The Influence of Pay Structures in a Successful Organization

740 Words3 Pages
Understanding and developing a pay structure can greatly influence an organization’s culture, effectiveness and ultimately their success. Pay structure is one of the most important fabrics in a healthy compensation plan. The structure and communication of the plan will separate aspiring plans from those plans that achieve long-term success. Pay structure often differentiates itself through various types and methods. A trending approach on the current market is broad banding. The broad banding theory is about creating a flatten hierarchy. Companies are now looking at how to create a team philosophy that centers on less upper management positions and allow group and teams to develop and function within those same capacities without the direct line or chain of command. Charlotte Mecklenburg Schools HR created a flatten hierarchy mentality after the last re-organization without the pay structure. Most of the positions in HR changed to reflect a new team concept to performing as an HR department. The changes included eliminating most of HR management positions, and establishing teams and groups within HR, this is further confirmation that this process is a growing trend. The district decentralized HR decision-making ability from the top and allowed it to become local, aimed at enhancing performance, and improving customer service. Broad Banding Advantages The broad banding of pay structures have condensed many of the pay steps and grade that once dominated most industries pay structures. This method also allows companies to overlap pay groups and flatten the organizational structure especially within the higher levels of management in company. Flatting the hierarchy verses, vertical approaches create more opportunities for multi-skil... ... middle of paper ... ...b description method based on outdated market analyses. The problem with this pay structure it is hard to administer in a public sector pay plan when the common though process is to do more with less. This encourages employees to function outside of their job description and complete work that is could be consider outside the band for their position but does not compensate them for the work they perform. Shrinking budgetary constraints have been the main culprit behind flatting organizational structure but banding would be hard to adjust for lower level position based on the adapted theory of the district. I do think that employees could benefit from broad banding if the pay structure supports and compensate employees for their efforts and work performed. Works Cited Milkovich, G., Newman, J., & Gerhart, B. (2014). Compensation. (11th ed.). New York: McGraw-Hill.
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