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Employees Different Pay Scale

Employees earn different payscales since pay grades serve as the basis for differences in salary ranges for various positions within the company. However, there have been controversies on whether the payscale strategies used by different companies are fair. Various researchers have studied the concept to determine the best strategy for determining a fair pay scale but it has been impossible to find the right strategy due to the nature of work in each company and the different work policies. I have performed a short survey and a review of the literature to understand the perception of employees about the differences in the pay scale at work. Findings and results for the two approaches have been explained in this essay.

Research question:

•What is the role of employee payscale in promoting overall satisfaction at work?
•What are some of the factors contributing to employee different payscale?
•What is the perception of employees on different payscale?
 

Introduction

A pay scale refers to a system that determines the amount of money an employee needs to be paid as salary or wage based on different factors such as the status, rank, or level of an employee within the organization (Augustsson & Rasmusson, 2018). Other factors considered in the pay scale are the difficulty in the work performed, the length of time an employee has been employed. Some examples of pay scales include the salary grades under which white-collar civil service employees in the United States get paid, U.S uniformed service pay grades, the General Schedule, and the salary grades under which the military personnel in the United States get paid (Augustsson & Rasmusson, 2018). Employers in the private sector use salary structures with different grades such as maximums, midpoints, and minimums to pay employees in each grade. Some companies create pay grades for different ranks while others create pay grades then determine the positions that fall in each grade.

There are two main reasons why pay structure matters. The first one is that organizations need to ensure that they are consistently paying staff appropriately for their output to the organization and their roles. Each type of pay structure has to take into account different factors to determine the appropriate pay rewards from utilizing average in the market to measuring standards of performance with different business functions. Organizations need to select the right pay structure that supports the model and culture of the organization. The second reason is the way employees are impacted by pay scale (Augustsson & Rasmusson, 2018). Employee satisfaction and engagement is a challenging topic filled with details and nuances, but remuneration and payment play a huge role in satisfying employees and increasing their level of engagement at work. All employees need an understandable and clear path in both pay and career progression. Outlined objectives and information that achieving the objectives will result in employees getting monetary payments for their efforts create a framework for satisfying and engaging the entire workforce. The presence of such clarity is a direct outcome of the transparency of the pay structure of an organization. The best pay scale system is one that balances the organizations’ monetary needs with employee needs. Using the appropriate pay scale, organizations can be able to pay their employees efficiently while at the same time enhancing staff productivity, satisfaction, and retention.

The essay seeks to examine the impact and perception of employees on the different pay scales in an organization. Various research conducted has revealed that most employees have exhibited low levels of satisfaction and engagement due to the pay scale system used by their employers. The majority of employees believe that the pay scale system used is unfair and favors only the top-ranking employees and the management team as they are excluded in some benefits as health benefits and leave benefits. This essay analysis investigates how employees view different pay scales, the different factors contributing to different pay scales, and what needs to be done to make employees understand the difference in pay scales.

Methodology

The study was performed based on two critical notions. I started by reviewing the literature to understand the responsibility of the organization in promoting the overall satisfaction of employees at work. We tend to believe that it is the role of every organization to create an environment that will promote feelings of satisfaction among employees. However, it is also appropriate if employees develop their self-satisfaction to increase their work output by operating from an internal interest. I have also used a short online survey to acquire sufficient responses from 5 participants about different pay scales and ways their organization contributes to their satisfaction rates at work.

Since a small population sample was used for the study, it mainly focused on general factors contributing to different pay scales, and participants were asked to rank them in the order they feel that the factors that increase their satisfaction and engagement levels at work. Participants were encouraged not to limit their responses to their current workplaces but to use the knowledge from other organizations to avoid biased responses. Their feedback is expected to educate other workers and employers in improving the satisfaction levels at the workplace. It would be expected that the need a factor is given, the more an organization must strive to advance it within the work environment. The information obtained was averaged since only a few variables were used for analysis. 

Results

I will analyze the results from the survey conducted and the four studies examined. Tale 1 shows the factors contributing to different pay scales in ascending order of the average ranking of five participants. A higher preference is indicated by a smaller figure.

Table 1: Ranking of factors contributing to different pay scale

 

FACTORS CONTRIBUTING TO DIFFERENT PAYSCALE

Average Ranking

  1.  

Industry

4.8

  1.  

Education

6.2

  1.  

Geographic location

7.2

  1.  

Experience

7.8

  1.  

Performance reports

8.6

  1.  

Shift differentials

9.0

  1.  

Hazardous working conditions

9.8

 

 

Research Article

Findings

  1.  

Abuhashesh, M. Y., Aldmour, R., & Masa'deh, R. M. (2019). Factors that affect Employees' Job Satisfaction and Performance to Increase Customers’ Satisfactions. Journal of Human Resource Management Research, 2019(2019), 1-23.

The study measured the impact of various factors on employee satisfaction such as organizational culture, wages, job satisfaction, training and development, job security, benefits, and promotion prospects.  The study found that the employees at Jordanian manufacturing were more concerned about their job positions and salaries than any other factors.

  1.  

Aliku, I. H., Morka, T. O., & Igemohia, F. (2020). COMPENSATION MANAGEMENT AND EMPLOYEE PERFORMANCE: MANUFACTURING INDUSTRY IN FOCUS. PalArch's Journal of Archeology of Egypt/Egyptology, 17(7), 8792-8810.

The findings showed that all independent variables (Benefits Programs (BP) and Salary (SLY)) have a significant correlation with Employee Performance in the manufacturing industry.

  1.  

