The Importance of Broadband Pay Design

HR is regarded as the most critical elements in the organization because it determines the ability of the organization to achieve its set goals and objectives and also if the institution will realize a competitive advantage in the market. Organizations are adopting different rewards system to enable their employee to consistently provide high-quality services. However, despite the system used, the basic principle of the reward system is that it should enhance equity, consistency, fairness, fairness and continuous development (Armstrong & Taylor, 2014, 736). The reward management process within the organization integrates the aspects such as design, implementation, and maintenance. The core goal of the rewards system should be to improve the individuals, teams and organization’s performance. Therefore this report, therefore, will outline why the grading structure has to be adopted and the payment be done using the broadband pay design. The report also recommends the adoption of competency-based pay as a key factor towards pay progression.

Job Evaluation Criteria

ABC has to reward employees depending on the values that they create to inspire positive behavior and outcomes. Proper rewards system motivates people to be more committed and engaged to produce high-quality services to the institution. This is critical in the development of performance culture and it can also be used as a strategy towards attracting and retaining people with high competency within the organization (Armstrong & Murlin, 2007, 152). Organizations have to align the employee’s values to organizations goals for the rewards system to be effective.

According to Armstrong and Taylor (2014) job evaluation systematic [process that is aimed at establishing an employee relative job value and the size of the job to facilitate the establishment of the internal relativeness Therefore the aim of undertaking the job evaluation process  is to gain information that will help in designing, and maintaining defensible and equitable pay structures and pay grade (Armstrong, 2018, 38). An effective job evaluation mechanism should provide an objective basis of grading jobs within the grade structure to enhance consistency in decision making on matters relating to job grading. Job evaluation needs to be in tandem with HR principle that emphasizes on offering equal pay for the work that has the obligation of Equal value.

The rumbling observed in the institution and claims that the employees at the IT department receive more pay compared to the rest is due to either lack of communication and use of subjective job evaluation process. When there is a perception of biases within the organization, employees become demotivated and the quality of their work reduces (Armstrong, 2014, 328). According to the equity theory, people are motivated when treated equitably. The equity in the workplace involves the perception that one group has with regards to another in terms of how they are treated (Armstrong & Murlis, 2007, 168). It is evident that the employees perceive biases towards the IT department. Job evaluation strategy can take two forms either analytical job evaluation or non-analytical job evaluation. With the current situation at ABC Company, this report recommends the used of analytical method of evaluating employee job. The approach that the organization should take includes: job classification, paired-comparison ranking, internal benchmarking and market pricing.

With the recent restructuring of the organization, most of the employees do not understand their place within the organization. There has been a consistent case of job overlap which can lead to redundancy. Therefore job classification facilitates the identification of the number, job characteristics, grades in the job grade and the pay structure in which the job will be placed. Therefore job classification provides comprehensive details concerning the placement and pay of a particular job or groups of jobs within the organization. Classification also fosters the understanding of the skills, responsibility, and decision making the authority of a given job. The complaint by the women employees at ABC is valid because the classification and role distinction within the organization is still ambiguous and thus job classification will provide a clear-cut distinction on the role and competency required in a given grade and thus reducing role overlap and redundancy (Armstrong & Brown, 2018, 156). Job evaluation facilitates the development of a job description by developing a comprehensive role profile level of responsibility, skills and knowledge requirement.

Most contemporary organizations have adopted the paired comparison ranking to enrich their content of job evaluation. Paired comparison ranking provides a more complex approach to whole job ranking through the use of statistical techniques (Armstrong, 2014, 763). The paired comparison approach involves comparing one job as a whole distinct from other jobs and thus when the job is considered of higher value it gains more point than the one compared to its which the institution thought had similar value. After comparing different task they are ranked from ‘A’ to the last value. The merit of paired comparison approach of job evaluation is that is offered the most effective approach of comparing two jobs and determines which one has a greater role than the other. When this approach is adopted by the ABC Company, might be the women will realize that the institution will realize it devalued the job role of the women employee and therefore reinstate it at its appropriate grade.

There is conflict within the organization in terms of role overlap, undervaluation of job and favoritism in terms of job promotion and pay. To effectively solve this challenge, the organization has to undertake an internal benchmarking. Internal benchmarking involves comparing job that is well paid with those that are under review. There is a contention on the job role of the IT department which other employees feel they are favored more than the other department. Thus the organization needs to undertake an internal analysis to determine if the claim is hypothetical true. ABC Company should, therefore, compare job description and responsibility of the IT Department against those of their counterpart in Human Resource or operations department who are appropriately graded and paid. The Internal job ranking approach involves undertaking a whole job analysis instead of analyzing it factor by factor. When undertaking job comparison or job matching, it is important to only select the most appropriate career band as the next step to selecting the next career goals (Shields et al., 2015, 132)). The global goal selected should act as a differentiator between each level and outlining the role that falls within each professional band. The job matching facilitates the provision of the most effective alternative towards HR pay complexities; because it integrates the use of internal and external knowledge to improve on the services. Within any career band, there are depicters that outline the role expectation at respective levels such as training, mentorship, improvement processes etc.

