Pay should be based on job evaluation

Every employer must be sure that basic pay be equal to the current market value for that line of work. Basic pay must be linked to the job rather than on extraneous factors unrelated to the skills required for that position.

But in many companies, the pay is linked to the person's nationality. Social scientists view this trend as dangerous practice, which will spoil the creation of a quality workforce in this country.

Especially, the present practice of paying salary according to nationalities would create an imbalance in the job market, which still depends on the demand and supply of manpower.

What is the right strategy to decide basic pay? Basic pay recognises the relative value of the type of work done in a job. It means that a job must be evaluated to set it in the correct position on a value scale.

We must fix a rate of pay for each job which will not only be fair but must be viewed as related to the relative difficulty of their job.

Here, we are talking about fair and equitable salary - not a competitive salary. Competitive pay depends upon the position and skills requirement and shortage.

To implement a rational pay strategy, you do not require big consultants to advise. What you need is a professional to guide you to devise a meaningful compensation.

For instance, you can identify several characteristics of the job under headings such as basic responsibility, key output, resources controlled, skills and knowledge, complexity and working conditions.

Of course, managers have known this by experience. What they need is a co-ordination as guide! The total score against the job characteristics will indicate at which point in the pay scale the job will be positioned. In the market, there are various methods and mechanisms available for job evaluation.

More than the methods, an employer must develop a basic system in the organisation that must identify job, position, role and competencies. Then you evaluate the jobs, and not the persons.

Once you develop the pay based on job evaluation, you can continue to improve your reward management. For instance, a band progression - an elegant way of recognising the performance - can be established as income improvers.

So you need not keep your pay scale as flat and fixed, rather allocate pay bands to accommodate various jobs. Band progression would definitely offer the prospects to the people. You can continuously use it to reward them based on service, skills and performance.

Pon Mohaideen Pitchai is a Dubai-based HRD consultant.