Salary Banding
Challenge
A global investment bank came to McLagan seeking counsel regarding its salary practices. The bank lacked a formal salary structure, consistent use of corporate titles, and standardized job grades or job descriptions.
The symptoms of this problem varied:
- New hires were being brought in at excessive salaries when compared to prevailing market rates.
- Inconsistent pay rates for employees in the same job exposed the firm to litigation risk.
- Management spent unnecessary time with two redundant merit processes (bonus & salary).
- Employees at the firm held little value in titles and promotions, as they were inconsistently allocated.
Solution
McLagan interviewed key stakeholders in HR to understand the firm’s business objectives, as well as the existing culture. McLagan proposed an integrated job structure / salary banding program that harmonized corporate titles, salary bands, job levels, functional titles and job descriptions.
The program balanced the need for flexibility / agility with enough structure to ensure that real cost savings and efficiencies would result.
Results
The firm is now implementing the plan, resulting in a tighter, more cost efficient salary process for 2008.
Employees now have functional titles that correspond to their real job responsibilities, and that are integrated with their corporate titles and job levels. Benchmarking and internal analytics are simplified, as there is now a meaningful level assigned to each employee for their salary band.
The firm is likely to save in excess of one million dollars of salary cost over the next two years by hiring employees at more appropriate and consistent levels, and will save hundreds of hours of business management’s time as a result of a more streamlined salary process.
