The 5 Steps to a Strong Salary Structure

Written by Navigo Admin

June 16, 2015

Salary expenditure can often be hard to accurately track and manage.

Having a strong salary structure and using software to identify problem areas can afford companies more resources to dedicate to more effective uses.

Getting on top of salaries means you can retain your star employees, while allowing you more resources to recruit and hire new employees efficiently.

Here are 5 tips to getting started with salary structures:

1. Put a value on it!

When undertaking the creation of a strong salary structure, your first priority should be to place a value on each position in your company. Take a look at the going market pricing for a given role or a commercially available salary survey to better understand pricing on various roles in different industries.

Once you have identified roles in the market that correlate with the roles and responsibilities in your organisation, you can extract the market rate data and compare this data to your current employees’ salaries. You can then work out the dollar and percentage differences between what employees are paid at your company and what the market rates are for similar positions.


“Getting on top of salaries means you can retain your star employees, while allowing you more resources to recruit and hire new employees efficiently.”


2. Where do you sit?

At this stage you can look at your company in the wider context of your industry. Use this perspective to compare your business’ overall salary level compared to the market average to identify if your salary rates are currently above, below or comparable to the rates of other organisations in the industry.

For Example:

  • Do you need to pay at a higher level to retain your current employees?
  • Do you want to pay at a higher level to attract better quality candidates?
  • Do you need to pay at a lower level because your company is low on finances?


3. How much can you afford?

If an employee is promoted, how much can you afford, comparable to the market rate, to pay them as an increase?

This figure is referred to as compensable leverage and mastering this figure will enable your business to strike a balance between providing an attractive promotion for employees and maintaining an affordable salary practice.

Using professional org charting tools can be key to working this figure out.


4. Be fair

By this stage you should have enough internal information to determine the equality of salaries between employees. You can use information gathered to work out if some salaries are disproportionate to others or are inconsistent to your organisation’s relationship to salaries across your industry.


  • Perhaps certain departments have multiple employees who are being payed a premium compared to market values.
  • Is your organisation’s overall performance for top tier/bottom tier jobs competitive at a market-level?

Some professional org charting solutions will even enable you to overview these problems using features such as conditional formatting.


5. Just do it!

Using the information you’ve gained from doing the market analysis of salary rates, you can now develop the salary structure for your company.

You can also use this structure to set rules around specific salary ranges, or pay grades for multiple positions to be grouped together who have a similar market value.


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