Grading structures• Core building-blocks of an organisation’s

HRM system• Not just about pay but also about

conditions and career development• Grading closely linked to the desired

shape of the organisation• Grading normally reflects the value of

jobs in terms of skill, difficulty or responsibility

Base pay structures and relationships

Types of organisational structure

Criteria for grading structures

• Equity, fairness and consistency• Internal structure versus external market• Degree of operational flexibility and

continuous development• Capacity for individual growth within the

structure• The clarity of reward and career paths• Ease of communication• Degree of control over pay growth given to

management(Armstrong, 2002)

Types of pay structure

• Individual ‘spot rate’ or ‘rate for the job’

• Individual pay ranges• Narrow-graded structures• Pay spines• Broad-banded structures• ‘Job’ or ‘career’ families

Narrow-graded structuresA typical narrow-graded structure:

Higher education pay spine and model grading structure

Source: Joint Negotiating Committee for Higher Education Staffs

Broad bandsTraditional graded structure – 40% grade width:

Source: IPD (1997)

Broadbanded structure – 100% band width:

Source: IPD (1997)

Broad bandsA broad band with zones for individual roles:

Source: IPD (1997)

Job families

The objectives of job families:

• to map out career paths

• to achieve more flexibility in grading

• to identify market groups

• to provide for rewards to be based on personal contribution and progress

IPD (2000)

Job evaluationA major mechanism for apportioning value

to jobs or roles

Four basic assumptions (Hills 1989):

• Jobs differ in terms of the required contribution from employees (eg skill, responsibility, effort, etc)

• Employees will accept the criteria used to assess a job’s worth

• Equity perceptions lie in the eyes of the beholders

• Equity criteria remain stable over time

Types of job evaluation

Non-analytical schemes• Job ranking• Paired comparison ranking• Job classification• Internal benchmarking

Analytical schemes• Factor comparison• Point-factor rating• Competence-based job evaluation

Job or role analysis• A job description typically provides an

overview of the job and its place in the organisational structure, a detailed description of the duties and responsibilities, and a commentary matching the various job evaluation factors.

• A role profile is more flexible, describes the type of personality required for the task, and is more focused on inputs and outputs, knowledge and skills required, and expected behaviours.

Aligning pay with the market

• The immediate local labour market surrounding the workplace (the town or suburb)

• The regional labour market (the geographical or travel-to-work zone)

• The national (or international) market

Differentiating between groups• Interim ad hoc payments for specific

groups• Market supplements• Separate pay structures for different

groups of staff• Job or career family structures• Skills-based approaches (internal

development)• Using grading structures and/or

actively encouraging grade driftIDS (2006)