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: | |
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1.1 | Set project metrics and take baseline measurements. |
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1.2 | Review benchmark jobs and determine market matches. |
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1.3 | Weight and input market data. |
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1.4 | Group jobs into grades and develop preliminary pay bands. |
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1.5 | Determine the number of base pay structures. |
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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: | |
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2.1 | Review and adjust the range spread, range overlap, and midpoints of preliminary pay bands. |
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2.2 | Compare against organizational data and adjust preliminary pay bands. |
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2.3 | Model base pay structure alternatives. |
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2.4 | Select the best-fit base pay structure. |
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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: | |
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3.1 | Develop salary administration guidelines. |
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3.2 | Evaluate current state of pay transparency. |
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3.3 | Determine desired future state of pay transparency. |
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3.4 | Develop a pay transparency strategy. |
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3.5 | Craft a communications plan. |
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