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All you need to know about pay and benefits

Memory Nguwi
One area that attracts employees’ attention more than any other area of their work-life is the issue of pay and benefits.

Should people in the same grade earn the same salary?

The answer to this question is no. When an organisation has a proper pay structure, each grade will have a salary range. Remember, a grade is a group of jobs of equal value to the organisation. Also, remember it’s the job that is graded, not the individual. However, when setting pay, the employer can vary the salaries of individuals in the grade based on factors such as performance, tenure, qualifications etc. If that does not happen, some employees complain that they are earning exact salaries as new employees. The correct practice is that new employees are paid at or close to the minimum of the grade. More experienced and competent employees are paid around the midpoint of the salary grade. Avoid paying any employee very close to the maximum when it is not purely on merit (consistent job performance). Anything goes in an organisation with no system or policies; people get paid based on their allegiance to the boss.

After job evaluation, what happens to the employee’s salary if their job is downgraded?

Remember, job evaluation is meant to correct pay equity anomalies. The fact that the job has been downgraded shows that the job was overvalued all along. However, the correct procedure to deal with this issue is not to reduce affected employees’ salaries. The job will be placed in the correct grade, but the person’s salary will not be affected. Over time, people classified as “person to holder” get smaller salary adjustments until they catch up with other people in the same grade (new grade).

Is there any standard grade difference between a boss and a subordinate?

I hear many employees saying they are wrongly graded because their boss is three grades or more above them. Remember, what is graded is the job minus the individual. Therefore it is possible to have any grade difference between the boss and the subordinate. I will consider this a no issue and often raised by people who are ignorant about how job evaluation works.

How much should I earn when I get promoted to a higher grade?

In organisations with a formal pay structure, it’s always recommended that new, promoted employees start at the minimum of their new grade. The reason for paying new employees at the minimum of the grade is because they are assumed to be learning the job and will not immediately give value. With time they are gradually moved within the grade based on merit.

Are notches important in a pay structure?

Notches have been traditionally developed to recognise service in most instances. The fact that notches are always associated with rewarding service means that they are hardly useful to cater for performance recognition. I would not recommend using notches if you want to be performance-driven. Instead, I recommend using merit tables to reward your top performers.

When is the right time to institute a job evaluation process?

Job evaluation can be done when jobs have not been graded before. It can also be done in situations where poor practices have distorted the job grades. Another situation where job evaluation is required is when an organisation has gone through a restructuring, and the job has changed significantly.

Which job evaluation system should we use?

I do not think any job evaluation is better than the other. It’s an issue of preference and what you think will work in your situation. Research shows that all job evaluation systems tend to come with an identical rank of jobs. Therefore when choosing a job evaluation system, be cost-efficient.

After a market salary survey, do we adjust the salaries by the same market rate?

Most organisations do purchase salary surveys. They use salary surveys to compare their salaries to the target market. Often, certain positions are below the market and some above the market. The most efficient way to deal with this is for you to adjust those below the market. In doing so, you must consider other factors such as individual performance.

It is unwise to pay an incompetent person a premium market salary. It is equally unwise to adjust upwards the salary of a person already paid above the target market.

Conclusion

To have a sustainable pay and benefits system, you need to have credible policies to back it up. When an organisation has a proper pay structure, each grade will have a salary range.

Employers can vary the salaries of individuals in the grade based on factors such as performance, tenure, qualifications etc. The correct practice is that new employees are paid at or close to the minimum of the grade.

In organisations with a formal pay structure, it’s always recommended that new employees start at the minimum of their new grade.

Job evaluation can be done when jobs have not been graded before. Research shows that all job evaluation systems tend to come with an identical rank of jobs.

  • Nguwi is an occupational psychologist, data scientist, speaker and managing consultant at Industrial Psychology Consultants (Pvt) Ltd, a management and human resources consulting firm. — https://www.thehumancapitalhub.com or e-mail: mnguwi@ipcconsultants.com.

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