This factsheet was last updated in January 2013.
What is a pay structure?
A pay structure is a collection of pay grades, levels or bands, linking related jobs within a hierarchy or series, that provides a framework for the implementation of reward strategies and policies within an organisation.
Pay structures may be designed to achieve several objectives:
- to align reward strategy with the business strategy of the organisation, such as encouraging high performance levels
- to bring order and clarity to an organisation and its employees in managing pay increases and career progression
- to help ensure fairness and lawfulness, for example by adopting an approach that avoids gender discrimination in pay.
While some smaller organisations manage without any form of pay structure at all, larger or growing organisations, typically once they have reached around 200-250 employees, usually find such arrangements essential as a framework for reward management.
Different types of pay structure are linked with varying types of pay progression arrangements. More on incremental pay can be found in our factsheet on pay progression.
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- What is a pay structure?
- Types of pay structures
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- Design issues
- Local pay structures
- CIPD viewpoint
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