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In most organizations
wage and salary rates are still assigned to jobs. The relationships between the pay for jobs involve pay structure decisions.
Although organizations often make pay level decisions (how much to pay) and pay structure decisions (pay relationship) at
the same time, these decisions and the process by which they are reached require separate treatment.
Actually, wage
structures represent wage relationships of all kinds. Analysis of wage differentials of any kind (geographic, industry, community,
or occupation) deals with wage structure issues. But because our primary focus is on pay decisions in organizations, our concern
is with pay differences between jobs. In fact, determining the pay structure of an organization may be usefully described
as putting dollar signs on jobs. Decisions on wage relationships among jobs within an organization are largely within the
control of its decision makers. Wage level decisions are usually influenced more by forces external to the organization than
are wage structure decisions.
Some organizations pay for skills possessed by employees rather than for the jobs employees
hold. The rationale is usually serious and continual skill shortages experienced by the organization. But most organizations
measure employee contributions first in terms of the jobs employees hold. One interesting analysis of organizational compensation
decisions is that pay structure decisions are intended to achieve retention of employees through prevention of dissatisfaction
and encouragement of employee cooperation.1 Pay level decisions, in this analysis, are intended to attract employees. To this analysis could be added the statement
that wage structure decisions are intended to encourage employees to make a career with the organization and to accept training
in preparation for higher-level jobs.
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