Step#1: Understand the frame of reference
Annual or hourly pay rate an employee gets for normal performance. This doesn't include overtime
, premiums or incentives.
The lowest hourly wage you pay.
The range that a salary can fall within. It shows a minimum, target and maximum salary for a job or a group of jobs.
Step#2: Create salary bands or ranges
When creating your pay structure, you'll need to determine what types of pay bands or ranges your structure will use.
Step#3: Determine the maximum and minimum levels per band or range
Broadbands and salary ranges can overlap. What this means is that the maximum salary of one band can be higher than the minimum salary of the band above it.
Step#4: Group jobs into bands/ranges
Last year, Government implemented over 70 changes to three of SA's most crucial labour Acts.
Among them were:
• When and how to issue employees with a fixed-term contract.
• Unfair discrimination and your employees' pay cheque.
• Steps you MUST take before you recruit a non-South African citizen.
• Labour brokers and the only time you can use them.
• And so many more.
How sure are you your HR department's current processes aren't a lawsuit waiting to happen?
How certain are you that one small oversight won't end up costing your company R2.7 million in fines?
How confident are you that you won't land at the CCMA defending a case for following a faulty HR process?
Don't take a chance when you don't have to.
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You can do this by using one of the following 2 methods:
1. Simple ranking order:
Using 'common sense' to rank jobs accordingly.
2. Job evaluation:
Award points based on various factors to do with the job, such as skills required, responsibilities etc.
Step#5: Assess job expectations to determine the relative position within the grade/range
Each broadband, or salary range, should have a corresponding minimum salary, a target salary, as well as a maximum salary.
You should place jobs within each of these salaries according to the following criteria, salaries:
· Between the minimum and target for employees still learning the job;
· At target rates for fully-functioning employees; and
· Between the target and maximum salary for employees who put in more… In other words, their performance is deserving of reward.
At the end of the day, pay structures communicate a very positive message with your employees in that it shows your intention to make pay decisions in an objective and equitable way.
NOTE: Most small businesses can manage without a pay structure. But as soon as your company gets larger (100-200 employees), then it'll be essential to have one.