Suppose your organisation is recently completed compensation survey showed that pay rates of several jobs were either less than what they should be. How do you bring these jobs "into line"?
When an organization completes a compensation survey and finds that the pay rates of several jobs are lower than they should be, it is essential to take a structured approach to bring these jobs "into line" with market standards and internal equity. Addressing this issue requires a comprehensive and methodical approach, balancing fairness, cost-effectiveness, and employee motivation. The process can involve several steps, each aimed at ensuring that compensation aligns with industry benchmarks and supports organizational goals.
### 1. Review Survey Data and Identify Specific Jobs
The first step in the process is to carefully review the compensation survey data. This includes understanding the methodology used in the survey, the sample of organizations surveyed, and the benchmark jobs that were used for comparison. Pay attention to the specific jobs that are underpaid and determine the extent of the discrepancy between the organization’s pay rates and the market rates.
Once the jobs that are underpaid are identified, it is important to evaluate whether these discrepancies are significant or marginal. For example, a small discrepancy might not require an immediate adjustment, but larger disparities would likely need more urgent intervention. It’s also important to understand the reasons behind these discrepancies—whether they are due to historical practices, budget constraints, or simply an oversight in updating compensation data.
### 2. Assess Internal Equity
In addition to comparing pay rates against external market standards, it’s crucial to consider internal equity. Internal equity ensures that employees performing similar work within the organization are paid fairly in relation to one another. It is important to analyze whether employees in similar or related positions, who have similar skills and responsibilities, are compensated at comparable levels. This helps in avoiding dissatisfaction and resentment among employees.
In assessing internal equity, the organization should evaluate the following factors:
- Job complexity and responsibility: Higher-level positions should have commensurate pay.
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