Design a Base Pay Structure

Build a base pay structure that is defensible, competitive, flexible, and practical.

Onsite Workshop

Without a well-defined base pay structure, organizations risk:

  • Increased labor costs
  • Decreased productivity from disengaged employees
  • Increased costs through employee turnover
  • Pay equity lawsuits

By designing a well-defined base pay structure, HR is able to:

  • Be confident that the base pay structure is equitable and aligned with the compensation philosophy
  • Empower managers as co-owners who engage their employees in pay discussions
  • Better move toward greater pay transparency

Module 1: Analyze Market Data

The Purpose

  • Identify metrics that will be used to determine project success.
  • Match benchmark jobs to market data and create preliminary pay bands.
  • Determine how many base pay structures the organization needs.

Key Benefits Achieved

  • Benchmark job descriptions matched to market data capsules.
  • Preliminary pay bands created and number of pay structures determined.

Activities: Outputs:
1.1 Set project metrics and take baseline measurements.
  • Project metrics and baseline measurements
1.2 Review benchmark jobs and determine market matches.
  • Benchmark jobs matched to appropriate market data
1.3 Weight and input market data.
  • Market data weighed based on market comparator criteria and inputted based on target market positioning.
1.4 Group jobs into grades and develop preliminary pay bands.
  • Preliminary pay bands developed.
1.5 Determine the number of base pay structures.
  • Number of base pay structures determined.

Module 2: Create Base Pay Structure

The Purpose

  • Overlay organizational base pay data for both benchmark and non-benchmark roles.
  • Model alternative base pay structure options and select the best-fit option.

Key Benefits Achieved

  • Finalized pay band structure determined.

Activities: Outputs:
2.1 Review and adjust the range spread, range overlap, and midpoints of preliminary pay bands.
  • Preliminary pay bands reviewed.
2.2 Compare against organizational data and adjust preliminary pay bands.
  • Preliminary pay bands compared against organizational data and adjusted as appropriate.
2.3 Model base pay structure alternatives.
  • Alternative base pay structures modeled.
2.4 Select the best-fit base pay structure.
  • Best-fit base pay structure selected.

Module 3: Set Salary Administration Guidelines and Transparency Strategy

The Purpose

  • Review existing salary administration guidelines and update accordingly to better suit new base pay structure(s).
  • Create a pay transparency plan.
  • Draft a communication plan that is well aligned with goals from the transparency strategy.

Key Benefits Achieved

  • Salary administration guidelines updated according to new base pay structure(s).
  • Pay transparency plan created.
  • Communications plan aligned to the transparency strategy drafted.

Activities: Outputs:
3.1 Develop salary administration guidelines.
  • Salary Administration Guidelines
3.2 Evaluate current state of pay transparency.
  • State of pay transparency assessed.
3.3 Determine desired future state of pay transparency.
  • Future state of pay transparency outlined.
3.4 Develop a pay transparency strategy.
  • Pay transparency strategy developed.
3.5 Craft a communications plan.
  • Communications plan created.

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