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Part 

6

  Performance and Reward

374

Pay can progress within the grades in a narrow- 

or broad-graded structure on the basis of merit or 

time served in the grade. Broad-banded structures 

in  theory  allow  more  flexibility,  but  they  often 

contain pay zones that provide an indication of the 

extent to which the pay of individuals in a particular 

role,  or  cluster  of  roles,  can  vary  around  what  is 

known  as  an ‘anchor  point’  –  the  rate  for  a  fully 

competent person in a role that is aligned to market 

rates. Another form of pay structure is a pay spine 

(found mainly in the public and voluntary sectors) 

consisting  of  a  number  of  pay  points  that  mark 

progression on the basis of time served.

Some  organizations,  especially  smaller  ones, 

do  not  have  a  formal  graded  structure  and  rely 

entirely on ‘spot rates’, ie the rates for jobs do not 

define any scope for the progression of base pay in 

the form of a pay range or salary bracket, although 

bonuses may be provided on top of the base rate. 

A  less  common  method  is  to  have ‘individual  job 

grades’  which  are,  in  effect,  spot  rates  to  which  a 

defined pay range of, say, 20 per cent on either side 

of the rate has been attached to provide scope for 

pay progression.

Guiding principles for grade and 

pay structures

Grade and pay structures should:

 

●

be appropriate to the culture, characteristics 

and needs of the organization and its 

employees;

 

●

facilitate the management of relativities  

and the achievement of equity, fairness, 

consistency and transparency in managing 

gradings and pay;

 

●

enable jobs to be graded appropriately and 

not be subject to grade drift (unjustified 

upgradings);

 

●

be flexible enough to adapt to pressures 

arising from market rate changes and skill 

shortages;

 

●

facilitate operational flexibility and 

continuous development;

 

●

provide scope as required for pay 

progression;

 

●

clarify reward, lateral development and 

career opportunities;

 

●

be constructed logically and clearly so that 

the basis upon which they operate can 

readily be communicated to employees;

 

●

enable the organization to exercise control 

over the implementation of pay policies and 

budgets.

Types of grade and pay structures

The  main  types  of  grade  and  pay  structures  and 

their advantages and disadvantages are summarized 

in Table 27.1.

Criteria for choice

There is always a choice of structures; the criteria 

are given in Table 27.2.