Question

• What are some of the reasons that an organization may use more than one pay structure?
• How might this be beneficial?
• Are there any drawbacks?

Answer 1

The reason a company might develop multiple pay structures is that the market pay lines for a given association of positions help a faster pay succession or very diverse base pay for jobs at the same.

Benefits:

• Consistency in performance.
• Flexibility of the payment.
• Budgeting is better.
• Helps in competitive analysis.

Drawbacks:

• Employees can be de-motivated if the goals established are extremely difficult to accomplish.
• Too much of the process relies on the quality of decision made by a manager.
• It decreases pay equality and can make an organisation responsible to expensive equal pay challenges if not excised fairly.

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