Developing a Salary Policy
Purpose:
To provide a common methodology for organizations to develop an equitable salary policy.
Description:
This tool is a how-to methodology for developing a salary policy for an organization. The document includes 1) the objectives of a salary policy, and 2) the key components for developing a sound salary policy. Examples of key components include up-to-date job descriptions, a job classification or banding structure, periodic market research on salaries, and a compensation committee that determine salaries for each job band or category in the organization.
Developed by:
Management Sciences for Health in 1999 under the Family Planning Management Development (FPMD) project, and funded by the United States Agency for International Development (USAID).
Intended Users:
This manual can be used by both public and private sector health care institutions. It should be used by a group of staff internal to the organization, as well as Board members. It is an invaluable tool for HR departments, management in general, hiring agencies and salary committees.
Application:
The Developing a Salary Policy manual has been used by NGOs in Paraguay, Bolivia, and Nicaragua.
Advantages:
The manual provides an easy-to-use methodology for developing salary policies. It requires little training and is applicable to organizations of all sizes. A sound salary policy, which is communicated to and understood by staff, will assist the organization in establishing salary equity among staff, and assist in staff planning and resource allocation. The salary ranges should be reviewed annually.
Limitations:
Effective implementation requires total commitment from the organization. It is difficult and problematic to change an implemented salary structure, and is therefore imperative to establish ranges that allow for growth in the future and/or irregular changes in the cost of living. Once bands and salary ranges within bands are established, they should be respected.
Recommendations for Users:
Before implementing a new salary policy, it is strongly recommended that the organization, through its HR department or an Ad Hoc committee, do a preliminary analysis to establish the foundation on which to start. The HR department or the Ad Hoc committee may want to explore questions such as: "Do we have a salary policy? What does this policy look like? Why is it important to have a salary policy?" It is important that the Ad Hoc committee have a balance staff and Board representation (for example, Executive Director, members of the Board, HR Director, and Administrative or Financial Officer), to ensure an adequate perspective. Once the preliminary analysis has occurred, it is critical to carefully review each component of the salary policy and answer the questions under each component before moving on to the next component. This will help the organization reach consensus on the structure of each component. As the organization progress through the framework, there may be cause to revisit components previously discussed.
The organization should remain cognizant of the market to ensure that salaries remain competitive, and qualified and experienced staff can be retained. It should also think about how to establish sufficient ranges within each band/level to account for professional growth and changes of each staff member in a given band/level. The band/level system should be flexible enough to handle possible changes in the organization.
Reports and Publications:
None
Availability:
English and Spanish.
Contact:
Sarah Johnson
Management Sciences for Health
784 Memorial Drive
Cambridge, MA 02139
USA
Phone: (617) 250-9500
Fax: 617-250-9090
E-mail: toolkit@msh.org
To provide a common methodology for organizations to develop an equitable salary policy.
Description:
This tool is a how-to methodology for developing a salary policy for an organization. The document includes 1) the objectives of a salary policy, and 2) the key components for developing a sound salary policy. Examples of key components include up-to-date job descriptions, a job classification or banding structure, periodic market research on salaries, and a compensation committee that determine salaries for each job band or category in the organization.
Developed by:
Management Sciences for Health in 1999 under the Family Planning Management Development (FPMD) project, and funded by the United States Agency for International Development (USAID).
Intended Users:
This manual can be used by both public and private sector health care institutions. It should be used by a group of staff internal to the organization, as well as Board members. It is an invaluable tool for HR departments, management in general, hiring agencies and salary committees.
Application:
The Developing a Salary Policy manual has been used by NGOs in Paraguay, Bolivia, and Nicaragua.
Advantages:
The manual provides an easy-to-use methodology for developing salary policies. It requires little training and is applicable to organizations of all sizes. A sound salary policy, which is communicated to and understood by staff, will assist the organization in establishing salary equity among staff, and assist in staff planning and resource allocation. The salary ranges should be reviewed annually.
Limitations:
Effective implementation requires total commitment from the organization. It is difficult and problematic to change an implemented salary structure, and is therefore imperative to establish ranges that allow for growth in the future and/or irregular changes in the cost of living. Once bands and salary ranges within bands are established, they should be respected.
Recommendations for Users:
Before implementing a new salary policy, it is strongly recommended that the organization, through its HR department or an Ad Hoc committee, do a preliminary analysis to establish the foundation on which to start. The HR department or the Ad Hoc committee may want to explore questions such as: "Do we have a salary policy? What does this policy look like? Why is it important to have a salary policy?" It is important that the Ad Hoc committee have a balance staff and Board representation (for example, Executive Director, members of the Board, HR Director, and Administrative or Financial Officer), to ensure an adequate perspective. Once the preliminary analysis has occurred, it is critical to carefully review each component of the salary policy and answer the questions under each component before moving on to the next component. This will help the organization reach consensus on the structure of each component. As the organization progress through the framework, there may be cause to revisit components previously discussed.
The organization should remain cognizant of the market to ensure that salaries remain competitive, and qualified and experienced staff can be retained. It should also think about how to establish sufficient ranges within each band/level to account for professional growth and changes of each staff member in a given band/level. The band/level system should be flexible enough to handle possible changes in the organization.
Reports and Publications:
None
Availability:
English and Spanish.
Contact:
Sarah Johnson
Management Sciences for Health
784 Memorial Drive
Cambridge, MA 02139
USA
Phone: (617) 250-9500
Fax: 617-250-9090
E-mail: toolkit@msh.org