Employee Wages, Step and Grade

Good Afternoon Management Doctor,

I am creating a Step and Grade approach to employee wages, particularly pertaining to merit increases and promotions. I’m having a bit of an issue coming up with qualifiers for the step increases for my staff.  I have a planning technician, planner I, planner II and planner III positions. 

Do you have a good resource, an example or link for a skills based pay structure you could share?

Your help would be most appreciated.

Planning and Zoning Director

Dear Planning and Zoning Director

A simple answer to your question is NO! However, I hope some of our readers can help us out. Most places that I have seen use this kind of a system tie it in some way to the annual employee evaluations. This may be as good a way as any.

Like most pay for performance systems, I have never found them particularly useful. When I was in government I participated in two such systems and the amount of money for the winners vs. losers was so small as to be insignificant. The biggest issue was how it impacted morale. Everyone wondered why so and so got more than they did.

Many communities use a five-step system. Normally you move from one step to the next each year. The only time I would not give the step increase would be for an employee with very serious performance issues that we likely wanted to terminate.

In theory, the better and more productive employees should receive more pay than less productive employees. This seems to work in private industry where they have substantial bonuses to distribute. However, I have never seen it work well in government.

Promotions are a different topic. The manager should have enough experience with staff to know who they want to promote. Some communities go through an interview process with a panel to make a recommendation. However, the panel will never know as much as you do. I have seen poor employees score well on a panel and then wonder why they are not promoted.

Skill is one criterion for promotion. However, many studies of poor performers indicate that skill is often only 20% of the problem. The other 80% is motivation. So, bottom line, who is producing for the organization.

I hope our readers can give you some better and more definitive suggestions. Also, do some search on Google and you will get more standard approaches.

Best wishes,

the Management Doctor