GRADE AND PAY

STRUCTURE
Presented By
Dibyashree Mohanty-15309
Nikita Tahlani- 15316

Grade Structure:
A grade structure is defined as the
sequence or hierarchy of grade,
bands or levels into which groups of
jobs that are broadly comparable in
size are placed.

Pay Structure:

A pay structure defines different levels of

pay for job or groups of jobs by reference
to their relative internal value as
determined by job evaluation.

There may be a single pay structure

covering the whole organisation or there
may be one structure for staff and another
for manual workers.

Guiding principles for grade and

pay structure:
Appropriate

to the culture, characteristics and

needs of the organisation and its employees.

Facilitate

the management of relativities and the

achievements of equity, fairness, consistency and
transparency in managing grading and pay.

Be

capable of adapting to pressures arising from

market rate changes and skill shortages.

 Facilitate operational flexibility and continuous

development .
Provide scope as required for rewarding performance,
contribution and increases in skill and competence.
Clarify reward, lateral development and career
opportunities.
Be constructed logically and clearly so that the basis
upon which they operate can readily be communicated to
employees.
Enable the organisation to exercise control over the
implementation of pay policies and budgets.

Types Of Grade and Pay structure:

Narrow-graded

structure
Broad-graded structure
Broad-banded structure
Job family structure
Career family structure
Pay spines
Spot rates
Individual job grades

Narrow- Graded structure:

It

consists of a sequence of job grades into

which jobs of broadly equivalent value are
placed.
Mid-point management techniques are often
used to analyse and control pay policies by
comparing actual pay with the reference point
that is regarded as the policy pay level.
One

disadvantages of it is they encourage

unjustified upgrading.

Broad-Grading structures:
They

have 6 to 9 grades rather than the 10 or

more grades contained in narrow-graded
structures.
It is used to overcome the grade drift problem
endemic in multi grade structures.
It consists of three mechanisms:
(a) Reference point control
(b) Threshold control
(c) Segment or zone control

Broad banded structures:

It

compresses multi-graded structures into 4 or 5

bands.

Bands

were unstructured and pay was managed

much more flexibly than in a conventional
graded structure.

Jobs

may be placed in the bands purely by

reference by market rates or by combination of
job evaluation and market rate analysis.

Job Family Structures:

It

consists of jobs in a function or

occupation.

Levels

are differentiated through the

activities carried out and the basic
knowledge, skill or competence needed.

Each

job family has its own grade and

pay structure.

Career Family Structure:

It

resembles job family structures in that there

are a number of different families.

It

is a single graded structure in which each

grade has been divided into families.

It

focus on career mapping and career

developing as part of an integrated approach to

human resource management.

Pay Spines:
They

are found in public sector or in agencies

and charities that have adopted a public sector
approach to reward management.

They

consists of a series of incremental pay

points extending from the lowest to the highest
paid jobs covered by the structure.

Pay

spine increment are between 2.5 and 3

percent.

Spot Rates:
Spot

rates are used in organisations which do

not have a graded structure at all for any jobs or
for certain jobs such as directors.

It

is used in retail firms for customer service

staff.

They

often exist in small or start up

organisation.

Individual Job Grades:

It

has been attached to jobs not people.

They

provide greater flexibility than more

conventional structures but can be difficult to
manage and justify and can result in pay
inequities.

The

mid-point of the range is fixed by reference

to job evaluation and market rate comparisons.

Analysis of different grade and

pay structures:
Type of structure
1.
2.

Features

Advantages

Disadvantages

When appropriate

Clearly indicate pay

Create hierarchical

In a large

pay ranges.

relativities.

rigidity.

bureaucratic

Sequence of

Facilitate control.

Prone to grade

organization.

4.Job family

between 6 and 9

Easy to understand.

inappropriate in a de-

Desirable to define

5.pay spine

A series of, often 5

Boarder grades can

layered organization.

and differentiate

or 6

be defined.

Too much scope for pay

Grades more

Separate pay

More control on

progression control

accurately.

structure for job

grade drift.

mechanisms and difficult

families.

More

to manage.

In de- layered

Series of

flexible reward

Create unrealistic

,process based,

incremental pay

lateral development

expectations of pay

flexible organizations.

covering all jobs.

and growth in

rises. Equal pay

Distinct market

competence

problems. Difficult to

groups.

Can appear to be

understand.

Public sector or

divisive. May inhibit

Facilitate pay

voluntary

lateral career

differentiation between organizations.

development.

market groups.

Easy to manage. A

Costly.

progression not

No scope for

based on managerial

differentiating rewards.

Narrow graded 10 or more narrow

Broad Graded

3.Broad- banded

judgment.

Designing grade and pay

structures
Deciding

on grade boundaries.
The guidelines to be considered when
deciding the boundaries:
a. Jobs with common features to be
grouped together.
b. Grade hierarchy should take account of
the organizational hierarchy.
c. Boundaries should not be placed
between jobs.
d. Should not be immediately placed
above jobs.

Number
a.
b.
c.
d.
e.
f.

of grades, levels or brands

They should be covered by the structure.
Range and job evaluation scores to be
accommodated.
No. of levels in the organizational
hierarchy.
Where grade boundaries to be placed.
Greater the no. of grades the smaller the
width and vice versa.
Grade drift.

Width
a.

b.
c.
d.

of grades
Allowed for performance
,contribution or career
progression within grade.
Equal pay considerations.
V on the no. of grades.
Decisions on the value of
increments in a pay structure.

Differentials

between pay ranges.

Pay

range overlap.

Pay

progression.

Design of a pay structure: