One of the many factors that attract employee to employers is the pay structure. Most employees look out for organisations that have a perceived fair pay structure. This fact raises two important question we will try to answer, the first, what is the relevance of a fair pay to a job? How do you determine if a job pay is fair?
The first question can be answered using J. Stacy Adams equity theory (it is also known a motivational theory). The theory states that there should be equity or the uniformity in the pay structure of an employee’s remuneration. In the event that the employee feels he is not being paid fairly for the amount of work he does, this inequity will result in lesser productivity, increased turnover and high absenteeism. According to this theory, remuneration system should comply with three types of equity:
- Internal Equity: The employee perceives the fairness in different pay for different jobs based on the nature of work involved, i.e. he must feel that pay differentials among the jobs are fair.
- External Equity: The employee should feel the fairness in what they are being paid is in line with what other players in the same industry are paying to their employees for the same kind of job.
- Individual Equity: The employee perceives the pay variances among the individuals who are performing the same kind of a job and within the same organization. Usually, an individual with more experience gets high remuneration as compared to the entry level staff irrespective of the nature of a job.
Having established why a job pay should be fair, let us consider how we can determine the fairness of a pay structure. The process of determining the worth or value of one job in relation to or compared to another regardless of the features or experience of the specific individual occupying the position is known as Job Grading. The process uses the skills required for each job, decision-making, and level of complexity to categorised the pay system.
To facilitate a better understanding of the concept of job grading, Nevitt Consulting is organising a 3-day training session in the months of June and July designed for CEOs, Snr. HR Executives and Professionals, HR Leads and HOD’s, Head of any HR function, CFOs, Administration Leads, and Accountants. The training objectives includes;
- Examining the development of Job descriptions, job specification and employee specifications in an organization;
- Comparing the duties, responsibilities and demands of a job vs other jobs in the same organization;
- Classifying jobs in an organization based on the responsibility level and value of individual jobs to the overall objectives of the organization.