Determing salary structure for your organization
Should every employee in an organization earn the same salary? why is there a difference in salaries in every organization, how do i determine the salary for my employees? While I believe every organization can benefit from industry comparison studies, if conducted by reputable organizations, the bigger question is whether you are competitive within your local market for most of your positions. Research the salary range for similar positions and job descriptions. The job description is particularly important for comparisons but usually harder to find for comparison. Determine whether you are competitive with similar positions with organizations of similar size, sales, and markets. If you can find companies in the same industry, especially in your area or region, that is another good comparison source. Pay must relate to the accomplishment of goals, the company mission and vision. Any system that offers an employee the "average" increase for their industry or length of service (usually 1-4 percent) is counter-productive to goal accomplishment. Even an above-average increase that differentiates one staff person from another can demotivate. One manager at a GM plant offered his star staff person a seven percent increase because she had accomplished all of her goals and "walked on water." Motivating? Should have been, however it was not when the staff person knew others in the organization were receiving ten percent increases and more. Additionally, your pay system must help you create the work culture you desire. Paying an individual for his performance accomplishments alone, will not help you develop the team environment you want. Thus, you must carefully define the work culture you want to create, and aim your best salary increases at those contributing to the success of that culture. If you want your organization to change, define the change, and pay employees commensurate with their support of and contribution to the change. Finally, your salary strategy must align with your human resources goals and strategies. If the HR function is charged with developing a highly skilled, outstanding workforce, you must pay above industry or regional averages to attract the quality employees you seek. Paying less than comparable firms will bring you mediocre employees and fail to fulfill the desire to create an outstanding workforce. If, on the other hand, the HR strategy is to get cheap labor in the door quickly with little regard for turnover, you can pay people less salary. We’re currently experiencing a period of high unemployment. Many skilled people are available because of job loss, the economic downturn, the demise of many dot com companies, and other reasons. Consequently, the economic reality is that you may be able to hire good people for less money than in the past. This may be short-term thinking, however. Don’t get too far out of line with what you would have paid that employee during better times. You risk losing her when the economy improves. She may never feel valued by your organization if her pay is out-of-line with her experience and contribution. She may never really stop her job search, using your company as a resting place until the right offer arrives. You will also want to consider percentages of increase in salary in similar jobs in your local area.Ask yourself if this is an employee you really want to keep? If so, pay the employee a salary that makes you the employer of choice.
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