Types of Pay Structures

Types of Pay Structures

These pay structures include:

  • Narrow-graded structures
  • Career family structures
  • Job family structures
  • Broad-banded pay structures
  • Pay spines
  • Spot Rates

Which Structure Should Be Used?

Salary Formula 10A

Source: (Kogan Page Publication)

Narrow-Graded Pay Structure

This is also called a multi grade pay structure

Salary Formula 10B

Source: (Kogan Page Publication)

Career Family Pay Structure

A career family pay structure is a single graded structure where each grade has been divided into job families, for example operations, finance, administration, marketing and IT. A career family pay structure normally has 6 to 8 levels defined by the activities carried out and/or by the knowledge and skills or competencies needed to perform these activities. Some job families may have more levels than others.

Jobs in the corresponding levels across each of the career families are within the same size range and when a points factor job evaluation system is used, the same range of scores would be given. The pay ranges in corresponding levels across the career families are the same.

Salary Formula 10C

Source: (Kogan Page Publication)

Salary Formula 10D
Source: Reward Management: A Handbook of Remuneration Strategy and Practice
By Michael Armstrong, Helen Murlis, Hay Group

Salary Formula 10E

Salary Formula 10F

Source: Benefits and Compensation Resources

Job Family Pay Structure

A job family pay structure may resemble a career family pay structure. The key difference is that instead of the all job families having a common grade structure, in a job family structure, each job family would have its own pay structures. This would take into account the different market rates between different job families.

In a job family pay structure, the level or grade structures may differ in order to reflect the special characteristics of the roles. This may result in unequal pay for work of equal value between different job families.

Armstrong and Murlis pointed out that career family structures can solve this problem by using market supplements which are easier to justify on an individual basis. A market supplement is an additional temporary payment to the basic salary of an individual job or specific group of jobs where market pressures would otherwise prevent the organization from being able to recruit or retain staff with a particular skill or group of skills.

Salary Formula 10G

Salary Formula 10H

Source: (Kogan Page Publication)

Salary Formula 10I
Source: Reward Management: A Handbook of Remuneration Strategy and Practice
By Michael Armstrong, Helen Murlis, Hay Group

Salary Formula 10J

Source: Job Families (Peter Reilly)

Broad Band Pay Structures

Salary Formula 10K

Source: World at Work

Salary Formula 10L

Source: Presentation Slides By Pabak Dev

Salary Formula 10M

Source: Job Families (Peter Reilly)

Broad Band versus Broad Graded Structures

Salary Formula 10N

Source: (Kogan Page Publication)

Note: Each salary band will be developed for each job family level based on market data relevant for that level and will not necessarily match the same band level of another job family. If a level is left blank, there are no current positions slotted in that level.

Combined Career/Job Family and Broad-Banded Structures

Salary Formula 10P
Source: A Handbook of Employee Reward Management and Practice By Michael Armstrong
What is a Pay Spine?

Pay spines consist of a series of incremental points stretching from the highest to the lowest paid job.

It can be used to determine pay ranges, according to job evaluation decisions and market pay rates. Each job pay range may span 4 or 5 incremental points.

Salary Formula 10Q

Source: (Kogan Page Publication)

Salary Formula 10R

Source: Reward Management in Context written by Angela Wright published by the Chartered Institute of Personnel and Development

Spot Rates

Salary Formula 10S

Source: (Kogan Page Publication)