More Organizations Shifting to Market-based Pay Structures

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Nov 13, 2012, 10:00 ET

SCOTTSDALE, Ariz., Nov. 13, 2012 /PRNewswire-USNewswire/ -- Every organization's success depends on attracting and retaining the critical talent needed to execute its business strategy. Companies use competitive pay to ensure they have the right talent when it needs it most. Pay structures, the foundation of administering base pay within organizations, have seen a notable shift in recent years. A new study by WorldatWork and Deloitte, "2012 Survey of Salary Structure Policies and Practices," found that market-based salary structures are the most prevalent type of pay structure in use today (64 percent). While traditional and broadband structures have been popular in the past, they are less common today (23 percent and 12 percent respectively).

"Compared to prior survey results we have seen an upward trend of organizations using market-based structures over traditional structures," said Kerry Chou, a Certified Compensation Professional (CCP) and practice leader for WorldatWork. "Market-based structures have struck a chord with organizations because they combine the more well-defined parameters of a traditional structure with the range spread flexibility of broad bands."

In addition, while most organizations keep salary structures, competitive positioning, and frequency of update consistent, variation by job function, job level, critical work force segment, and/or geography is not uncommon. Of note, 37 percent of the organizations surveyed use different types of structures by job level and 30 percent by geographic location.

"Variation in structures based on critical workforce segments, geography and job function is not surprising to us, as we see continuing focus by employers on balancing the need to attract and retain critical talent with a laser focus on cost and judicious spending of organizational funds," said Gregory Stoskopf, director, compensation strategies for Deloitte Consulting LLP.

Other Key Study Findings:

Traditional structure range spreads appear to have increased over time and midpoint progressions have loosened.
For market-based structures, broadbands and step structures, larger organizations tend to have wider ranges whereas smaller organizations have smaller ranges.
Consulting, professional, scientific & technical services appear to be the heaviest users of market-based ranges.
Out of the 80 percent who responded that salary ranges are adjusted regularly in their organization, 70 percent do so annually while 12 percent adjust every two years.
The most popular tool for salary structure design, administration, record, and communication were spreadsheet applications (e.g., Microsoft Excel). Other common tools for design, administration, and record were point solutions (e.g., tools specifically focused on salary structure management) and Enterprise Systems (e.g., Oracle, PeopleSoft, SAP).

About the Study

WorldatWork and Deloitte Consulting LLP collected survey data for the "2012 Survey of Salary Structure Policies and Practices" from July 18, 2012 to August 10, 2012. The survey report was based on 910 responses. Survey respondents were WorldatWork members and Deloitte contacts employed in the HR, compensation and benefits departments of mostly U.S. organizations: 65 percent from the private sector and 35 percent from public sector and nonprofit.

About WorldatWork®

The Total Rewards Association

WorldatWork (www.worldatwork.org) is a nonprofit human resources association for professionals and organizations focused on compensation, benefits, work-life effectiveness and total rewards — strategies to attract, motivate and retain an engaged and productive workforce. WorldatWork and its affiliates provide comprehensive education, certification, research, advocacy and community, enhancing careers of professionals and, ultimately, achieving better results for the organizations they serve. WorldatWork has more than 65,000 members and subscribers worldwide; 95 percent of Fortune 500 companies employ a WorldatWork member. Founded in 1955, WorldatWork is affiliated with more than 70 local human resources associations and has offices in Scottsdale, Ariz., and Washington, D.C.

WorldatWork Society of Certified Professionals^® is the certifying body for six prestigious designations: the Certified Compensation Professional^® (CCP^®), Certified Benefits Professional^® (CBP), Global Remuneration Professional (GRP^®), Work-Life Certified Professional® (WLCP^®), Certified Sales Compensation Professional (CSCP)™ and Certified Executive Compensation Professional (CECP)™.

The WorldatWork group of registered marks also includes: Alliance for Work-Life Progressor AWLP, workspan and WorldatWork Journal.

Contact: Marcia G. Rhodes, (480) 304-6885, [email protected]

SOURCE WorldatWork