It is critical for the organization to undertake a market pricing strategy to evaluate the job role within the organization. Market pricing involves acquiring contemporary information relating to market rates to develop a comprehensive decision on the organizations pay structures, and individuals pay rates. The approach is effective when used in determining the job content and pay of the executives in an organization (Ntim et al.,2014, 14). Through this organization is able to retain and attract people with high-quality competency. Market analysis can be used by the institution to develop pay structure, pay range which is attached to the respective grades within the organization (Shields et al., 2015, 234). Market price provides the broadest approach of undertaking job evaluation since the information is obtained from the large population and provide an overview of the trending market rates. The data can be obtained from the salary surveys, rewards consultants, internet, professional bodies or from recruitment agency data (Armstrong & Cumming, 2008 160 ).

With a wide source of data to undertake the market pricing approach, it is significant to assess the authenticity of the data obtained. Though the Internet is a good source, ABC Company should adopt the rewards consultants because it provides data that is specific to a given situation. The Company should outsource a consultancy firm to help the organization acquire an in-depth knowledge of matters of pay structure. Despite the process outsourcing the rewards consultants can be expensive, the ultimate output will have higher quality compared to using cheap sources whose data validity, reliability, and authenticity are not ascertained. Through market pricing, the organization can determine if it is paying its employees competitive salaries or whether the payments are not in tandem with the current trends. Therefore if ABC undertakes the market pricing approach it will overcome the challenge of higher employee turnover and low motivation and satisfaction level. The current unfairness in terms of gender biases within the pay structure and role profiling that is witnessed within the organization can damage the institution reputation if it is not checked and addressed,

Job Evaluation Process

A job evaluation process is aimed at enhancing equity, transparency objectivity, fairness, and accountability. The first step in job evaluation is analyzing the current situation of the organization. The current situation at ABC Company is not healthy for the survival of the firm. The first challenge is that the company organized are a structure without adequately preparing the employees for the change that they should anticipate. There also ambiguity in terms of responsibilities of the frontline staff. Through the front staff are trained to acquire skills to operate the machinery, the female employees feel underutilized by the organization. There is also a concern over equal pay with regards to the changes in the IT department. There is also misunderstanding regarding lack of job description upgrading despite the increase in the number of employees by two hundred percent. This reveals that there a lot of unaddressed issues within the organization relating to rewards and pay that organization has to solve before they jeopardize the organization’s operations.

After analyzing the current organizational process, the organization then defines the objectives and the principle that will guide the pay structure development. The establishment of principle and objectives will enable the organization to focus on the achievement of specific goals. The goals of the organization will be; to enhance equity, fairness, transparency and accountability in the pay structure by enhancing equal pay for the work of same value; eliminate the cases of role ambiguity by clearly defining the job details of each grade within the organization, Establish clear communication channel between the management and the employees; Eliminate any cases of biases relating to role profiling and job description across the organization’s functions.

The third process involves deciding on the program and the methodology that will be used to develop an effective pay structure. The restructuring of the organization structure affected all functions within the organization regarding the role description and pay structure. It is therefore recommended that the organization set up a steering group and task force to provide a wider analysis of the current challenge that the organization is facing (Brewster, 2017, 33). Task force will facilitate the provision of solid recommendations due to the rigor and comprehensive analytical approach and knowledge they apply in understanding different concepts within the organization. Task force is also the best approach because it comprises of people with diverse skills, competencies, and therefore when they work collectively as a team they can present an all-around solution that can be applied in different function and situations. In this sense, the employees in the IT department, HR, finance, operation, marketing, and PR will provide their perspective which can be used to enrich the role and rewards structures within the organization. This report suggests the establishment of a task force comprising of management and employee representatives from all functions within the institution and two external experts in rewards management to enrich the quality of recommendation and solutions that will be put forth(Brewster, 2017, 32).

After developing the task force, the team choose the scheme and define the key features of the rewards structure. The team can decide to adopt the job ranking, job family structure, broad-banded structure or job grading structure. The task force will focus on the graded structure to solve the rewards complexities experienced within the ABC firm. The task force will undertake a key function within the organization such as Human Resources, Marketing. IT Administration, and finance and determine the disciplines that each function need to undertake. The task force also clarify the classification of different function within the new structure because the restructuring had cause uncertainty in terms of pay structure leading to other receiving more pay than others while other receiving less responsibility that other which can affect them when the organization opts for performance-based pay (Armstrong & Cummins, 2008, 142).

