Employee Salary Talks Stirring Unrest: How Can We Create Fair Pay Structures?

Hi all,

Employee unrest is seen within the organization due to employees discussing salary amongst themselves (despite strict rules against disclosing it). The solution I suggested is to have fixed salary grades for each cadre of employees or have more specific designations, for example, Senior Developer, Junior Developer, etc., and proceed accordingly. (Our organization does not have an HR department, and I am in the process of setting one up.) If the above solution is appreciated, how should I go about it? What is your opinion on the above problem? How do we decide the salary for employees? Are there any fixed policies? Please suggest as soon as possible.

Thanks

Hello Asha,

According to me, we cannot keep things secret. For example, you receive your payslip, and below that form, you see that it is very confidential not to disclose (even to the MD). But remember, this payslip, prepared for even the MD, is in the hands of an accounts clerk. Personally, I don't like the idea of keeping anything secret. Now, regarding your problem, I liked your suggestion, but could you provide me with a clearer picture of your organization structure and the pay levels for each position (approximately) so I can work on it.

Regards,
Sachu

Hi Sachu,

Thank you for your prompt response. There are no policies or criteria in place for determining salaries or grading here. In fact, no policies have been established yet. Currently, we have five levels:

- Managing Director (MD)
- Project Manager (15-20k)
- Project Leader (10-15k)
- Team Leader
- Team Members (Developers)

Additionally, other technical roles such as web designers, tech-writers, and testers are common across all projects.

I hope this information is sufficient for you. Could you please provide guidance on how to develop a salary policy and any other general policies? Can anyone suggest books or websites related to this topic?

Your assistance is greatly appreciated.

Salary structure is something that needs to be validated carefully - at least here - you want to ensure you are setting up your salary structure and job grades and bands to fall within your industry and area. That way if employees question you on why, for example, PMs are within a certain salary range, you have your backup factual data. Within each range, you also want your median/midpoint and tie in the job description to how you determine an employee's salary. There are lots of sites out there to help you, but you would want to start with your industry and area.

What industry are you in? If I have some information that matches, I can send it to you. Cheers! Rekha

Dear Rekha and everyone,

I am in an IT firm. It has 27 technical employees and two non-technical people (admin, HR) and one helper. It's a newly set up company. Please help me in formulating a salary policy. If you are aware of some sites or books, please inform me. How is it done in your organization? How should I go about it? I hope someone could guide me in this area. What are the various criteria that determine one is better than the other?

I am trying to set up a system here. I have been designing HR forms and letters, separate personal files for employees. My next step is recruitment activities followed by performance appraisal. For my work to move on, I need help in this salary structuring area.

Thanks

Before you embark on setting a salary structure, you should establish job descriptions as a basis for the ranges.

Job descriptions will provide reporting relationships and list responsibilities for the position, serving as a "talking point" in the recruitment and selection of future candidates.

The job description will contain:

- The Primary Function (of the position)
- Tools and Equipment Used
- Materials Used
- Source of Supervision
- Direction Exercised (over others)
- Working Procedure (step-by-step account of the job's major duties recorded in the order in which they are performed, or some other logical order, and the results expected.)

Of course, job descriptions change over time with added/deleted responsibilities or technological innovations. Nonetheless, they serve as a basis for salary ranges.

After job descriptions have been finalized (after interviews and reviews with the incumbents) and agreed to by the MD, the next step would be to select "Benchmarks," jobs in your organization that are common throughout the (IT) industry. Using these "Benchmark" jobs, you can determine the appropriate compatible salary range for your company.

I would suggest that you start at the lowest level and work up, but I see that someone has already begun the process [Project Manager (15-20k), Project Leader (10-15k)], so you may have to use these as "Benchmarks."

The development and implementation of a salary structure is not an easy task. It requires a combination of practicality, logic, financial acumen, and support from the MD.

One last word of advice, I would not proceed to the other tasks - recruiting (unless absolutely necessary) and performance appraisals - until you have developed a salary structure based on job descriptions.

Dear Asha,

Salary comparison among employees is something that an HR personnel have no control over. Yes, you can create an organizational structure which is grouped into X number of bands, e.g., Directors, Management group, Operation group, Support group, and so on. But before you do this, you have to have a clear picture of the company's growth in terms of turnover, say 5 years down the line. The expected manpower growth, the various types of job work undertaken by the company, the job profiles for various positions, the salary bands existing in a similar kind of industry, and which are the key and critical positions in the company. All the above aspects have to be looked into before creating a company band.

Some of my points.

Leena Nair HR Specialist

Hi Sachu,

I fully agree that salaries are not the best-kept secrets and cannot be secrets. Secrecy leads only to more intrigue and discontent. If the policies have good clarity, then the salary of any particular person could be explained logically and with conviction. Does it sound like too idealistic a situation? Personally, I would like to have total transparency on salary.

Bala

Dear Bill, Leena, and all,

Thank you for sharing your knowledge with me. Following your suggestion, I am commencing my work by gathering job description details. However, I would like to understand more about the benchmarking process. How should I proceed with it? Are there any websites or books that you can recommend on this topic?

