Pay Structure Reflects Four General Architectural Principles. Essay

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Pay structure reflects four general architectural principles. The first is the minimum and maximum levels of pay within the organization, and to whom those levels go. The second is the general relationship between the levels of pay. In this, the organization must understand the different types of employees that it has, and what the relationship is between those types. The third factor is whether the pay structure should lead the market, meet the market or lag the market. This can be broken down by pay class as well, so that some positions lag the market while others lead the market, depending on the importance of the position to the company. The fourth architectural component of pay structure, which is the division of the total compensation dollar between base pay, merit pay and pay-for-performance programs (Henderson, 2006).

A pay policy line is best described as a trend line that reflects the "middle pay value of jobs that have been evaluated" (Ibid, p.266). The trend line will reflect the above-mentioned factors of whether the structure leads or lags the industry, and the relationship between the different pay grades. The pay policy line need not have the same slope throughout, but could curve. An example of this would be a company like Wal-Mart, where the lower levels of the organization are filled with tens of thousands of workers with a relatively flat pay structure.

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At higher levels, Wal-Mart employs some of the best talents in the field of logistics and supply chain management, and these talents are paid according to their talents, so the slope of the pay policy scale steepens at this point. This reflects that an organization might have more than one pay structure (i.e. For technical and non-technical staff). Alternately, if there is a smoother transition from lower level workers with some technical skills to workers with more advanced technical skills, there might be a curvilinear pay scale (a good example of this is a sports team, where players do the same job but those with higher skills see their salaries escalate at a faster rate than lower-skilled players).

The pay policy line is determined by a number of different factors. One of the most important factors is the market for different skill sets and where the company wants to position itself within that market. Another consideration is the degree of importance that the company places on base pay vs.….....

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