gradar is the only tool you’ll ever need for structuring effective pay systems. We allow your organisation to perform detailed compensation and equal pay reporting, build pay bands and handle compa-ratio analysis.
300+ organizations trust gradar to drive performance and engagement.
Pay bands and groups
Go beyond job salary analytics and spot rates to establish fair
and transparent compensation structures in your organisation.
Ensure equal pay with regression-based pay gap analytical
features. Effortlessly generate pay bands and pay groups to
advance salary reviews, negotiations and offering processes. Use
structural data from pay scales, and internal and external
compa-ratio analyses as a basis for budgeting, controlling and
setting new ‘like job’ salaries - all under one roof in a single
software.
Compa-ratio analysis
Calculate your organisation’s internal and external compa-ratio
analysis, viewing the distribution of results and the salary range
penetration as a diagram - in addition to detailed result views
for the individual employee data sets. Get an overview of the
costs to raise all salaries to the Minimum or Midpoint of pay
bands, as well as to the reference value of market data, for base
pay or target compensation. Calculate the projected costs to
introduce variable compensation into your organisation.
Pay management explained
Compensation analytics and compensation structuring are the
fundamental tools of pay management. They involve analysing and
understanding the current distribution of salaries, deciding on
pay levels, fixing rates of pay and developing and operating
grade-based pay structures.
Grade Structures
A grade structure consists of a hierarchy of levels into which
jobs that are broadly comparable in their requirements are placed.
gradar is a modern and affordable job grading tool that analyzes
and evaluates jobs in three distinct career paths and 25 grades:
Individual Contributors such as non-skilled and semi-skilled
labourers, skilled specialists, professionals and strategic
experts.
Management roles such as team leaders, middle management and top
management functions.
Project Management roles with the core objective of
coordinating, planning and distributing personnel, resources and
budgets.
Experts, "Gurus"
Professionals
Skilled Labour
Un-skilled / Semi-skilled Labour
The Grade is a result of the project's dimensions:
Timeframe, budget, leadership span, complexity, ...
General Management
Top Management
Middle Management
Supervisory Management / Team Leadership
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Individual Contribution
Project Management
Management
Grade and Pay Structures
A grade structure becomes a grade and pay structure when pay bands
(also called brackets, ranges or scales) are attached to each
grade or level. In other words, a pay structure describes an
organisation's willingness and ability to pay.
Pay Bands
Formal graded pay structures are defined by the number of grades
they contain, as well as the span or width of the pay bands
attached to each grade.
Pay Bands
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Pay bands are defined by the difference between the lowest and the
highest monetary value set for each grade or level.
The structures define the different levels of pay for jobs or
groups of jobs from job families. They do this with reference to
external relativities established by market rate surveys and
internal value determined by job evaluation. They provide scope
for pay progression in accordance with performance, contribution
or service.
As a result, an employee’s minimum salary is at least on the
respective pay band minimum and, ideally, there are no outliers
below or above the pay band. When pay bands are modelled in a
grade structure, they are typically narrower than if they were to
modelled for a broad job category such as executives or subject
matter experts - known as broadbanding.
The progression of employees within a salary band should take into
account various factors such as budget [cost of living + merit],
compa-ratio within the pay band, resignation risk, talent
potential and more.
Pay Groups
In some compensation structures, reference points may be placed
within the bands to indicate the height of pay for jobs depending
on the grade and tenure. These systems are called pay groups and
are quite typical for collective bargaining agreements as they
show monthly wages.
Pay Groups
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Segmentation of Pay Structures
There may be a single grade and pay structure covering the entire
organisation. Occasionally, segmentation is based on job families,
involving the use of separate pay bands or bonus plans for
different categories of staff so that special requirements can be
catered for.
A typical approach is to develop a job family structure that has
separate grade and pay structure for different groups of staff.
The traditional form of segmentation is to have one structure for
staff with salaries and another for manual workers with wages. The
use of separate structures for white-collar and blue-collar job
holders is becoming less common and is evident from recent updates
of collective bargaining agreements across the globe.
The trend within these agreements is to harmonise non-analytical
job evaluation methods with terms and conditions between different
groups of staff as part of a move towards single status. This is
further supported by pay equity legislation and an increasing need
for skilled labour even amongst traditional blue-collar jobs.
Three Steps to Modelling Pay Bands
Modelling pay bands is not a science, it’s an art. Compensation
structuring uses statistical methods alongside multiple
information sources to design a structure that is appropriate to
the culture, characteristics and needs of the organisation and its
employees. It follows an evidence-based practice, taking into
account the following sources:
Internal data from the evaluation and grading of jobs, alongside
a statistical analysis of current salaries.
Market benchmarks to assess the price of similar jobs in other
organisations.
Stakeholders’ values and concerns.
The compensation practitioner’s professional expertise in
designing pay structures.
Step 1: Analysis of the Current Salaries with Regard to the
Distribution and Correlations of Salaries
To start the compensation analysis, we examine the grade-based
distribution of salaries. This requires the evaluation of all
the job holders’ functions, as well as matching the employees to
their actual jobs.
Employee data must then be prepared for compensation analysis
and modeling by extrapolating all part-time salaries, allowances
and guaranteed payments to full-time-equivalent figures. With
this, we’re able to compare relevant data which gives the most
useful results.
We then use a simple scatter diagram to show the current
distribution of salaries.
current salaries
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Additionally, we run some simple descriptive statistics to learn
more about the distribution of salaries. We consider the
grade-based percentiles, such as the median, and the grade-based
averages.
This information shows us where current salaries are closely
distributed and where they are far apart. In this case, our
distribution analysis shows - especially in grades 12 (49%), 13
(56%) and 16 (50%) - the salaries spread relatively widely.
For this purpose, the distance from the 10th to the 90th
percentile (80% of employees) and, if required, the distance
from the 5th to the 95th percentile are considered. The broader
the distribution of salaries, the more challenging the modelling
of salary bands and the management of salaries becomes.
We may use slightly more advanced statistics to view the
correlations of different factors such as grade and height of
salary. In this example, the analysis shows that there is
already a strong, positive correlation between grade and salary
level (r= 0.89).
Further options could be to look at salary and gender, salary
and age or salary and job tenure. We could also use multivariate
analysis and regression analysis to learn more about our
population. The bigger the population, the higher its
significance as the basis for an internal benchmark.
Step 2: Comparison of Current Salaries with a Market Benchmark
For the market benchmark of actual salaries, data from
compensation benchmark surveys and collective bargaining
agreements is used in a two-step process:
Analysis of an individual job holder’s comparative ratio.
Grade-specific aggregation of market benchmark prices.
gradar supports the automated matching of its grading results to
benchmark positions from leading global compensation surveys and
shows a strong correlation to existing collective bargaining
agreements.
The individual compa-ratio analysis compares an employee’s
current salary with the market benchmark (e.g. median-based
pricing). A compa-ratio is a measure of the relationship between
actual and reference rates of pay as a percentage.
Compa-ratios can be used to learn about the overall market
deviation - the relationship between market prices and actual
rates of pay. An overall compa-ratio of 98% means that, on
average, employees are paid 2% below the market reference point.
The aggregation of benchmark prices gives an overview of your
employee population compared to the external benchmark. Using a
population-based average of median and percentile values is a
great way to take into account your organisation’s specific job
types and distribution of job holders.
We associate market pricing with job evaluation in order to
develop a pay system that is internally equitable as well as
externally competitive. That said, it can be difficult to
achieve. Paying the competitive rate for a job can upset
internal relativities as established by our analytical job
evaluation.
Insight Into US-American and European Compensation Management
Practices
There is a difference in the way US-American and European
companies use job evaluation. In our experience, American
companies often focus on the “price” of a job, whereas many
European companies focus on the “value” of a job to determine a
salary range.
The difficulty with the former is that many companies compare
their jobs to the wrong levels in the benchmark surveys,
resulting in significant pay budget losses. gradar dramatically
enhances the American market job pricing strategy by ensuring
jobs are levelled correctly. Removing subjectivity from the job
analysis process saves the company a significant amount of
money.
Step 3: Modelling Pay Bands
From the analysis of current salaries and market data, together
with the knowledge of stakeholder values, the experienced
compensation professional will be able to model pay bands and
pay groups. They can also design hybrid solutions that enable
the organisation to exercise full control over the
implementation of pay policies and budgets.
The salary bands are often designed with a +/- 20% spread around
the grade-specific midpoint. The height of the midpoints depends
on the results of the internal and external analysis, as well as
the strategic goals of the company. A typical statement in an
organisation’s compensation philosophy is about the pay
positioning. From a benchmarking perspective, the base pay
positioning may be aimed at the market median, whereas the total
target compensation positioning may be aimed at the upper
quartile.
In some cases, such as broad-banded structures, more than two
segments are used. A basic example is the use of an entry-level
low third, a middle third for full achievers and a high third
for top performers or long-tenured personnel.
There is no one-size-fits-all approach. No algorithm will build
the perfect pay structure. Ultimately, it is always a decision
driven by an organisation’s needs for flexibility and continuous
development in rewarding performance and an increase in skill.
What’s the Evidence for Compensation Structuring?
General pay satisfaction is more strongly related to distributive
justice than to procedural justice. Without structures, there can
be no distributive or procedural justice. Pay bands and job
evaluation may play a big part in achieving equity, fairness,
consistency and transparency when managing gradings and pay as
well as avoiding discrimination and biased-decision making.
Connect with a gradar consultant
To help you get the most out of gradar, we’ve built a network of
implementation partners for when you need project support. These
experts are trained in the gradar system and available worldwide to
consult on job architecture and compensation. Oh - and you’ll still
retain all the gradar knowledge in-house after your project!
It’s time to optimise your pay, productivity and performance
Just like these guys…
BirdLife International
“gradar has been revolutionary and the support we have received has been exceptional. The system is user friendly and I have great confidence in the fairness of the scoring. It’s brilliant to have clear visibility of our roles in one system and to be able to easily cross compare and benchmark them against each other. We now have firm evidence to develop our pay and grading data, and I would recommend gradar to any organisation looking to transform their job evaluation systems.”
“gradar helped us to structure our compensation schemes and this is the foundation for a state-of-the art performance management, equal pay, consistent career paths and having the right conversations around compensation with managers and employees. I’d recommend it to anyone who needs a solution for this!”
“We recently implemented gradar's job grading system for our business and we are very pleased with the results! The application was extremely easy to use and the interface was intuitive and user friendly. The system was also very flexible, allowing me to customize the application to fit my specific needs. I highly recommend this system for anyone looking to perform a detailed job evaluation exercise!”
