Effective pay structures offer employees a framework for progression and can help to encourage appropriate behaviours and high performance. As part of a reward strategy, a successful pay structure will be transparent, fair and flexible, and most effectual when it aligns with the organisation’s strategy and its values.

This factsheet explores the purpose of pay structures and offers an introduction to the commonly used types, including individual pay ranges, broadbanding, pay spines and job families. It takes a closer look at the issues HR professionals need to consider when designing pay structures, such as red circling or avoiding discrimination. Finally, it covers local pay structures, identifying the main approaches to local pay differentiation.

CIPD viewpoint

What is a pay structure?

Types of pay structures

Incidence of arrangements among employers

Design issues

Local pay structures

Further reading

This factsheet was last updated by Charles Cotton.

Charles Cotton

Charles Cotton: Performance and Reward Adviser

Charles directs the CIPD's performance and reward research agenda. He has recently led research into: how employers can help improve their employees’ understanding of their personal finances; how front line managers make and communicate reward decisions to their employees; how employers manage the risks around reward; how private sector employers can build the business case for workplace pensions; how employees form their attitudes to pay; and how the annual pay review process can become more strategic. 

He is also responsible for the CIPD’s public policy reward work and has given evidence to select committees on banking pay, redundancy awards as well as responding to various consultations, such as on pensions, retirement and MPs’ expenses.


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