What Is Salary? What Is The Structure Of Salary?

A Salary is a form of payment from an employer to an employee, which may be specified in an employment contract. It is contrasted with piece wages, where each job, hour, or other unit is paid separately, rather than periodically. Salary is a fixed amount of money or compensation paid to an employee by an employer in return for work performed. Salary is commonly paid in fixed intervals, for example, monthly payments of one-twelfth of the annual salary. Salary is typically determined by comparing market pay rates for people performing similar work in similar industries in the same region. Salary is also determined by levelling the pay rates and salary ranges established by an individual employer. Salary is also affected by the number of people available to perform a specific job in the employer's employment locale.

Salary Structures are an important component of effective compensation programs and help ensure that pay levels for groups of jobs are competitive externally and equitable internally. A well-designed salary structure allows management to reward performance and skills development while controlling overall base salary costs by providing a cap on the range paid for particular jobs or locations. The following highlights are drawn from the 2010 Culpepper Salary Range Structure Practices Survey.

Key Survey Findings

• 72 per cent of surveyed North American companies reported having formal base salary range structures.
• Most companies with formal base salary structures review their structures annually.
• 93 per cent use compensation survey market data when designing salary structures.
• 82 per cent use traditional salary structures, while 7 per cent use broadband structures.
• 55 per cent have multiple structures varying by job and/or geographic location.
• Salary range spreads and midpoint-to-midpoint differentials vary significantly by job level.

Salary Ranges and Structures Defined

A Salary Range is a span between the minimum and maximum base salary an organization will pay for a specific job or group of jobs. A salary range structure (or salary structure) is a hierarchal group of jobs and salary ranges within an organization. Salary structures often are expressed as pay grades or job grades that reflect the value of a job in the external market and/or the internal value to an organization.