salary structure

What is Salary Structure?

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Currently, businesses operate on a larger scale, with a larger number of employees. Therefore, they need to have a specific salary policy to easily manage and pay their employees. Each company will stipulate salary structure however, most are based on three general types of structures. In this article, together Johnson's Blog Learn more about this topic!

What is the salary structure?
What is the salary structure?

What is the salary structure?

Salary structure is a set of regulations made by a company or a member of its management for the purpose of determining how much an employee should be paid. The salary structure is based on factors such as working time at the company, employee's rank, achievements, job difficulty requirements, etc.

In addition, many employers also apply a salary structure that includes salary levels. This allows employees to understand the salary they may receive when applying for this position. It includes a minimum wage which is the least amount someone in the position can receive and a maximum salary which is the largest amount that person can expect to receive. 

Types of salary structures popular today

Depends on each business regulations on salary structure will be different. However, before making a decision on which salary structure to use, you need to carefully pay attention to the common types of structures, the size of the business, the location of the company's headquarters, etc. Because, each type of structure Wages are applied under different conditions. 

Market-based structure

Market-based salary structure
Market-based salary structure

The market-based structure is the most common type of structure, which is widely used. This structure involves a manager paying employees according to what other companies in the same field pay their employees. 

To get an accurate salary, the first thing to do is do general market research to get an idea of the average salary for that position. 

An example of a market-based salary structure is as follows:

  • Level 1: Pay from 5 million to 7 million
  • Level 2: Pay from 8 million to 10 million
  • Level 3: Pay from 11 million to 13 million

The advantage of this type of structure is that employees will feel that the salary they receive is completely equivalent to the average level in their field. As a result, employers can retain experienced people and recruit new talented employees, helping businesses thrive.

>>> See more: ERP implementation consultant Who is?

Traditional structure

The traditional salary structure is understood that the manager uses multiple salary tiers so that employees can invest maximum effort instead of reaching the salary too quickly. However, using this structure is easy to encounter situations where employees look for opportunities elsewhere or operate less effectively. 

If you use this salary structure, clearly define how much each level will be paid, the minimum and the maximum. Next, set out the criteria that an employee needs to meet in order to confirm a raise. 

An example of a traditional salary structure for a job at an organization:

Traditional structure
Traditional salary structure
  • Level 1: Pay from 8 million to 10 million
  • Level 2: Pay from 11 million to 12 million
  • Level 3: Pay from 13 million to 14 million
  • Level 4: Pay from 15 million to 16 million
  • Level 5: Pay from 17 million to 18 million
  • Level 6: Pay from 19 million to 20 million

See also: The HR Manager job in the organization

Structure type “wide gap”

Structures of this type are used the least, but, not because they are so detrimental, there are still useful aspects.

This type of structure has similarities with the traditional structure in that the employee has to work hard to move up the ladder, from which the salary they receive will be more. However, the difference lies in the fact that instead of dividing them into many sub-steps, they will be aggregated into broader categories. This means that this structure will cover fewer salaries and each level will have a wider range. 

Example of "wide gap" type structure as follows:

  • Level 1: Pay from 5 million to 10 million
  • Level 2: Pay from 10 million to 14 million
  • Level 3: Pay from 14 million to 20 million

The advantage of this structure is that the established criteria focus more on long-term career development than promotion. Businesses using this salary structure hardly have the opportunity to thrive. However, their employees will improve their skills and take on more responsibilities. At the same time, the amount they receive will increase regularly even if they are not promoted. 

Structure type “wide gap”
Payroll management software

>>> See more: HR management software Professional you need to know


Through the above article, Johnson's Blog Hope you have some understanding of salary structure. If you have any questions or concerns about any business related matter, you can contact us.


Johnson Vu – Deputy General Director of Viindoo Technology Joint Stock Company

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