What are the necessary steps to implement a Salary Administration program ?

Developing a comprehensive and effective salary administration program is critical to the sound functioning of an organization. It is necessary to retaining employees and creating a working environment that is motivating and rewarding. A flawed or poorly designed salary administration system will cause uneven and unfair rewarding and result in loss of motivation, frustration and resentment. Hence, it is of utmost importance that an organization develops and maintains a proper salary administration program.

The implementation of a salary administration program needs to be carefully designed and implemented. The entire process of implementation can be broadly classified into the following stages :-

Job Analysis
Job analysis involves the various functions involved in a job. It also involves understanding the working conditions and the responsibilities involved in it. The process of job analysis culminates with a job description. The job description is done in consultation with the supervisor and the job. The description is then reviewed in the presence of the employee and changes made if necessary. The description is made on the basis of a Job Analysis questionnaire. The Job analysis questionnaire contains queries pertaining to the know-how involved for a job, the responsibility for decision making, the problem solving abilities required and other features such as fiscal responsibility and working conditions. A copy of the job description is given to the employee at the time of appointment, during the annual performance review and as and when changes in the description of the job occur.

Job Evaluation
This involves describing a point value for each job. The value is arrived at by studying the duties, skills and responsibilities involved in each job profile. Ranges of the points decided will be later associated with salary grades. Generally, the evaluation does not consider job titles. Jobs with similar titles can have differences in salaries.

Developing Salary Structures
As mentioned earlier, the salary structure is developed using point values calculated earlier. On the basis of these points, salary grades are created. Each salary grade consists of a certain minimum amount, a central point and a maximum amount. The minimum amount usually is offered to employees who are relatively new to the job and who have minimum qualifications. The system is designed for employees to progress forward within the salary grades with experience and performance.

Job reclassification
Jobs may require reclassification as changes occur in the organizations and responsibilities increase. In such cases, the immediate superior should request the HR manager to review the specific job. In some cases, the HR department can itself initiate the process of reclassification based on inputs from the Job analysis questionnaire. The suggested reclassification is sent to the superior for approval along with the revised salary grade. The superior may either approve it or limit the number of responsibilities for the particular job profile