Design a Base Pay Structure
Balance internal equity and market competitiveness to build an effective base pay structure.
- Traditional base pay structures are seen as bureaucratic red tape that hinders a manager’s hiring ability.
- Designing base pay structures can be complex, requiring accurate data collection and a significant time investment from HR and managers.
- Pay transparency is difficult given the sensitive and highly confidential nature of pay information.
Our Advice
Critical Insight
A credible compensation structure provides the foundation for increased pay transparency, and a hybrid approach to building the structure enables the right balance between flexibility and standardization to ensure equity and fairness.
Impact and Result
- Design a pay structure that is internally and externally equitable by balancing the internal job worth hierarchy with external market competitiveness.
- Leverage McLean & Company’s approach to building a hybrid pay structure that benefits from the advantages of the traditional and broadband approaches.
- Empower managers by involving them in matching benchmarked jobs with market data and educating them on salary administration guidelines.
Design a Base Pay Structure Research & Tools
1. Collect and analyze market data
Collect, analyze, and examine market data using the organization’s compensation philosophy as a filter.
2. Create the base pay structure
Create and finalize the base pay structure.
3. Determine salary administration guidelines
Identify and develop salary administration guidelines tailored to the organization.
4. Prepare to roll out the transparency strategy
Develop a pay transparency strategy suited to the organization and draft a communication plan.
Compensation Essentials
This program has been approved for continuing professional development (CPD) hours under Section A of the Continuing Professional Development (CPD) Log of the Human Resource Professionals Association (HRPA).
McLean & Company is recognized by SHRM and can award Professional Development Credits (PDCs) for the SHRM-CP® or SHRM-SCP®.
HR Certification Institute’s® official seal confirms that McLean & Company meets the criteria for pre-approved recertification credit(s) for any of HRCI’s eight credentials, including SPHR® and PHR®.
How to complete this course:
Use these videos, along with the Project Blueprint deck above, to gain an understanding of the subject. Start with the Introduction, then move through each of the Course Modules. At the end of each Module, you will be required to complete a short test to demonstrate your understanding. You will complete this course when you have completed all of the course tests.
- Number of Course Modules: 5
- Estimated Completion Time: 2 hours
Learning Outcome
Explain the rationale for developing foundational compensation programs (compensation philosophy, job evaluation, and base pay structure) and how they guide compensation decisions in alignment with organizational strategy.
Learning Objectives
By the end of this course, learners will be able to:
- Explain how a compensation philosophy guides the creation of other compensation programs.
- Articulate how an objective job worth hierarchy promotes internal equity and the value that brings to the organization.
- Describe the basic steps of creating a base pay structure while balancing internal equity (i.e. job worth hierarchy) with external equity (i.e. market data).
Course Modules
Introduction
Module 1
Module 2
Module 3
Module 4
About McLean & Company
McLean & Company is an HR research and advisory firm providing practical solutions to human resources challenges via executable research, tools, diagnostics, and advisory services that have a clear and measurable impact on your business.
What Is a Blueprint?
A blueprint is designed to be a roadmap, containing a methodology and the tools and templates you need to solve your HR problems.
Each blueprint can be accompanied by a Guided Implementation that provides you access to our world-class analysts to help you get through the project.
Need Extra Help?
Speak With An Analyst
Get the help you need in this 4-phase advisory process. You'll receive 8 touchpoints with our researchers, all included in your membership.
Guided Implementation 1: Collect and analyze data
- Call 1: Determine the market comparator criteria that are relevant for your organization.
- Call 2: Review benchmark jobs and their market data.
Guided Implementation 2: Create the base pay structure
- Call 1: Identify the number of base pay structures that your organization needs and understand the main components of a hybrid base pay structure.
- Call 2: Walk through determining appropriate job grades and pay bands for a sample data set.
Guided Implementation 3: Determine salary administration guidelines
- Call 1: Establish guidelines for moving between pay bands and between pay structures.
- Call 2: Determine criteria for hot skills and set parameters for hot skills premiums.
Guided Implementation 4: Prepare to roll out the transparency strategy
- Call 1: Define desired and current levels of pay transparency and develop a strategy to close the gap.
- Call 2: Create a communications plan for the first year of the pay transparency strategy.
Contributors
- Bessie Mok, Manager, Compensation and Benefits, The Corporation of the City of Markham
- Cal Barber, Independent Compensation Consultant; Professor, Seneca College of Applied Arts and Technology
- Chuck Csizmar, Principal, CMC Compensation Group
- Dr. Howard Risher, Private Consultant
- Jackson Tian, Senior Analyst, Compensation Advisory, OMERS
- Karen Nordby-Wadel, Compensation Consultant
- Kate Beckett, CCP, Senior Director of Total Rewards and HR Technology, Indigo
- Paul Wong, HR Consultant, Consulting Firm
- Rachel Wong, CCP, GRP, CHRL, Senior Manager of Global Compensation, Kinross Gold Corporation
- Steven Osiel, Vice President of Compensation & Incentives, Accompass; Lecturer at the University of Toronto
- Syma Khan, CCP, CHRL, CSA, Senior Compensation Manager, Loblaw Companies Limited
- Terra Aartsen, CCP, GRP, Practice Lead - Learning & Development Solutions, Info-Tech Research Group
- Tia Wang, HR Consultant, Consulting Firm
Design a Base Pay Structure
Craft a Compensation Philosophy
Evolve Pay for Performance
Build a Total Rewards Strategy
Conduct a Salary Assessment
The Rise of Organizational Transparency