Study: Organizations Shifting to Market-based Pay Structures Increasing

A recent study by nonprofit human resources association WorldatWork and Deloitte Consulting LLP, entitled 2012 Survey of Salary Structure Policies and Practices, found that at 64 percent, market-based salary structures are the most common type of pay structure being used today. Although popular in the past, traditional and broadband structures aren’t used as widely today with just 23 percent and 12 percent, respectively, of respondents saying they use them.

The study’s results come from 910 responses from WorldatWork members and Deloitte contacts employed in the HR, compensation and benefits departments of mostly U.S. organizations. Of the people polled, 65 percent worked in the private sector and 35 percent worked in the public sector and nonprofit field.

“Compared to prior survey results we have seen an upward trend of organizations using market-based structures over traditional structures,” said Kerry Chou, a certified compensation professional (CCP) and practice leader for WorldatWork. “Market-based structures have struck a chord with organizations because they combine the more well-defined parameters of a traditional structure with the range spread flexibility of broad bands.”

The study, conducted from July to August of this year, also showed that 37 percent of the organizations surveyed use different types of structures by job level and 30 percent by geographic location.

Other findings included:

• Traditional structure range spreads increased over time while midpoint progressions loosened.

• Larger organizations tend to have wider ranges for market-based structures, broadbands and step structures while smaller organizations have smaller ranges.

• Consulting, professional, scientific and technical services showed the heaviest users of market-based ranges.

• Out of the 80 percent who responded that salary ranges are adjusted regularly in their organization, 70 percent do so annually while 12 percent adjust every two years.