What Are the Advantages of a Job-Based Compensation Structure?

Job-based pay may protect against gender discrimination.

Job-based pay may protect against gender discrimination.

A job-based compensation structure typically contrasts a skill-based structure in that you are paid based on the responsibilities of a position rather than your personal skills. While you might prefer the opportunity to optimize your earnings to match your abilities, job-based pay does offer some benefits that are especially important to women.

Pay for Value

In a job-based pay structure, you essentially get paid for the value of the work you perform for the company. This gives your compensation a more tangible quality than a skill-based structure where a supervisor must assess the value of the skills and qualities you bring to the table. Employers typically have pay grades or schedules indicating the salary or wage for each particular job, and this enables you to see the relative pay to the duties assigned.

Fairness and Equality

Though not 100 percent certain, job-based pay can reduce the likelihood of gender discrimination in pay. Since the focus is on the job itself, pay theoretically shouldn't vary based on personal qualities you present. In fact, some employers use job-based structures primarily to protect against discrimination claims. While the glass ceiling, or wage gap, still exists between men and women, job-based pay should ensure that men and women earn equal pay for the same position.

Clear Steps to Higher Pay

The process of earning more money are generally clear in a job-based structure. Typically, you must gain promotion to a new position to see a significant boost in pay. You can normally look at the job description of a position you want to see what skills and qualities you must possess to gain a promotion. In a skill-based structure, the path to a raise is usually more informal and grounded in the development of new skills and abilities.

Pay Comparisons

Though not necessarily your employer's intent, a job-based structure allows you to more easily compare your salary to those offered by other employers. This is especially true if most companies in an industry use a job-pay structure. A side benefit is that employers using this compensation structure are often more cognizant to compare their salaries to those offered by competitors, which may mean your earning potential is higher or more representative of current market value for your work.

 

About the Author

Neil Kokemuller has been an active business, finance and education writer and content media website developer since 2007. He has been a college marketing professor since 2004. Kokemuller has additional professional experience in marketing, retail and small business. He holds a Master of Business Administration from Iowa State University.

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