The salary chaos prevailed in a technology-oriented, large medium-sized company. It had grown rapidly after a merger, often with expensive new hires. Most of the employment contracts were not covered by collective agreements. A small number of employees were covered by several different collective agreements. Different wages were paid for the same tasks. Personnel costs were threatening to rise dramatically, as the pressure to adapt the core workforce was also increasing due to the recruitment of specialists with high market values. So something had to be done - but what and how?
After a goal-setting workshop, the various tasks of the more than 1,000 employees were assigned to generic terms, so-called functions, and explained in function descriptions. This categorization allowed several positions to be described in summary form so that the administrative effort involved in the introduction was kept to a minimum. In this way, it was possible to assign the tasks of each employee to one of around 80 different function descriptions. Later, if the requirements for a task changed, there was little or no need to adjust the structure and wording of the job descriptions.
The current internal salaries were then structured and compared with an external market comparison. The job descriptions created in the first phase were assigned salaries, not as fixed salaries, but in the form of multi-level salary bands. This allowed gradual differences in the performance requirements of several tasks assigned to a function to be taken into account. In addition, it later became possible to reflect increases in requirements over time by shifting the salary band.
Each employee was able to influence their own salary within the salary band according to their performance within the framework of defined upper and lower limits. An individual performance assessment tailored to the company was developed to determine this performance component.
After the corresponding company agreements were concluded, the remuneration system was presented to all employees. All initially defined goals were achieved. The system was introduced at no cost.
Conclusion: fair performance, transparency and cost neutrality instead of chaos
The medium-sized company was able to eliminate the salary chaos by introducing a remuneration system that is characterized in particular by
- Fair performance
- Transparency
- Good negotiability
- Future security
- Cost neutrality
The development of such a company-specific remuneration system is particularly advantageous for companies that, due to their growth, can no longer set salaries individually and according to the situation. These companies need a performance and market-oriented system that is also perceived as fair by the vast majority of employees. The system must also be flexible enough to be applied over many years without having to change its basic structure.
