Developing Salary Scheme for Employees Eliminates Pay Inequity

Fair and competitive payment of staff salaries and bonuses are thorny HR issues in many organizations that have not embraced best practices on remuneration by developing salary scheme. In some organizations, managers are accused of making reward decisions based on factors that cannot be justified.

Others have institutionalized policies and procedures that manage staff remuneration effectively by a developing salary scheme. Here are six strategies that employers should use to ensure that employees are paid salaries, bonuses and other benefits in a fair, equitable and consistent manner.

Provisions for Reward Schemes: An employer who executes reward decisions without relevant policies, provides room for baseless determination of individual staff salaries. Remuneration policies should provide guidelines for the development of reward schemes that foster internal equity and external competitiveness. For effective implementation of reward schemes, policies should include the development of salary structures; determination of annual salary increases; movements between salary scales and payment of bonuses.

Determination of Job Values: The value and weight of jobs in an organization vary depending not only on their positions in the production line but also their contribution towards the expected output. To classify the jobs according to their respective worth, organizations should undertake a job evaluation exercise to create job groups. Clear linkages between job groups and salary scales would reduce pay inequities between and among employees.

Comparisons with Market Rates: Progressive organizations undertake remuneration surveys that provide data and information for developing or adjusting salary scales. Best remuneration practices require that salaries be calibrated on or above market rates taking into account affordability. Without remuneration surveys, salary reviews would be likened to tossing a die to decide on salaries of individual employees. When management blindfolds itself on salary issues, it allows low morale bugs to bite staff causing obvious falls in productivity.

Basis for Bonus Payment: Bonus payment should be made to the whole workforce depending on both the overall company performance and individual employee’s performance appraisal rating. Although everyone is deemed to have contributed equally to the total results, some organizations award higher bonuses to senior staff. When the criteria for bonus-sharing are pre-determined, staff discontentment on bonuses would be minimized.

Room for Negotiations: The CBA (collective bargaining agreement) for unionisable employees contains provisions on salary increments and bonuses that must be honoured. Employers that flout those provisions, invite go-slows that may escalate into industrial strikes.  Both employers and trade unions should hone their negotiation skills to settle on CBAs that are both fair and affordable. The Employment Courts have piles of unresolved salary disputes that would have been avoided had the concerned parties followed due processes by developing salary scheme.