Leena, would you mind if I send the designed JD template for further guidance? If you are okay with it, I would appreciate it if you could provide me with your email address so that I can forward the designed template of JD for this organization.

Bill, I have your email address. May I send the template to you for guidance in case I make any errors?

Regards,
Asha
[Email: ashakuncheria@gmail.com]

Hi,

I think you should first draw up a time frame highlighting the major activities and get support on that from the top management. I'm saying this because I have done this entire process of creating a salary administration system and found that the top management support to the entire process is very important. Otherwise, it may be very difficult to sell the system.

Dear Physhed,

Sorry for responding late. I really do feel that not only salary, but for that matter, anything should not have secrecy in organizations, especially new deals. I still don't understand the fact that a group of people at the top talk about the new deal in a closed cubicle and only some targets are rolled out to the lower structure. Why is this happening? Let all know about the deal - they should have the objective, the profits, etc. But to tell you the fact, still, we are good preachers but not better practitioners. Hopefully, one day, let's change the way an organization works.

Thank you.

Asha, I am also very keen on doing this benchmarking and completing the job descriptions of all our employees. Please share with me all the information you get from other sources that are not available in this forum.

Hi Rekha!

Further to your email with Sachu, I would like to inquire if I can also request from you a salary structure schedule. I have already tried to research from different private companies, and they have chosen not to disclose their salary scale, which I understand because they likely have confidentiality agreements regarding their records. I also made inquiries with various government organizations to check for an existing standard salary scale in the Emirates, but I received no affirmative feedback. It was quite disappointing because most of them responded in an annoyed tone or even hung up the phone, showing they did not care at all. This was far from my expectations in this Arab country because unlike in the US, Asia, or India, the government usually has a publicly available salary scale through government agencies involved in research and statistics.

We are engaged in consultancy services here in the UAE with six departments: Administration, Finance, Marketing, Research, and Consultancy. In terms of job responsibilities' value, Consultancy is the most important department, while Marketing and Research are almost at the same level. Administration and Finance are the least significant. Currently, we have Salary Grades 1 to 6, each with four quartiles at every level.

I would like to understand how far each department and job category are from each other, and perhaps with your guidance, I can create my own salary scale based on your sample.

I hope you can assist me with this.

Thank you!

Best regards,

wdpamintuan

Rekha, salary structure is crucial and needs careful validation, especially here. It is essential to ensure that your salary structure, job grades, and bands align with your industry and area. This way, you can provide factual data as backup when employees question salary ranges, such as for project managers.

Within each range, it is important to establish the median/midpoint and link the job description to how you determine an employee's salary.

There are numerous resources available to assist you, but it is recommended to start with your industry and area specifics.

Could you please provide details about your industry? If I have relevant information, I can share it with you.

Cheers!

Rekha

Dear Colleagues,

Setting up a salary structure for a new company should be a challenge for the HR professional. There are diverse ways of setting the standards:

1. Use industry benchmarks as a guide.
2. Consider the location of the company/factory.
3. Take into account employee qualifications.
4. Define responsibilities/job descriptions of employees.
5. Consider the nature of tasks to be carried out - hazardous or safe.
6. Assess the availability of qualified applicants such as air pilots, medical doctors, chartered professionals, etc.
7. Consider years of experience post-qualification and hands-on experience.

You could then create other subheads to accommodate allowances/subsidies, for instance:

- Lunch Subsidy
- GSM/Mobile Phone Allowance
- Tea Break Allowance
- Dressing Allowance for the marketing team and allied staff
- Sales Commission
- Production Bonus
- Shift Allowance
- Fuel (Petrol/Diesel) Allowance
- Traveling Allowance
- Education/Professional Membership Allowance

Generally speaking, depending on the industry and nature of operation, HR could create as many subheads as possible to increase people's income and serve as incentives.

Thanks.

Dear All,

As you all know, the basic purpose behind keeping salary secret is not to spread dissatisfaction amongst employees. Salary increments and promotions need to be announced in order to convey the criteria to employees. This, in turn, will establish transparency and reduce destructive discussions.

When deciding on the salary for a particular position, I believe the best approach is to work on the Job Description, or if possible, on Job Evaluation. By working on the JD, you will understand:
- The expected output from the job and the activities involved.
- How the job is linked to the attainment of the company's objectives.
- The required skill set for the job.

Then, based on the JD, you can conduct a market survey in your industry to determine the associated costs. It is not advisable to conduct the survey based on designations, as this would be like comparing apples with apples. It is recommended to start with lower-level jobs; for senior positions, consultancy involvement is advisable.

Regards,

Deepa

Dear All,

For an organization with fewer than 30 members, it is not fair to set up grades for salary. Let the employees feel that they are receiving personal attention, and their salary is purely based on their performance. Ensure that you provide periodic increments for their experience in the field and performance appraisals.

Teamwork is crucial for any organization. If salary increments depend on changing the grade, employees may perceive it as challenging, which could impact teamwork.

Don't disclose someone's salary; let some believe they have a high or low salary. What truly matters is how well they perform and their level of satisfaction with their situation.

Best,
Betsy Simon