Working for a startup comes with the risk that the employee will have to look for another job in a year or two. Salary structures also allow companies to reward performance and development while controlling cost. According to D.S. They won’t have any motivation to actually do well for the organization if the organization doesn’t appreciate them. originally appeared on Quora: the knowledge sharing network where compelling questions are answered by people with unique insights. Aligning pay structures with business and employee needs. In the old tax regime, some of the components of salary such as leave travel allowance and house rent allowance, etc. There are a lot of reasons why underpaying is bad—such as high turnover and demotivation—but there are also a lot of reasons why overpaying is just as bad. The Basic component is the primary component and the core of the salary structure. Some benefits have intrinsic value. Especially when your organization needs accounting for labor costs. Learning Management System (Online Courses), How to Demonstrate Your Adaptability at Work. Other factors like corporate culture, knowing other people at the company, or wanting to work with particular individuals in a field may also play a role. In business, gross salary plays an important part for both, the company as well as the employee. Wages and salaries are the remuneration paid or payable to employees for work performed on behalf of an employer or services provided. When I was in my 20’s I didn’t think health insurance was particularly important. SHARE. Obviously, if your organization is small, there’s no point in competing with big companies when it comes to salary. On the other hand, the new tax regime does not allow any such deductions and exemptions. The salary structure you determine for your organization will have an impact on your business operations, especially related to talent management and cost containment, so the selection of a compensation philosophy is an important one. Not many would be willing to tack on an extra hour or two to their commute. Con 1 – Administrative Burden. Why Should Leaders Stop Obsessing About Platforms And Ecosystems? Beach “Wage and Salary Administration refers to the establishment and implementation of sound policies and practices of employee compensation.. You can pick and choose any topic you are looking for or you can read through the entire post to get a detailed understanding of designing salary structure in India. Importance of Gross Salary. You need to have a good salary system to attract and retain talents in your company. Related to location are the amount of travel involved and the ability to work from home. Here Are 5 Things You Should Do When an Employee Leaves. Also, whether a job expects 40 hours or 60 hours a week can have a substantial impact on quality of life. Some benefits are valued differently by different employees. Learn from experts and access insider knowledge. Can you afford it? Over 80% of companies develop their salary structures based on base salary, but almost 15% of companies develop their salary structures based on total cash compensation. And not just any salary structure, but an efficient one. Well-designed salary structures will attract highly skilled people to your company and keep them motivated within the organization. Where Is There Still Room For Growth When It Comes To Content Creation? For some positions it’s not even the largest component. Not to mention, it can help you retain your current employees, as well as make your recruiting, hiring and promoting efforts more focused and easier to execute. However, maybe you knew about this, but what do you know about the EFCC salary structure? Company size and stability are also considerations. Several components of a salary package may be calculated based on the basic salary amount (on the basis of the grade of an employee within a company’s salary structure). Severance pays or promotional increases are also taken into consideration. The fourth and the most important component of any salary structure is the retirement benefit contribution which is not payable to the employee immediately and is in the nature of long-term savings for them. Viele übersetzte Beispielsätze mit "salary structure" – Deutsch-Englisch Wörterbuch und Suchmaschine für Millionen von Deutsch-Übersetzungen. EMAIL. SHARE. He did note that recognition, promotional opportunities and self-worth are key motivators. © 2021 Forbes Media LLC. 401k matching can be another significant advantage. To do so, break down each salary structure using pay grades. Having a solid salary structure makes it easier to manage your salary expenditure. Why Is The Future Of Business About Creating A Shared Value For Everyone? Create a minimum and maximum salary within the structure. 3 Benefits of an Efficient Pay Structure Proper compensation of employees As with equity, these figures can be tough to predict. America's Top Givers: The 25 Most Philanthropic Billionaires, EY & Citi On The Importance Of Resilience And Innovation, Impact 50: Investors Seeking Profit — And Pushing For Change, Three Things You’ll Need Before Starting A New Business. The benchmark jobs are then ordered from bottom to top and divided into grades by examining the clusters of jobs. Establishing salary grades and salary ranges are one viable and popular pay structure system. You can create a salary structure to help when calculating a raise. It is important to note that the amount of money that an employee earns working overtime does not, in any manner, raise his or her basic pay amount. You can follow Quora on Twitter, Facebook, and Google+. It is usually the largest component of the CTC making up for 40-45% of the total CTC. Compliance with these policies and practices is subject to audit review. A quote from Doug Conant, former CEO of Campbell’s Soup, says, “To win in the marketplace… you