What Is a Pay Range?

The salary system is an important part of the overall human resource management system of an enterprise. The salary system refers to the composition and distribution of salary, that is, what parts of a person's work remuneration consist of? Generally speaking, employees' salaries include the following major parts: basic salaries (that is, basic salaries), bonuses, allowances, and benefits.

Salary System

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As one of the forms of distribution value, remuneration should be designed in accordance with the principles of distribution according to work, giving priority to efficiency, considering fairness and sustainable development.

First, the value of the job

The value of job position refers to the job value of each position in the enterprise, that is, the relative importance of each position, or the relative contribution of each position to the company's performance. The value of the work here is a relative value, or "comparable value", which is to establish fair pay on a broader basis, rather than focusing only on the same position in terms of fair pay. The value of a job is generally determined through job evaluation or job evaluation.

Second, the ability of employees

The ability of employees is also a relative concept, which refers to the work skills and work-related knowledge possessed by employees. With the advent of the era of knowledge economy, the contribution of employees' intellectual capital to the company's performance has received more and more attention. The company's internal emphasis on human resource development and the flattening of the organization brought by informatization and process reorganization, the reduction of middle management work, the reduction of managers' promotion plans, and the consideration of the relative value of employees in the compensation system have become the starting point for motivating employees point. The relative value of employees is usually determined based on their ability to achieve their duties or mastery of responsibilities. The means for determining the relative value of employees is performance assessment and skill appraisal.

Third, the demand for human resources in related positions

The situation of different positions in the enterprise in the local labor market mainly refers to the salary levels of various occupations in the labor market. Market salary levels are determined through salary surveys.

Fourth, the local minimum wage

The local minimum wage standard specifies the living expenses required by local employees to maintain a certain standard of living. Companies can use it as a reference when considering the cost of living.

V. Human Resource Costs

The cost of human resources of an enterprise is affected by the value and benefits brought by the investment of human capital on the one hand, and also determines the productivity of employees, the capital structure of the company, the amount of reinvestment, economic conditions and competitiveness Wait. "Enterprise human resource cost" is difficult to define. How strong the enterprise human resource cost is, it is also difficult to measure and controversial. Therefore, the problems identified by "corporate human resource costs" often require employees and company management to resolve them through negotiation and cooperation.

Compared with salary system based on job content, competency-based salary system has the following advantages:

Government intervention in the pay system

In the previous planned economy, the government was the master of the enterprise. The government must intervene in the establishment of large and small businesses, especially human and material resources. The wage level of employees has always had a fixed pattern. Reform and opening up have improved this phenomenon and directly or indirectly promoted China's economic development, but the sequelae of this planned economy have not been completely cured.

Linking the salary system

When it comes to pay, people naturally associate the familiar vertical pay ladder. In fact, whether in many companies abroad or at home, the traditional salary level design is based on a strict bureaucratic level. The so-called "one post and one salary" respected in some Chinese enterprises is essentially based on the value of the post itself to determine the compensation of employees, regardless of the actual performance differences achieved by different employees in the same post, serious Affect the motivation of some employees. At the same time, companies also wishfully think that employees who perform well in lower-level positions will necessarily do well in higher-level positions, so promotion has become a major incentive for many excellent employees in enterprises the way. However, sadly, although many employees were eventually promoted under the subjective "effort" and objective "help" of the enterprise, they also entered a "Peter Heights" that was very embarrassing to employees and the enterprise. Management scientist Lawrence Peter in his 1969 book, Peter Principles, issued such a warning that there is a general tendency in companies and organizations to promote employees to a position that he cannot do. This situation has two consequences: one is that employees are not qualified for the job, can't find the joy of work, can't realize their own value, and often behave abnormally under the condition of low performance pressure; the other is that the employees are inappropriately Promoted to a position that he is not qualified for. On the one hand, the company has added a lame manager, and on the other hand, it has lost an excellent employee who can fill a lower-level position. As a result, businesses and individuals are victims of this inappropriate promotion. However, unfortunately, traditional compensation systems and promotion philosophy are still commonplace in enterprises.

Competitiveness of the salary system

China's reform and opening up has introduced advanced foreign technology and foreign funds, which have played a huge role in China's economic development. For Chinese enterprises, this is an opportunity, but also a challenge. It also brings many problems. The competition for talents is a very important aspect. It is no news that foreign companies are digging people from state-owned enterprises for high salaries. This will inevitably cause great disadvantages to the development of Chinese enterprises, especially after China's entry into the WTO. How Chinese local companies compete with foreign companies for talent has become an urgent issue.

