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October 23, 2010
Establishing Pay Practices for your Organization

A typical salary range structure has a 50 percent spread from minimum to maximum and a 10 percent difference in grade minimums. Often, the rate ranges are further broken down into thirds, to create ranges within ranges. This facilitates a common practice of granting proportionally higher raises to new employees whose pay rates are at the lower end of their grade. A properly structured system will accommodate every job in your organization.

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To make a structured system work, managers and supervisors must exercise self-discipline and be willing to hold themselves accountable for pay actions. The human resources administrator will usually be asked to authorize each pay action, applying some sort of checking mechanism to the task to ensure consistency and adherence to the rules.

Many organizations have customized their Human Resources Information System (HRIS) to perform this analysis, ensuring that employees receive raises within their grades, that the raises reflect employees’ performance appraisal ratings, and that percentage increases are tempered by length of service and current salary level within the pay grade.

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