Is your compensation structure equitable and working to secure the talent you need?
Simply put, compensation structure (also known as wage structure or salary structure) is the framework your organization references when determining how each employee is paid. Defining (or refining) your organization’s internal salary structure provides the guidelines needed for assigning new hire pay rates, managing raises and distributing bonuses. KMA works with companies small and large throughout New England to ensure their compensation structure is competitive within their market.
Benefits of a Competitive Salary Structure
Have you refined your compensation structure in the past year? If you aren’t updating salary bands each year and performing a complete external market analysis every 2-3 years, your compensation structure is likely out of date. Keeping up with current market conditions, inflation and other external variables will ensure your company’s pay grades are competitive.
Benefits of a well defined compensation structure:
- Stay competitive within your market to attract and retain top talent.
- Establish new hire pay rates for each position / band of your organization
- Establish fair and equitable pay grades (salary steps) for everyone in the organization
- Strategically manage individual employee growth over time.
- Prevent compression in your pay bands.
- Understand how pay increases will impact your total salary expenditure.
Compensation Structure Process
KMA will work with you to define, and annually refine, your organization’s internal salary ranges or pay grades. We recommend an annual analysis and refinement of your pay bands based on inflation or another predetermined metric your company uses. This research is ideally performed in the quarter before your merit cycle. Having this data early will provide the time to make adjustments to your pay rates based on your organization’s current financial picture and employee retention goals.
We begin with a full external market review. This is a critical step to make sure your salary bands are competitive within your market. Each position in your organization will be reviewed, validating and/or adjusting the bands as necessary to meet the external market rates.
We can also consult with you on periodic pay grade reviews. This is a common request for clients who are gearing up for a hiring cycle and aligning their new hire rates with current market conditions. At this point, we also recommend reviewing current employees and pay bands to perform a pay equity assessment.
Working with KMA
Updating or creating a compensation structure from scratch is a daunting task for small and large businesses alike. It’s not just about money; the decisions you make with regard to your pay structure can directly impact your company’s future growth. That’s why it’s helpful to go through these processes with the right partner.
KMA works with businesses of all sizes to give them the tools and support they need to grow. With regional offices in MA, NH, RI and ME, our compensation experts can work with you to implement salary structures that help you attract and retain key employees, while facilitating your organizational goals.
Are you ready to discuss your compensation structure?
Contact KMA today and learn how we can help you save time and money through compensation structure analysis and design, along with other essential HR strategies.