Question

How do you evaluate whether your organization's current pay structure makes sense in view of what competing organizations are paying?

Answer 1

We can evaluate whether my organization's current pay structure makes sense in view of what competing organizations are paying through effective measurement systems. My organization is a multinational publishing company and is the leading publisher in the industry. They have multiple offices globally. The company evaluates if the current pay structure makes sense by –

- Assessing if the compensation system aligns with the business strategies- Most often the business strategies keep changing as the publishing industry is a fast paced business organization. Hence, the compensation system had to be updated to align with the business strategies. For example, projects had to be taken up by my company to combat competition and the pay structure was based on the project driven goals.

- Employee feedback- It is important that the organization understand what the employees think of the current pay structure. It is necessary to identify if the employees are satisfied or not to avoid attrition rate. Hence, employee opinion surveys would help in this regards.

- Attrition rate, absenteeism and lower productivity- These are some of the negative signs that the employees are not satisfied with the way the organization functions or the pay structure. Hence, the company needs to identify the root cause of the problem and resolve them at the earliest.

- Market/industry standards- It is important that the organization assesses the compensation in par with the market/industry standards such as annual bonuses, competitive pay scales, budgets for salary increases, etc.

- Regular review- My organization regularly reviews the following to ensure that the compensation system is effective or not-

                - Career levels

                - Employee engagement

                - Pay scales in alignment with industry standards

                - Job evaluation

                - Job satisfaction

                - Incentives (long term and short term), etc

Thus, it is pertinent to say that it is essential that organizations regularly review their pay structure to check if it makes sense or not.

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