
Jobs placed in the bands purely by reference to the market rates and
job evaluation
Advantage is that it enables pay to be managed more flexibly
Provides a role specific and performance management focus
It dismantles the overly structured and bureaucratic approach of
multi-graded structure
Disadvantage could be Reliance on external relativities (market
rates), gender discrimination, women in lower region of bands