Having a base pay compensation program can create many benefits for your company. The current status of an organization’s base pay program tends to fall into three categories: (1) Organizations that do not have pay grades and salary ranges; (2) Organizations that have not reviewed or enhanced our current pay grades and salary ranges for many years; (3) Organizations that have an effective base pay program.
For the organizations in the third category that feel they have an effective base pay program, there are certain features or characteristics that they use to describe their programs.
- We describe and provide our employees with career path information for their function. Through these career paths we support advancement opportunities for employees, as we want them to continuously learn and apply improved skills and competencies.
- We have placed our jobs in pay ranges. The pay ranges have been developed based on the market so that they are externally competitive. Our managers can attract and retain the necessary talent for the organization.
- There is a process in place that we use to establish, review and maintain internal fairness in pay and job responsibilities.
- Most employees have a clear understanding and acceptance of the rationale for compensation decision making. This has been accomplished through regular communications about the compensation program and managers are trained and fully informed on how to reinforce our compensation philosophy.
- We provide managers with tools so that they can recognize employee performance and make decisions regarding employee pay that are consistent with our philosophy.
- The program has been designed in way that administration is efficient and effective. There are very few requests for job evaluations. We have set up a calendar of to conduct market studies, analyze the impact and take necessary pay actions on a regular, ongoing basis.
- We have anticipated the possibility of new acquisitions, reorganizations and organizational expansion in our jobs and grades so that the program provides sufficient flexibility and scalability into common jobs and pay levels.
- Our organization is unique and the compensation program effectively combines our values and needs within the structure of sound compensation principles.
- Fixed compensation costs do not get out of hand; we can effectively manage and optimize these costs based on the organization’s business needs.
- Our program is not static but has improved over time from the initial effective date. The types of improvements that have gotten the most traction are more frequent communication, expanding the functions covered by career paths or defined job families, developing additional tools for managers, adjusting pay grades, reviewing job title use and implementing systems solutions.