Compensation system structure

Generally speaking, as long as the overall wage level paid by the enterprise is not lower than the minimum wage level, there is no need to establish a separate minimum wage. In many companies, the level of pay is inherently low. As a result of drawing such a highly egalitarian sector, the differences in other aspects (such as positions or skills) of employees have become minimal in the level of pay.

Evaluation of salary system

The so-called incentive is that the organization stimulates, guides, maintains and regulates the behavior of enterprise members by designing appropriate external reward and punishment forms and working environments, using certain behavioral norms and punitive measures, and using communication to effectively achieve the organization and its members Systematic activities for personal goals. Through continuous adjustments, it changes its mindset and behavior in a positive direction that is beneficial to the company. Based on the results of the annual performance assessment, it is determined whether to meet the needs of the company's development through promotion. In our country's enterprises, there are some problems that make the incentive role of pay less effective.

Components of the compensation system

Many employees view their compensation as the amount of money they receive that they can actually take home. However, when designing the compensation system, it is necessary to consider compensation as the concept of "overall compensation". The total salary includes not only the basic salary, but also various additional compensation (such as: shift differentials, cost-of-living salary, promotion salary, etc.), performance salary / bonus, and additional benefits.

Base salary + allowances + performance salary + extra benefits = total salary

The basis of the compensation system is the basic salary, which reflects the value of the job to the organization and is consistent with the value of the job in the external market. Because these two values sometimes conflict with each other, designers of pay systems often have to make difficult choices between internal fairness and external fairness. Different employees who perform the same job often have differences in basic salary because of their knowledge, skills, abilities, qualifications and performance. As a result, new employees receive lower base salaries than veteran employees with the same job experience. The salary range was established to provide upper and lower base wages for different employees engaged in the same job or group of jobs. The salary range reflects the maximum and minimum value of a job or group of jobs to the organization.

Allowances are wage differentials in addition to base wages, which reflect factors that are not related to performance. For example, night shift pay is given to employees who work night shifts on the shop floor, regardless of performance differences between them. This wage differential reflects the additional difficulties or pain associated with unpleasant working hours. The increase in the cost of living reflects the organization's desire to prevent inflation from impacting the purchasing power of wages by adjusting employee wages. Therefore, this part of the salary is given to all employees without reflecting differences in work or employee performance.

Performance pay is an increase in the base salary to reflect the difference in performance levels between different employees or different groups. The difference between it and any kind of bonus plan is that the bonus plan will not become part of the base salary and cause the base salary to continue to increase.

Additional benefits (also known as indirect benefits) are an additional part of wages, but are often not reflected in the direct compensation that employees receive. But when employees evaluate the fairness of overall compensation, benefits are often undervalued. Some companies struggle to make their employees realize the true value of the total compensation they receive, including both direct and indirect compensation, and this is why.

Compensation system capital concept

The compensation system based on the concept of human capital should include:

(1) Replace the narrower salary structure with a broadband salary structure.

(2) Competence-based compensation has its core shifted from work to people.

(3) While emphasizing internal fairness, more emphasis is placed on external market regulation.

(4) Expand and strengthen the role of variable compensation combined with collective or team performance.

(5) Emphasize recognition and reward for individual achievement or performance.

Guiding effect

Which positions in the enterprise have higher salaries and which positions have lower salaries reflect the focus of the company's development and the balance of various factors. That is, salary-oriented. Among the valuation elements of salary, performance, ability, seniority, education, position, etc. must always have a priority order. Different companies emphasize different aspects. On the other hand, these salary determination factors are not completely independent of each other, and are interconnected and influential. For example, competence and performance are basically positively correlated, and education is a necessary condition for competence, especially in the technical type. In the enterprise.

To realize the fairness of new and old employees in the compensation system of an enterprise, the solution is to design a unified standard compensation system. Emphasize the focus of salary on factors such as performance, ability, seniority, education, or position. At the same time, we must connect the old and new salary systems, and try to minimize the fluctuations caused by the salary adjustment process. For example, the salary and entrepreneurship allowances are set up in the salary system, taking into account the feelings of old employees to reflect their value; setting education allowances, job title allowances, or granting one-time placement allowances are beneficial to the introduction of enterprise talents. In the salary system, the interests of new and old employees are taken into account, and the difference in salary is given to them. No matter what employees implement a uniform standard salary system, as long as the conditions are the same, the positions are the same, and the compensation is the same. Make employees realize that the difference in salary between employees is not caused by the irrational company's salary system, but caused by individual differences. The sense of fairness among employees will naturally increase, and the relationship between employees can be handled well, so that the development of the company will have a stronger motivation.

