Do you know that in an ideal situation organisations don't just wake up and decide that they will pay a certain amount for a job. There are levels of planning to go into it for them to arrive at the figure they pay you.

A thread

The first thing they do is a job analysis. They try to understand why your job exist. Gather all the necessary information about your job. The relationship with other roles in the organization, the job responsibility, person specification. After getting all these info they come

up with a Job description (JD).

Then they do a job evaluation. What is your job actually worth. They compare it with what is obtainable in the external market as well as their internal equity.

Then after this they come up with a Job grade. e.g officer, associate, manager etc

The job grade will determine your pay grade. The pay grade has a minimum point, midpoint, and maximum point. You might be earning 150k as an officer and that might be the minimum range within your salary band. Whike the mid point could be 170k and maximum point could be 200k.

That explains why someone might be on the same level as you and earn more. The person might have been able to negotiate for the maximum point within the band or the company decided to increase their pay based on their level of productivity vis-a-vis their peers.

Now in terms of pay strategy. Organisations decide if they want to either pay above the market rate(lead), match the market or lag the market.

For those that lead the market, they pay higher than the prevailing market rate. They use this as a strategy to attract the best talent

increase morale and productivity, and also decrease employee turnover.

Others that match the market they pay relative to what others are paying in the existing marketplace. They remain competitive

The last category are those that lag the market. Why would an organisation just

decide to pay below what the market is offering. It could be that they do not have the financial resources to pay higher rates. They try to make up for this shortfall in nonmonetary ways to minimize dissatisfaction and turnover. The implication of this strategy is that they

become a stopgap. People just come in to learn and move on to better places. They will constantly recruit as they will experience higher rates of employee dissatisfaction, poor performance, and turnover.

I hope you have learnt something today.