DESIGN & IMPLEMENTATION OF PAY

STRUCTURES
Advanced-HR has professional consultants who have been at the forefront of the equal value pay challenge
in the public sector. Our reward practitioners have experience of leading and implementing modern and
compliant pay and grading structures, in the context of the single status agreement.
From the very start of this project, determining your pay envelope to negotiating with the trade unions,
developing proposals, evaluating jobs, communicating with your employees helping you to implement a fair
and equitable pay structure, our consultants can give you as much support as you need. We can assist you
with determining your local conventions or just analysing jobs. Our experienced consultants have a proven
track record in implementing this complex and specific project.

Pay Structures
A pay structure is a collection of pay grades, levels or bands linking related jobs within a hierarchy or
series that provides a framework for the implementation of reward strategies and policies within an
organisation.
Pay structures may be designed to achieve several objectives:

to align reward strategy with the business strategy of the organisation, such as encouraging high
performance levels

to bring order and clarity to an organisation and its employees in managing pay increases and
career progression

to help ensure fairness and lawfulness, for example by adopting an approach that avoids gender
discrimination in pay.

While some smaller organisations manage without any form of pay structure at all, larger or growing
organisations, typically once they have reached around 200-250 employees, usually find such arrangements
essential as a framework for reward management.
Different types of pay structure are linked with varying types of pay progression arrangements. Pay
structures may be distinguished in particular by two key characteristics:

the number of grades, levels or bands within the structure which may be either many or few, and

the width, or span, of each grade that is the percentage difference between the lowest and
highest pay rates attached to each grade or band.

Brief definitions of different types of pay structures are set out below, although differing definitions
exist and approaches may overlap at times. Indeed, a strict definition of pay structures might exclude
the first two categories listed below as they could be considered rather as unstructured pay
arrangements.

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Individual pay rates, spot rates, spot salaries

Under these arrangements, there is a single hourly or weekly pay rate or a single
annual salary attached to each job, or possibly to each person, in an organisation. In
a nutshell, there is only one job to a grade.
Spot rates are often to be found among lower-skilled occupations where there is a
need for a simple rate for the job. Conversely, spot salaries often also occur at the
other end of the scale for more senior positions, such as senior managers or
directors, where the remuneration package may need to be designed to attract or
retain a specific individual. Spot rates are also relatively common in small firms.
Using this approach, there is no formal structure in place for pay progression,
although there may be scope for moving to a higher spot rate or for spot rates to be
increased, say to keep pace with inflation or market rates.

Individual pay ranges, individual job ranges, individual salary ranges

These are a more sophisticated version of spot rates or spot salaries. Instead of a
single rate for the job, a pay range or salary range is attached to each job or
individual employee. Individual pay ranges may be considered preferable to
individual pay rates as they allow some formal scope for pay progression.
Narrow-graded pay structures

This approach comprises a large number of grades, typically 10 or more, with jobs of
broadly equivalent worth slotted into each of the grades. Often found in public
sector structures, progression is frequently by means of service increments.
However, because the grades are very narrow, most employees reach the top of the
pay range for their grade fairly quickly, potentially leading to demands for upgrading
and grade drift (jobs being ranked more highly than justified).

Broad-graded pay structures

These structures make use of fewer grades than narrow-graded structures, perhaps
six to nine. They can help counter the problem of grade drift as there is greater
scope for individual employees to progress further along a pay grade, thus averting
the need for upgrading in many cases. These types of structures are sometimes
included within a definition of broadbanding.

Broadbanding

This approach involves the use of a small number of pay bands, usually just four or
five, and is designed to allow for much greater pay flexibility than traditional graded
structures. A classic broadbanding arrangement would place no limits on pay
progression within each band, although some employers have now re-introduced a
greater degree of structure into such systems, partly to counter concerns over equal
pay issues.

Pay spines

A similar approach to narrow-graded pay structures, these take the form of long
grading structures based on a series of incremental points that usually allow for
service-related pay progression. Such arrangements are traditionally found in local
government or voluntary organisations with pay structures that mirror local
government arrangements.
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Job families

This system groups jobs within similar occupations or functions together, usually
with around six to eight levels, similar to the number of grades found in broadgraded structures. There are separate pay structures for different families (for
example, one for sales staff, one for IT staff and so on). This approach may be
helpful in facilitating higher rates for highly sought-after workers such as specialist
IT staff.

Career families, career-grade structures

A variation on the theme of job families, this system involves the use of a common
pay structure across all job families, rather than operating separate pay structures
for each family. Such arrangements tend to reflect an emphasis on career paths and
career progression as against the greater pay focus of the job families approach.

Confidential Review
We can undertake a confidential review of the equal value risk within your organisation.
This is a complex process that requires practitioners who have a proven track record not only in managing
the process but also gaining agreement with trade unions. We can combine harmonise terms and
conditions of employment, providing innovative solutions, to meet the specific needs of your service by
looking at:

Pay Structures
Bonus Schemes
Job Evaluation
Reward incentives
Flexible benefits packages

If you are interested in knowing about how ADVANCED-HR can support your business
or if you wish to discuss any of the support packages that we offer then please do not
hesitate to contact us on:
Telephone: 01302 381605

e-mail: info@advanced-hr.co.uk

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