Generation of the pay scale

A salary pay scale consists of tiers on which employees are spread. This phase is the evaluation, which was completed in the previous step of the pay scale creation process. The last step is to complete the pay scale by assigning an amount to each tier.

As an illustration, here is a five-component pay scale model with complete tiers:

Finding the right amount to assign to each tier is the most time-consuming phase of creating a salary pay scale. Traditionally done in Excel, the amounts are often defined a little randomly until the tiers and wages become roughly consistent.

In order to simplify life, we’ve looked at the criteria that characterize a good pay scale and how to automate all of it. This is the objective of the pay scale generator:

The Clearwage pay scale generator 🤖

To design the pay scale creation tool, we based the problem of How to generate the best possible pay scale? In the form of a linear optimization equation.

In our case, this essentially consists of:

  1. Define a set of variables, here the salaries and the value of the tiers;
  2. Define the constraints that bind the variables together, here the formula of the pay scale and the gap between tiers;
  3. Define a function to minimize, here the increase in total payroll.

The payroll increase is used as an indicator of the cost of transitioning to the pay scale. It is calculated by finding the difference between the new wages aligned on the pay scale and the old ones.

By relying on reference tools like OR Tools, we can express this problem so that the machine generates several pay scales, evaluates them, and returns the best possible pay scale for you. Thus, the generator will always propose the pay scale that meets all the constraints and whose payroll increase is the lowest.

The pay scale generator is integrated in the pay scale creation tool and you have your hand on various parameters:

Configuration of the pay scale

The settings in the pay scale allow you to choose how to value each component. Once you are satisfied with your choice, click Generate pay scale. The generator will then be based on the distribution of your budget to create all tiers.

Feel free to experiment by creating several pay scales with different parameters. As inspiration we offer a guide to editing the tiers. Click Generate a new pay scale to return to the pay scale configuration.

ℹ️ The evaluation of the employees is essential in the generation of the pay scale: the creator will try as much as possible to match the existing salaries with the new ones aligned on the pay scale. If the existing salaries are widely varied, the quality of the generated pay scale will be diminished. To avoid this situation, you can choose to exclude an employee temporarily from the grid and then add it in a second time around. 

Please keep in mind that a good pay scale is above all a clear and fair pay scale, which is an extension of your corporate culture. Whatever the result of the pay scale creator, it is by refining it manually that you can aim for an optimal result. Editing the pay scale manually is detailed in this article.

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