The task force can then evaluate the benchmarking job to ascertain the appropriateness in terms of remuneration, basic pay and role composition. The task force can analyze the job composition of the human resource manager, operations manager, and the finance officers. The benchmarking roles act as a reference to which other jobs are valued and compared. The task force analyses the roles against the set elements and factors. The approach which can be taken includes generic role profiles which cover the cluster roles of the team leaders. In this case, they can also adopt a role to role matching or role to grade matching (Ntim et al., 2014, 38). The task force can undertake analytical matching which can be used in the placement and grading of jobs using the evaluation of the benchmarks

The design grade structure is developed after evaluating the benchmark jobs. According to Armstrong (2018), total rewards system is the most effective rewards concept as it integrates all form of rewards such as intrinsic, extrinsic, external and internal motivation. Broad-banded pay structure is the most effective pay structure in the organization. Due to the restructuring of the organization’s organogram to reduce the level of management, the resulting effect was a reduction in grades within the system. Therefore most of the responsibilities were categorized together. This the most effective pay structure will be the broad-banded pay structure because e it fosters wider pay range span which takes into consideration the need for equal pay and fairness. The jobs are branded together using both the market rate and internal job evaluation processes. The ABC Company has fewer levels of management which imply that the organization has adopted a flat organogram. Therefore, in this case, the bands within the organization are broad covering a multitude of employees within the institution. To enhance equity, it will be essential for the institution to adopt the broadband pay structure.

After identifying the paid design, the task force need to match the remaining roles to grade. With conflict on equal payment, lack of updating the job description details for three years, matching the skills will make the employees get new roles or have their recent job modified (Armstrong & Brown, 2018, 131). Matching the remaining job will involve undertaking job design strategies such as job enlargement or job enrichment for the female employees who feel the organization is undervaluing them.

The last step is the implementation where the institution acts on the recommendation of the group. During the implementation, the progress is continuously analyzed to ascertain the success of the plan. The quality impact of the scheme will be evaluated with regards to the objectives set at the beginning of the process.  Therefore the task force shall assess whether the pay structure has enhanced equity, transparency, motivation, and fairness. The process should enhance the clarity in a job description and role profiling. The progression on the job payment should be based on the competencies of the person. Competency-based pay involves people receiving financial incentives based on the level of competencies they demonstrate in carrying out their roles (Armstrong, 2007, 180). Rewarding employees for what they are doing motivates them to even performing better.

Recommendations

The most appropriate pay structure that ABC should adopt is the grading pay structure where the employees are graded depending on factors such as the nature of the job and seniority to enhance consistency and fairness. After grading the employees, with the nature of the organization’s structure, the organization can adopt broadband pay structure to determine the rate of rewards for each employee. The pay progression of the employee should be based on their competencies. The competency-based pay is effective because it encourage employees to provide high-quality services to the organization.

In conclusion, ABC Company has to adopt the graded pay structure to reduce the level of conflict witnessed within the institution. Due to the flattening of the organization structure to minimize the management cost, the most appropriate pay structure design is the broadband pay structure. The pay progression within the company should be based on the competencies of the employees. However, organization can integrate the pay structure to achieve maximum result from the employees.

References

Armstrong, M. and Brown, D., 2018. Job Evaluation Versus Market Pricing: Competing or Combining Methods of Pay Determination?. Compensation & Benefits Review, p.0886368718765827.

Armstrong, M. and Cummins, A., 2008. Valuing roles: how to establish relative worth. Kogan Page Publishers.

Armstrong, M. and Murlis, H., 2007. Reward management: A handbook of remuneration strategy and practice. Kogan Page Publishers.

Armstrong, M. and Taylor, S., 2014. Armstrong’s handbook of human resource management practice. Kogan Page Publishers.

Armstrong, M., 2018. Armstrong’s Job Evaluation Handbook: A Guide to Achieving Fairness and Transparency in Pay and Reward. Kogan Page Publishers.

Brewster, C., 2017. The integration of human resource management and corporate strategy. In Policy and practice in European human resource management (pp. 22-35). Routledge.

Ntim, C.G., Lindop, S., Thomas, D.A., Abdou, H. and Opong, K.K., 2017. Executive pay and performance: the moderating effect of CEO power and governance structure. The International Journal of Human Resource Management, pp.1-43.

Shields, J., Brown, M., Kaine, S., Dolle-Samuel, C., North-Samardzic, A., McLean, P., Johns, R., O’Leary, P., Robinson, J. and Plimmer, G., 2015. Managing employee performance & reward: Concepts, practices, strategies. Cambridge University Press.