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Tired of losing key employees because you're not paying competitive salaries? Pay structuring could be the solution

by , 22 December 2014
Did five of your employees resign?

And they told you in their exit interviews you don't pay competitive salaries and your competitors are?

Pay structuring could help you fix this problem.

If, for example, you currently pay your assistant R9 000 and other employers in your industry pay R13 000 for the same position. Chances are your assistant will leave if she gets a job offer elsewhere.

To avoid losing your key employees, read on to find out more about pay structuring...

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Paying structuring could help you ensure your salaries are market-related so you stop losing key employees

The Practical Guide to Human Resources Management defines pay structuring as, 'the process that determines pay levels for jobs, levels of jobs and categories of jobs.'

Basically, pay structuring can help you see whether or not your salaries are market-related. And help you link your pay to what employees do.

If you find that your salaries aren't market-related, you can then adjust them.

The end result?

You'll retain key staff.

When you do your research, you may find that you don't only pay less than your competitors. But, what you may find also is that employees who do similar work in your company don't earn the same salaries.

So, with pay structuring you can actually kill two birds with one stone:

  1. Avoid losing key employees; and
  2. Make sure your pay structure isn't discriminatory.

You'll remember that in August this year, amendments to the Employment Equity Act (EEA) came into effect. One of the key changes to the Act is about ''equal pay for equal work'.

This, according to Taryn Strugnell, editor of The Labour Watch Newsletter means, 'employees who do similar work must get similar pay and benefits irrespective of race, gender, belief, and so on, unless there's a valid reason for differences.'

So pay structuring could help you comply with the EEA too. And avoid penalties of up to R2.7 million or 10% of your turnover.

So how do you make sure you're paying competitive salaries?

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Here are two ways to make sure you're paying competitive salaries using pay structuring

1. Develop pay structures by developing your own guidelines

Here, you can look at the following:

  • Your company's vision and mission. For example, if your vision is to employ the best talent, your guideline could be: 'We'll pay above average market pay rates.'


  • How competitive you want your pay levels to be. For example, you decide to pay market average rates for all positions. But add 10% for managerial positions and 20% for executive positions.


  • The skills in short supply that call for better than average pay levels.


  • What the law requires you to pay. For example, if the minimum wage in the sector is, R2 000, you can't pay less than this.

2. Conduct market remuneration comparisons

There are three ways to compare remuneration: You can:

  1. Conduct your own research into market rates.

  2. Research job ads in the media.

  3. Buy commercial remuneration survey.

Check out the Practical Guide to Human Resources Management for a breakdown of what you need to do when using each of these three options.

While we're not saying money is everything, it's definitely a factor that influences employees to leave or stay in a company.

So if you're losing key employees, it may be because you don't pay competitive salaries and pay structuring could be the answer to your woes.

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