Of course, the connection between the old and new salary systems is very important. Generally, it is best to use an excessive approach first. The various salary decision elements set are sufficient to reflect the situation of the company's various types of employees. The calculation and the old salary system are perfect. Butt. After implementation for a period of time, the proportion of each compensation element is adjusted to reflect the company's development strategic direction. Through the guiding role of compensation, the rational flow control of talents and the determination of the value of high and low values are truly established. Salary System.

Strategic relationship of compensation system

According to our survey, at least 60% of companies have not linked their corporate compensation system to strategy. Is it necessary to link salary design with corporate strategy?

The answer is yes. The compensation system of an enterprise must be linked with strategy. This is the basic rule that must be followed when designing the compensation system. First, if the company's compensation system is not linked to the company's strategy, it is a question of who is paid and how much is paid. Strategy determines the target and scale of a company's employment. The second is that if the compensation system is not linked to strategy, it will become a purely transactional management activity.

development trend

Scientific progress is changing with each passing day, and the knowledge economy is developing rapidly. On the one hand, the design of the pay system must be relatively stable under the guidance of basic principles; Compared with the traditional salary system, the 21st century salary system design presents new development trends. Being familiar with and grasping these new trends is important for timely adjustment of the salary system design and improvement of corporate performance.

1.Comprehensive compensation system

Salary is neither a single salary nor a pure monetary form of compensation. It also includes spiritual incentives, such as superior working conditions, good working atmosphere training opportunities, promotion opportunities, etc. These aspects should also be well integrated into In the compensation system, the internal compensation and external compensation should be perfectly combined, and it is not feasible to focus on either party. Both material and spiritual.

2. Close combination of salary and performance

Only when salary is closely combined with performance can we fully mobilize the enthusiasm of employees and improve their performance. Raising wages generally without considering individual performance will result in reduced performance. From the perspective of salary structure, the emergence of performance-based pay has enriched the connotation of pay. In the past, single pay became less and less, and replaced by a flexible pay system that was closely linked to individual performance and team performance.

3. Broadband salary structure

The reduction of salary levels, and the cross-remuneration of various job levels is a popular trend in the design of salary structures. Broadband's compensation structure can be said to be tailored to match the flat organization. It breaks the hierarchical system maintained by traditional compensation structures, and helps companies guide employees to shift their focus from job promotion or salary promotion to personal development. In terms of improvement of ability and ability, it gives a large salary increase room for those who perform well.

4. Pay attention to the relationship between salary and team

Carry out projects on a team basis, emphasizing that the working method of collaboration within the team is becoming more and more popular. In line with this, a special incentive plan and salary plan should be designed for the team. The incentive effect is better than the simple single person incentive effect. Incentive programs are especially suitable for organizations with a small number of people who emphasize collaboration.

5. Refinement of salary

Refinement of salary is first of all a detailed refinement of salary composition. The single, deadly salary composition of the era of planned economy no longer meets the needs of modern enterprises, and it is replaced by a new, diversified, multi-level and flexible salary composition. . The second is the specialization of the compensation design of specialized personnel. For example: marketing personnel play a huge role in the company, professional professionals are more exclusive, and the status of temporary workers is extraordinary. When designing these employees' compensation, they should not adopt the same compensation system as other departments. In addition, in the process of the system of some indicators, it should also be refined to avoid the "one size fits all" approach.

6.Transparency of the salary system

There has been much debate about whether employees should know about the compensation of their colleagues. It has two fundamentally opposing views. The opposition to public pay view argues that in real life, pay levels are often unequal. Those who are "in favor of public pay" believe that this helps improve incentives. They believe that workers who do not understand the level of each other's compensation cannot be properly familiar with the relationship between the level of effort and compensation, nor can they know whether their compensation is reasonable. Moreover, companies that implement confidential compensation systems often experience this phenomenon: strong The curiosity of employees made employees inquire about the salaries of their colleagues through various channels, and the confidentiality remuneration just formulated soon became transparent. Even if a strict confidentiality system is formulated, it is difficult to prevent this phenomenon. Since confidential remuneration cannot serve the purpose of confidentiality, it is better to use transparent remuneration directly and implement remuneration transparency. According to recent data, the call for transparency is also growing.