As technologically and scientific advancements progress, humanity has become more and more adept at collecting data, identifying patterns and harnessing it to improve the way we live and work. This is especially true in business, where big data analysis can help inform everything from the times we have our breaks through to the way we target customers.
One of the most important patterns that modern data has identified, is through research done into employee behaviour, retention and engagement. There’s no denying that the evidence suggests there is a range of factors which impact employee productivity and loyalty, and of these factors, pay and reward is one of the largest.
Introducing an effective pay and reward structure is essential for businesses of all shapes and sizes. In this short guide, we are going to cover three of the most important points to consider when you are shaping your remuneration system, helping you ensure you create an approach that truly engages staff and improves employee retention.
Ease of Management
Firstly, aside from the benefits that your system will have on employee well-being, it’s important to make sure that your new reward structure can be managed effectively – otherwise, all of its advantages will simply become ineffective. For example, if your is large and has a host of different job roles, creating a pay structure that uses individual pay rates for each role will be extremely difficult to manage. Your HR or accounts team will have to develop their own wage management system for every individual job role to maintain balance across the company and won’t have any guidelines on the limits and market salary averages.
In this situation, pay grades would be significantly better. By grouping similarly paid job roles into pay grades, HR staff can more easily manage the maintenance of equal wages across the business and always have an awareness of the minimum and maximum that staff wages within that grade can reach. This doesn’t just make life for the HR or accounts team easier, but also makes it easier for employees to stay aware of their progression opportunities.
One of the biggest challenges that larger organisations face is identifying the relative value of different job roles within the company. To elaborate on this further, if a large organisation wants to implement a pay grade system, how do they choose which roles are4 grouped together into the same grade.
The process of identifying the relative value of a role is called evaluation, and job analysis is the initial steps taken to work out exactly what a role entails including it’s the stress it puts on staff, the responsibility they have, the skills required to complete the role and much more. There are tools to help evaluate job roles effectively and whilst it can take time, it is essential for creating a fair and balanced pay structure system.
Growth, Development and Promotion Opportunity
Finally, it is absolutely paramount that employers keep in mind staff development and progression within their remuneration and benefit systems. Apart from monetary reward, one of the biggest motivators for employees is seeing a clear method of reaching the next step or the next rung up the ladder. This can be offered in a variety of ways – pay grades offer incremental payment increases whilst job families offer incremental promotions that often come with pay increases too.
The specific method is up to you and your organisation but what’s most important is laying out the facts and the path to this growth clearly and understandably for staff to absorb. If employees feel stuck in their role and unable to move forward, they will get bored and stagnate, reducing their productivity and eventually leading to their departure.
By keeping these three points in mind, you are sure to build a pay structure that both promotes business growth and employee retention. As will all business decisions, do extensive research or consult experts before finalizing your payment structure change, as it can have a serious and notable effect on organisational success.