Salary grids are a must have for modern companies that focus on innovation and competitiveness. They are a tool thanks to which a clear structure and rules are introduced in the organization. Why are they needed and how to design them? Scroll on to find out.
Salary grids to the rescue to keep workers
According to this year’s Hays Poland payroll report, 74% of companies expect this year’s recruitment to be much more difficult than in previous years, due to, among other things, the competency gap encountered by organizations seeking experts. In addition, for years, remuneration has been the main motivation behind the decision to change jobs.
source: Salary report Hays Poland 2022
Nevertheless, a favorable atmosphere at work can keep employees for longer. Awareness, not only of employment, which isn’t based on competences, but also the amount of earnings determined only by what is related to experience and position, builds such an atmosphere. And here – with a background full of bass and lofty tones – arrives in a red cape, the heroine of today’s article, The Salary Grid! I asked her for an expert comment.
The Salary Grid is a superheroine
Ada: Salary Grid, tell us what is your mission?
The Salary Grid: Equal pay for all!
Ada: But for everyone, everyone, no matter what they do in the company?
The Salary Grid, correcting the cell in row 4: No, no… For everyone at the same job level, with the same experience, with the same set of duties, and regardless of gender or age.
Ada: This is a very important addition. And the villains you’re mostly fighting with are…
The Salary Grid: Discrimination and inequality. They don’t even know how much damage they cause!
Ada: Then tell us what superpower are you using to overcome it?
The Salary Grid: The salary ranges!
Let’s show them the ranges!
The salary grids are used to indicate the salary ranges: more precisely, the spread of the basic salary of people employed in given positions. They constitute universal information that can be accessed by everyone in the organization.
– But don’t provide the exact salaries of specific people, because this is confidential data! – adds The Salary Grid.
However, you may wonder what our superheroine looks like. She is in the form of a table. The positions are sorted into levels I, II, III – or junior, mid, senior (depending on the type of company in which she saves transparency). It would also be good to separate them by departments/ type of teams. Each job category should have the minimum and maximum base salaries indicated in the columns. Their number depends on the variety of positions in the company and their type (specialized, production, management, etc.).
– Fewer categories allow for a wider range of salary ranges. It’s a more flexible solution, but with a lower level of transparency. In order to increase it, one should focus on more detailed categories – emphasizes The Salary Grid. – In this way, the company can clearly communicate that it doesn’t hide anything and that all issues related to the payroll policy are well organized.
Find out more: Check the salary calculator
Benchmarking – what does it mean?
Above all, it’s important to remember that salary grids aren’t letters in sealed envelopes that cannot be tampered with. They can and should change as the market and the economy evolves. Benchmarking, which should be an ongoing process within the organization, becomes helpful in this regard.
Benchmarking is about comparing yourself with others. More precisely, with other organizations considered to be leaders in the analyzed field or in the context of specific practices. It takes parameters into account related to the functioning of enterprises. The effects of such a comparison are primarily:
- identification of the best solutions,
- establishing the company’s image against the market,
- assessment of own competitiveness,
- setting strategic goals.
Salary benchmarking, or else, a salary grid helper
Competitiveness can be achieved through the offered products or services. Although, it’s created by people – it’s good for them to know their area as well as possible. Especially when the staffing gap in many industries is only widening. Therefore, it’s important to be competitive not only in the services market, but also in the labor market. Both to attract new people, but also to encourage those who are already employed to stay.
– You know, just as Batman has his Robin, I have salary Benchmarking – admits our expert. – It helps me determine the realities of the market. He won’t be offended if I tell you that his superpower is payroll reports.
So our superheroine and others in the superhero industry don’t always act alone. Mentioned benchmarking is based primarily on payroll reports. They can be used to track both earnings and non-wage benefits broken down into positions, taking into account the division into industries, sectors or geographic conditions. Many recruitment companies or job boards publish this type of data.
Gender pay gap
The pay gap is not only a phenomenon, but also an indicator used in statistical surveys. The conclusions of the research report of the Central Statistical Office aren’t very optimistic: despite the pandemic, the picture of the gender pay gap is similar to that revealed in the previous edition of the survey. As you can read in the report:
In Poland, in October 2020, this ratio was 4.8%. It means that by this value men achieved average hourly wages higher than women. In the public sector, women earned 2.3% less per hour of work than men, and in the private sector by as much as 12.9%. In all major groups of occupations, hourly wages of men were higher than those of women.
Source: GUS, Structure of wages and salaries by occupations in October 2020 (survey performed every 2 years)
As the Ombudsman pointed out in 2021, the lack of a wage grid, and thus the lack of wage transparency, strengthens inequalities in wages. In a European Commission study, disclosure of the pay gap was identified as one of the ways to combat the gender pay gap. In addition, it’s also worth remembering about the legal consequences: Polish regulations or EU directives prohibit discrimination.
– There is still a perception that money isn’t discussed – remarks the Salary Grid. – However, when this isn’t happening, there is no chance to find out if our salaries are fair. On the other hand, this topic usually arises by chance. Only then the employees find out about the differences in their earnings. And the chaos begins!
Salary grids are the order
From an employer’s perspective, salary grids help to check and then monitor pay equality. Instead of relying on the impression that the company is working flawlessly without any issues, it’s better to use hard data.
– In order to avoid chaos, it’s best to design myself right from the start! – our superheroine recommends.
Salary grids allow you to systematize the knowledge within which numbers should be used while building the teams. In this way, the organization also has control over this type of information, because it doesn’t hide anything. On the other hand, employees know where they stand and what their financial perspective is in the company. They also feel that the company isn’t concealing anything from them which concerns them directly. This affects the comfort of work. In other words, the lifting of taboos on wages is a win-win.
Modern wage policy, meaning what kind?
Modernity means taking into account corporate social responsibility (CSR). This scope also includes analyzing the internal activities of the organization in terms of social impact. Earning inequality affects the quality of life of those affected.
For women, for example, this is associated with an increased risk of poverty, also as a result of the gender gap in pensions. In 2020, it amounted to approximately 28% in the European Union. Data from Poland, collected by ZUS in March this year, are more pessimistic, because the difference in average pensions between women and men is almost 50%.
– Modern payroll policy is associated with increased awareness, opportunities and development. To make it possible, it must be transparent and anti-discriminatory – emphasizes the Salary Grid. – Without bragging, but relying on my experience, I have to say that one of the ways to achieve this is me.
Translated by: Agnieszka Szostakowska
