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 structures A typical narrow-graded structure:

Higher education pay spine and model grading structure Source: Joint Negotiating Committee for Higher Education Staffs

Broad bands Traditional graded structure – 40% grade width: Source: IPD (1997) Broadbanded structure – 100% band width: Source: IPD (1997)

Broad bands A 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 evaluation A 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 drift IDS (2006)