Creating an effective compensation program requires a thorough understanding of an organization's jobs — in particular, the relationships between job functions, titles and families. This lays the foundation for the development and support of a sound pay-for-performance system that has accurate and current job information.
Salary structures provide a framework for organizations to manage employee base salaries. A salary range within the pay structure typically encompasses a particular grouping of jobs (e.g., jobs with similar job responsibilities and levels, employee skill sets and strategic importance to the organization). The pay levels associated with the salary ranges (i.e., minimum, midpoint and maximums) are developed based upon the organization's overall compensation strategy and pay positioning.
Pay equity issues arise from flaws in the compensation process that will continue to produce issues unless they are "caught" with audits and redesigned. Compensation process flaws can impact employee morale and motivation because of a lack of trust in the pay system, and these flaws can also impact the bottom-line because of compensation cost creep versus competitors.
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