Anthonia. N, O., Okeke, M., & Ikechukwu, I. A. (2019). Compensation management and employee performance in Nigeria. International Journal of Academic Research in Business and Social Sciences, 9(2). https://doi.org/10.6007/ijarbss/v9-i2/5552

Results from the research found that Equity-based compensation, competency-based compensation, and performance-based compensation do not affect the performance of employees in Nigerian organizations. The study further stated that compensation management has a significant impact on employee performance in organizations in Nigeria

  1.  

Daniel, C. O. (2019). Compensation Management and Its Impacts on Organizational Commitment. International Journal of Contemporary Applied Researches, 6(2), 26-36.

The results from the study showed that compensation management positively influences organizational commitment. Compensation management leads to enhanced performance, good working relationships among employers and employees, improved management, and increased organizational commitment in the workplace. The results also showed that employees become more satisfied with their work and what they do when their needs are met.

  1.  

DO, T. T. (2020). Critical factors affecting the salaries of employees of manufacturing enterprises in Vietnam. The Journal of Asian Finance, Economics, and Business, 7(6), 485-494. https://doi.org/10.13106/jafeb.2020.vol7.no6.485

Multiple Regression Analysis (MRA) and Exploratory Factor Analysis (EFA) were used in the study which identified six determinants influencing employees’ salaries in manufacturing companies in Hanoi. The determinants include; Financial ability of the enterprise (FA), Paying views of business leaders (PV), State policies and laws on labor-salaries (STL), Capacity of workers (CW), Role of grassroots trade unions (TU), Capacity of the contingent of employees engaged in salary work (CC).

Source: Human Resource Management Research (2019).

Discussions

From the results of the studies conducted by other researchers as discussed above, it is evident that different factors contribute to differences in employees’ pay scale which affects employee motivation. Results from the survey I conducted in Table 1 shows that industry was the highest-ranked factor contributing to the difference in pay scale. The participants affirmed that employees performing similar roles in different industries get paid differently based on the industry. One participant provided an example that an accountant working at a public school gets paid very low wages compared to an accountant that rises to the partner level at Ernst and Young company since they are different industries with different pay scales. Employees should consider looking for industries that offer the best opportunity for their profession if they would like to maximize their earning potential.

Education ranked second with a score of 6.2. Education still pays more and the earning potential of employees increases for every additional level of education they achieve. Employees with different associations and certifications influence their earning potential and it makes them be in more advantageous positions compared to those with no additional certifications. Employers also tend to request education certificates of candidates to determine if they have the skills and knowledge in the position they are applying for to minimize the chances of employing unproductive employees. Employees should increase their education and get other certifications to enable their employers to enroll them in higher pay scales and to increase their satisfaction and engagement levels.

Hazardous working conditions were not positioned highly by the employees which might indicate that employees believe that those working in the risky environment are not paid fairly. Most employees with different levels of skills to handle chemicals and perform other dangerous tasks are subjected to low pay leading to most of them quitting jobs.  Only a few employees who have no idea about the existence of hazardous pay tend to remain in the jobs while accepting low pay. Moreover, companies with hazardous work often employ unqualified individuals so that they can pay them minimum wages for the job. To avoid losing talents and skills that are in high demand, employees should consider revising their pay scales and compensating employees performing hazardous work. 

For the reviewed studies, it was evident that pay scales affected employee satisfaction and engagement. Abuhashesh et al. (2019) found out that employees were more satisfied with their job positions and salaries compared to other factors such as training and development and organizational culture. Aliku et al. (2020) also discovered that benefit programs and salary had a significant correlation with the performance of employees in manufacturing industries. Do (2020) discovered six factors influencing employees’ salaries that contributed to differences in employees pay scale such as Financial ability of the enterprise (FA), Paying views of business leaders (PV), State policies and laws on labor-salaries (STL), Capacity of workers (CW), Role of grassroots trade unions (TU), Capacity of the contingent of employees engaged in salary work (CC).

On the contrary, Anthonia et al. (2019) found that compensation strategies such as Equity-based, competency-based, and performance-based do not affect employee performance except for compensation management. Daniel (2019) discovered that compensation management positively influences organizational commitment which leads to enhanced performance.

In conclusion, various factors contribute to differences in pay scale which affects the satisfaction of employees. Factors such as shift differentials and hazardous working conditions make employees believe that the pay scale is unfair as those working the night shift are paid more than those working the day shift with those working in hazardous conditions paid the same amount as those working in a favorable environment. Employers should be greatly involved in compensation management strategies to increase organizational commitment in employee satisfaction and engagement.

Author: Mona Alanazi

References

Abuhashesh, M. Y., Aldmour, R., & Masa'deh, R. M. (2019). Factors that affect Employees' Job Satisfaction and Performance to Increase Customers’ Satisfactions. Journal of Human Resource Management Research, 2019(2019), 1-23. 

Aliku, I. H., Morka, T. O., & Igemohia, F. (2020). Compensation management and employee performance: manufacturing industry in focus. PalArch's Journal of Archeology of Egypt/Egyptology, 17(7), 8792-8810. 

Anthonia. N, O., Okeke, M., & Ikechukwu, I. A. (2019). Compensation management and employee performance in Nigeria. International Journal of Academic Research in Business and Social Sciences, 9(2). https://doi.org/10.6007/ijarbss/v9-i2/5552

Augustsson, G., & Rasmusson, M. (2018). Regular and temporary employees in project-organized businesses pay different attention to preconditions for learning. Organizacija, 51(2), 97-110. https://doi.org/10.2478/orga-2018-0011

Daniel, C. O. (2019). Compensation Management and Its Impacts on Organizational Commitment. International Journal of Contemporary Applied Researches, 6(2), 26-36. 

DO, T. T. (2020). Critical factors affecting the salaries of employees of manufacturing enterprises in Vietnam. The Journal of Asian Finance, Economics and Business, 7(6), 485-494. https://doi.org/10.13106/jafeb.2020.vol7.no6.485

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