must first win in the workplace.” Your employees’ treatment of your customers is a reflection of how they are treated at work. How can you create and advertise a position that will attract and maintain a quality employee? Google’s free breakfast, lunch, and dinner can add up to over $10k of after-tax dollars a year. While having a salary structure is not required, having one certainly helps to control costs and plan for the future. For Google the match is 50%, so for those that max out their contributions, the benefit comes to an extra $9k a year. One of the first things that an applicant looks for on the job is the salary. Equity can be tricky to understand (a $200k equity package might sound like a lot but if it vests over five years that’s $40k annually). This results in a considerable uniformity in wage and salary rates. It’s hard to put a monetary value on the ability to do one’s laundry at work or to take a nap in a nap pod. They help make sure that the pay levels are externally competitive and internally fair. Herzberg said basic salary was important as a survival need because it protects against employee dissatisfaction. As mentioned in our Compensation 101 and Compensation 102 articles, formal salary structures are used to create fairness among employees and protect an organization from possible federal law violations. Is salary the most important consideration when choosing a job? How Can AI Support Small Businesses During The Pandemic? Let’s start with the bad news first. Having a flexible system like this is surely going to save your organization from losing hundreds and thousands from compensation mistakes. And not just any salary structure, but an efficient one. Salary structure has a major impact on your tax aspect. Conversely, who wants to spend half their life in airports? For instance, senior positions at big tech companies often have an equity component that equals or exceeds the salary component. Thus, if companies tie these factors to pay structure, they may have more ability to use salary to push for stronger performance. These levels of responsibility, or grades, can be linked to the value of the position within the organization or through market pricing. How Can Tech Companies Become More Human Focused? Benefits can also be tricky to evaluate. Answer by Paul K. Young, Software Engineer at Google, on Quora: Compensation is important, it says a lot about the job and the company. Your investment into your pay structure will all go to waste if you don’t consider how it will affect your company operations. Your employees’ efforts will be properly rewarded if you have an efficient pay structure. Moreover, because of price fluctuations, it’s not always clear how it will affect one’s overall financial situation. We list down 3 benefits of an efficient pay structure for your organization. The Generational Values of Recruits Oftentimes, the types of employee benefits that will matter the most have a lot to do with the generation of talent the company is trying to attract. This is “The Roles of Pay Structure and Pay for Performance”, section 16.5 from the book Management ... Pay can be thought of in terms of the “total reward” that includes an individual’s base salary, variable pay, share ownership, and other benefits. Salary Is Important, But Here Are 5 Other Things You Shouldn't Ignore As A Job Seeker Quora Contributor Opinions expressed by Forbes Contributors are their own. More questions: Quora: the place to gain and share knowledge, empowering people to learn from others and better understand the world. 15 minutes ago. SHARE. By Robert Half on 9 April 2019 Wages may be classed as an operating expense, but like any good investment, strong staff salaries can deliver healthy returns. EFCC Salary Structure 2020: The Economic and Financial Crimes Commission (EFCC) is a Nigerian law enforcement agency. Salaried class may face difficulties to repay EMI from April 2021; know impact of new salary structure in your life Zee News. The JobVite survey revealed that 52.8% of older workers (aged 45-54) would prefer a salary increase vs. 36.1% of younger workers (aged 25-34). Location, at least for some, is just as important as compensation. Keep in mind that when designing your company’s pay structure, you have to think of both sides of the coin. At its most basic, a salary structure is the manner in which an organization carries out its pay philosophy. Ask a question, get a great answer. An organization ponders what and how much to offer a candidate for a job opening. Time-shifting to accommodate a long commute, or being able to leave early to pick up the kids can make a big difference in accommodating other aspects of a person’s life. You may opt-out by. An overworked but underpaid employee wouldn’t perform, right? Should Social Media Influence Your Firing Decision? While it may be possible to get $100k+ in bonuses at Google, the typical developer gets a much more modest 15% of their base salary. Benefits can also play a significant role in the larger financial picture. How Is Blackness Represented In Digital Domains? Salary is only one part of compensation. As much as you want to give your employees or offer a big salary, you have to consider your situation. Depending upon the job description, responsibilities, area of expertise, years of experience etc, companies define gross salaries for a particular role or job band. Severance pays or promotional increases are also taken into consideration. Plus, our combined healthcare costs are higher than when I was single. Hours and schedule flexibility can also be important factors. The salary a worker is paid by his employer can have a great influence on his performance in the administration. And it investigates financial crimes such as advance fee fraud (419) and money laundering. Salary structure: How to create a compensation structure. From the perspective