Yesterday, we got some insights on the importance of a well-structured approach to compensation at your organization, courtesy of J. Timothy O’Rourke. Today, we look at his take on whether building an effective salary structure is more of an art or a science.
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O’Rourke is president and CEO of Matthews, Young – Management Consulting.
As we mentioned yesterday, pay grades are important for a variety of reasons. A salary structure with well-established pay grades and ranges allows for base salary planning. It also provides vertical and horizontal perspective, which allows you to ensure your salary structure is both aligned with company goals and equitable across groups.
Finally—and this is an important yet often overlooked consideration—formal pay grades and ranges visibly reinforce your commitment to legal considerations relating to equal pay, parity, and fairness. This helps prove your compliance with the Americans with Disabilities Act (ADA), Fair Labor Standards Act (FLSA), Age Discrimination in Employment Act (ADEA), and other state and federal antibias laws.
Want to make sure your pay programs are effective? Start on Wednesday, September 16, 2015, with a new interactive webinar, Salary Structure Design for HR: Keys to the Most Successful Pay Programs. Learn More.
The importance of a formal salary structure is indisputable—but the best way to craft one is a different question altogether. Is building an effective salary structure an art or a science?
“Great question!” says O’Rourke. “It is both an art and a science. The science is in making sure that the structure is linked to and anchored in the evolving marketplace. Research must be done to produce the data necessary to accomplish this objective.
“The art comes into play when designing the structure to support and interface with a total rewards philosophy and strategy. Every dollar paid above the ‘going rate in the marketplace’ for a position is a premium rate.
“Ensuring that premium rates are available and determining how they can be earned is part of the support that a good salary administration program provides. These things should be guided by strategy, and that is an art,” O’Rourke concludes.
Your employees know how to access salary data and what they find might cause problems. Want to learn how to modify your pay program to avoid this and other problems? Fortunately there’s timely help in the form of BLR’s new webinar—Salary Structure Design for HR: Keys to the Most Successful Pay Programs. In just 90 minutes, on Wednesday, September 16, you’ll learn everything you need to know about creating an effective and legal pay program.
Register today for this interactive webinar.
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Great point about how formal systems can serve as evidence of compliance. Too many informal systems are unnecessarily vulnerable to inaccurate inferences of discrimination, etc.