Future Pay Structure by Benchmarking

Benchmarking and Corporate Pay Structure

A companies pay structure is the method a company uses to administer a "pay philosophy" (Ojimba, 6). Pay structure may be determined by a number of distinct factors including benchmarking. Benchmarking tells a company how many jobs need to be compensated for and the total amount of money needed to compensate these jobs (Ojimba, 7). It enables companies to match internal jobs with those of competitors, gain insight into their industry and helps link jobs to content and not just titles (Ojimba, 7). Benchmarking puts value in a job instead of value in a particular person. Benchmarking is nothing more than a process allowing a company to make pay comparisons for a job typically to jobs outside the organization in question but sometimes within the organization itself. This process helps establish a hierarchy of jobs that validates the worth of jobs within a company. Pay structure within an organization is often assessed using benchmarking.

When companies benchmark their positions they can establish a future pay structure that helps attract, motivate and subsequently retain good people. The pay structure within an organization is the foundation with which an organization can accomplish this. The pay structure should include a combination of three vital components, which include: base pay or salary, incentive pay (cash or stock) and benefits or other non-financial base rewards (Ojimba, 1). A solid pay structure enables a company to remain competitive, and a consistent structure helps provides both the company and employees a "frame of reference" when discussing salary (Ojimba, 1).