of a compensation professional, here are a few pros and cons to implementing a salary structure and job grades in your organization. How Do Employee Needs Vary From Generation To Generation? These provisions are not conditions of employment and can be modified, revoked, or changed at any time without notice. As you design your salary structure, it is important to consider all forms of cash compensation. What you and your organization can do is to have a salary structure. How do you determine important employee numbers such as salary and benefits? This question originally appeared on Quora. After all, if you underpay a position, an employee will likely start looking elsewhere. Commissions and bonuses should also be figured into total compensation. Who would turn down an attractive compensation offer? Salary structures are a necessary part of effective management. While these savings help them lead a dignified life post-retirement, they also result in a lower take home package. Articles Related to … What is the importance of planning our career? EFCC Salary Structure 2020, Importance and Functions. What are a few unique pieces of career advice that nobody ever mentions. (Photo: PHILIPPE DESMAZES/AFP/Getty Images). There are a lot of ways to attract talents, from creative ways of rewarding them from investing in their development. From there, all other jobs for which there is a market rate are placed into their appropriate grade. Salary structures group benchmark jobs into salary grades (or levels) and most companies base the salary range associated with each grade on the salary survey median. This involves weighing up the pros and cons of differing types of structure, including how closely they: Meet the business needs, including affordability. Employers are required by law to deduct from wages, commonly termed "withhold", income taxes, social contributions and for other … So we have broken down this post into multiple topics. All Rights Reserved, This is a BETA experience. Now that I have a daughter I’m much more concerned about it. It also wonders how much a salary increase will be. Some people love not having to put on pants to go to work. The primary goal of negotiating a salary is to gain maximum monetary benefit for the services provided by you in a tax efficient manner. It is important to decide the right ratio for these contributions. Salary structures are the foundation for base pay administration. And while some may consider moving to a different area for a better job, there are many who are tied to a particular location due to family or other obligations. We list down 3 benefits of an efficient pay structure for your organization. TWEET. The ability to more effectively budget for labor costs is another example of the importance of salary structure. TRENDING ARTICLES. The organization’s and the employee’s. Imagine you're the HR director of a small chain of retail stores and you've been tasked with hiring for a new position that you've neither had before, nor have any familiarity with. The high cost of low salaries: why paying a competitive salary is important. I’ve known a few recruiters who like to focus on the high end of the upside rather than median values. Here Is Some Good Advice For Leaders Of Remote Teams. Is salary the most important consideration when choosing a job? This enables companies to have a framework or structure as salaries is a cost to a company. The median is considered ‘at market’ and so becomes the salary range midpoint for the jobs assigned to a salary grade. A standard salary structure takes into account things like merit, length of employment, and pay compared to similar positions. The basic plays an important role in defining the salary as other components like Provident Fund, Gratuity and ESIC are dependent on it. Once recognized, the salary structure is easy to comprehend and even easier to negotiate. The Salaries and Wages section of the Employees: Personnel Administration business area is intended to ensure consistent application of Research Foundation (RF) policies and procedures for salary and wage administration. Employers that pay well are likely going to value their employees’ time more than those that don’t. The salary plays a big part in attracting talents to apply to your organization. Finally, if the same or about the same general rates of wages are not paid to the employees as are paid by the organizations competitors, it will not be able to attract and maintain the sufficient quantity and quality of manpower. What you and your organization can do is to have a salary structure. You can also offer other forms of compensation or additional benefits to attract a talent to work in your company. Large corporations tend to offer more stability but they come with administrative and organizational challenges that can detract from the primary work. It could not, however, strongly motivate. So benchmark jobs are ones that are important to the organization and have a market equivalent. It’s important to understand the basis for any grades or bands being incorporated into a new or revised pay structure. And once you have created an efficient pay system, you can use it for other areas, too. As we all are aware, creating an ideal salary structure is one of the most important tasks of HR or payroll manager. What Impact Is Technology Having On Today’s Workforce? But, as the employer, you have to keep in mind if the compensation you’re offering for a job is really worth it. Pay structure is the strategic arrangement of pay levels in a hierarchy. The Facts Salary grades and salary ranges group job functions into pay ranges in which each position’s compensation is determined according to its placement in a hierarchy of positions above and below it. were allowed for claiming the deductions to bring down your taxable income. 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