Salary Scale
We're excited to announce that we have released a new feature on ZenHR, Salary Scale. Salary Scales are the range of wages you pay a new hire to work in a particular job at your company, and they help employers ensure that their people are compensated fairly. You can now fully set up and customize your company’s salary scale by adding the basic salaries, financial benefits, and vacation types that each position is entitled to.
The salary scale feature will also allow organizations to identify the health of their salary scale through the Compa-Ratio Report, which is a measure that highlights current pay rates as a percentage of range midpoints.
TABLE OF CONTENTS
- Setting up a Salary Scale Structure
- Salary Scale Structure Examples
- How to Setup Salary Scale Layers
- Compa-Ratio Report
Setting up a Salary Scale Structure
User Menu → System Preferences → Financial Setup → Salary Scale Setup
Super and Financial Admins will be able to set the salary ranges of their employees and the financial benefits that each employee is entitled to according to their job title and career level.
Admins can customize the salary scale by choosing how many layers they would like their salary scale structure to be divided into.
The three layers that admins can choose from include:
Band
Grade
Level
Admins can choose to have one, two, or three layers according to their company policy. They can rearrange the layers in the order they prefer. For example, traditionally, Bands are the largest layer in the salary scale; however, we have made it customizable, allowing you to set it as the smallest, middle, or largest layer. This applies to all the the layers, Bands, Grades, and Levels.
Activate the toggle beside the layers you want to be included in your salary scale. Once you do, drag the layers and set them in the order you’d like them to be, from the largest to the smallest.
Once the structure has been set, you can begin customizing each one of your layers.
First, select which layer you would like to add salary ranges to.
Add the percentage you can Exceed salary ranges by.
Add the Ideal compa-ratio range
Employees' salaries will be able to go under the minimum or above the maximum salary ranges up to this percentage.
Set the percentages where your ideal compa-ratios of employees’ salaries should fall within. The employees' compa-ratios and where they fall among your ideal salary range will be reflected in the Compa-Ratio Report.
Note: The best practice for the ideal compa-ratio range is for it to be between 80%-120%, depending on the structure in place. (Example: In a broadbanding salary scale structure, a large portion of positions are added to one layer. This creates a wide salary range, which will affect the compa-ratio percentage).
Then select which layer you would like to add financial benefits to.
Add the percentage you can Exceed financial benefits by
Employees will be able to receive additional financial benefits up to this percentage.
Select which layer you would like to add vacation types to.
Choose whether you would like to auto-move vacation types.
This option will move the vacation types automatically once the employee moves between Bands, Grades, and Levels.
Set the vacation classification.
This is used for mapping to ensure accurate vacation replacements when the automatic change option is enabled.
Then click “Create Salary Scale”.
Admins can also save the salary scale as a draft by clicking “Save as Draft”, and continue with the setup later.
Salary Scale Structure Examples
Below are some examples of possible salary scale structures that can be created:
Example 1
In this example, the salary scale is divided into 3 layers. The Band is the largest layer, the Grade is the middle layer, and the Level is the smallest layer. The salary ranges are placed on the Bands, financial benefits are placed on the Grades, and the vacation types are placed on the Levels. The Positions will be on the Levels.
Note: Positions will always be included in the smallest layer.
Example 2
In this example, the salary scale is divided into 2 layers. The Grade is the largest layer, and the Level is the smallest layer. The salary ranges are placed on the Grades, and financial benefits and vacation types are placed on the Levels. Bands are not used in this structure, and the Positions will be on the Levels.
Example 3
In this example, the salary scale is a single layer, with Grade being the only layer. In this case, salary ranges, financial benefits, and vacation types are placed on the Grades. Bands and Levels are not used in this structure. The Positions will be placed on the Grades.
How to Setup Salary Scale Layers
User Menu → System Preferences → Financial Setup → Salary Scale
Once the structure is created, admins can start setting the layers (Bands, Grades, and Levels) in order from the biggest layer to the smallest layer. The setup will vary depending on where the salary range and financial benefits are.
Click on the Bands tab, or any tab, to customize that layer.
Then click “Add Band”
You can now set up each level by adding its Basic Information.
Add the name of the layer you’re currently creating under the Level name.
Add the Grade and/or the Band if applicable.
Grade is the parent, the layer that comes right after your first layer (If there are 3 layers, the Grade will be the middle layer).
Band is the grandparent, the largest layer.
If the layer you’re setting up is a Level, add the positions you’d like to link to this layer.
If Salary Ranges are included in this layer:
Add the Min. basic salary, the Max. basic salary, and the Midpoint basic salary for this layer.
Minimum Basic Salary: The least amount the employee can have as a basic salary.
Maximum Basic Salary: The most amount the employee can have as a basic salary.
Midpoint Basic Salary: The system automatically calculates the salary midpoint (Minimum+Maximum/2).
Salary ranges are basic salary parameters the admin sets for each job title(s) that ensure the employees' basic salaries are within these ranges. If an admin sets a basic salary outside the range, they will be notified that the basic salary provided is outside the range.
If Financial Benefits are included in this layer:
Add the Entitled health insurance policies, Entitled air ticket types, and Entitled loan types, and select if they are/aren’t Entitled to overtime.
Click “Add Allowance” to add an entitled allowance to this layer.
If Vacation Types are included in this layer:
Add the vacation setup that is linked to this layer
Annual Vacation: select the annual vacation type you want to link to the scale.
Sick Vacation: select the annual vacation type you want to link to the scale.
This will be used when the
Under Salary Range Exceptions, click “Add Exception” if you’d like to add exceptions outside the normal ranges you’ve set.
Select the desired exceptions, such as Nationality and Contract Type.
Then, fill out the relevant fields.
Under Financial Benefit Exceptions, click “Add Exception” if you want to add exceptions.
Select the desired exceptions, such as Nationality.
Then, fill out the relevant fields.
Under Vacation Type Exceptions, click “Add Exception” if you want to add exceptions.
Select the desired exceptions, such as Nationality.
Then, fill out the relevant fields.
Compa-Ratio Report
Main Menu → Reports→ Financial Reports → Compa-Ratio Report
Once your salary scale structure has been created and your layers have been customized, admins can extract a Compa-Ratio Report. The Compa-Ratio aims to help analyze the salary scale by revealing how far an employee’s basic salary is from the midpoint salary of their scale. The compa-ratio report calculation is: Employee Basic Salary/ Midpoint of Scale * 100
In the Compa-Ratio report, the system will analyze whether the employees' basic salary is within the Ideal Compa-Ratio range. If the ratio is within the Ideal Compa-Ratio range percentage, it will appear in green. If it's outside the ideal range, it will be in yellow. If it’s outside the salary range, it will be highlighted in red.
