Updated: Jan 31, 2022
Remuneration, one of the key elements in the Total Rewards model, remains the most critical factor for the attraction, motivation and retention of staff both to and in an organisation. To remain competitive organisations should review the way they establish their pay levels.
Role profiling and salary benchmarking can help organisations to overcome various issues. Crucially, this is a much more focused and detailed process than simply interrogating a traditional salary survey to establish a salary range for a job title.
Role profiling helps create profiles that replace complicated and poorly structured job descriptions, often no more than a ‘duty list’, with reference documents that are far more useful for employees, managers, and hiring teams. These role profiles form the basis of key talent management applications – from recruiting and onboarding to development, grading of positions, and succession planning. Properly constructed role profiles serve to establish role clarity and mitigate conflict arising out of uncertainty.
Salary benchmarking is a process by which an organisation jobs are matched (typically, at least 70% match) to similar jobs and descriptions in a selected salary survey or other source of market pay data.
Companies often come to us wondering whether their senior executives’ remuneration packages are in line with those offered by other organisations of similar size. Few employers routinely have access to this information and gaining it can be challenging. Pay varies widely depending on sector and many other factors. Salary benchmarking allows organisations to get an idea of these differences, while finding out pay levels typical in their own sector.
Some businesses have remuneration committees in place for this purpose but knowing where to start can be difficult. Salary surveys can be useful for benchmarking at more junior levels, particularly with the volume of data that can be generated when comparing pay for roles that are common in the marketplace.
The value of different components of the package can differ greatly depending on the employer. Salary benchmarking considers all aspects of remuneration to ensure an accurate reflection of the package is given. Importantly, salary benchmarking allows companies to make comparisons of these figures between a large number of businesses. As part of the analysis, research can determine the overall mean, as well as lower and upper quartiles, of staff members overall compensation packages.
In developing a suggested payline and salary scale structure the organisation’s policies on remuneration must be taken into consideration, such as skills shortages and premiums, competitive position, review dates, lead/lag policy, etc. One needs to identify the market segment with which the organisation should compare itself, e.g. industry sector and choose the position within that market for which you strive, e.g. median, upper quartile, etc.
Government has made significant changes to Employment Equity (EE) reporting requirements with the goal to improve the accuracy and efficiency of collecting data about wage disparities between the highest paid and lowest-paid employees. This will enable the Department of Employment and Labour to identify wage gaps and set benchmarks for different sectors.
Employers must ensure that they have policies and mechanisms in place to resolve remuneration gaps and avoid unfair discrimination, real or, perceived. If there are disproportionate differences in remuneration that are not justifiable, they need to take measures to progressively reduce such differences or face possible consequences in the years to come. Failure to do so may be costly as employers may receive hefty penalties should the Department of Labour conduct an equal pay for equal work audit.
With the correct role profiling and salary benchmarking technology, we are able to aid in helping you build consistency across the organisation. It is our pleasure to assist companies in these critical areas of attraction, motivation, and retention of their staff.
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