Editor's message: In a pay and grading structure, jobs are placed in order of hierarchy and arranged into a series of grades, with salaries attached to each grade. Having a clear grading structure helps to provide a logical basis for objective decisions about pay and progression. Although some smaller employers may decide that it is not necessary to develop a formal grading structure, it is nonetheless useful for them to clarify the rationale on which decisions about the relative value of jobs and how they are rewarded are made. For employees, a grading structure can help to make it clear how their role and pay relates to others within the organisation and externally, and how they can progress to a higher level position at the organisation.
When devised in conjunction with a thorough job evaluation process, a pay and grading system can help to prevent equal pay issues. Some organisations have different grading structures in place for different types of job roles, but you need to keep a watchful eye over the risk of equal pay issues where this is the case.
A grading structure will need to be supported by accurate, up-to-date information on market pay rates. There are numerous ways in which you can gather this information, from looking at salary surveys to speaking to consultants. However, you should be clear about what information you require, who you want to compare against and the advantages and disadvantages of the different information sources.
Sheila Attwood, managing editor, pay and HR practice
Updated to include salary data from the June 2018 XpertHR Technology Salary Survey.
Updated to include information on the 2018 UK Corporate Governance Code, effective from 1 January 2019.
Updated to take account of the General Data Protection Regulation, in force from 25 May 2018.
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The 2015 survey of pay and grading structures looks at the type of structures in use and how they are designed.
Practical guidance on how to select, devise and use a job evaluation scheme, for example for the purpose of introducing a single pay and grading structure or carrying out an equal pay audit.
Practical guidance on introducing and reviewing a pay and grading structure, including single grade structures; narrow grade structures; broadbanding; job families; and career families.
Definition from the XpertHR glossary.
HR and legal information and guidance relating to pay and grading systems.