What is a Pay Plan?

A pay plan, also known as a compensation plan or salary or wage schedule, is a structured system that outlines how employees are rewarded for their work in terms of base salary or wages. These plans can be designed in various ways and take many forms, but they typically include multiple pay grades and pay ranges. Pay plans usually do not encompass the total compensation package, which includes base pay as well as additional pay, benefits, and retirement offerings. A well-designed pay plan ensures that base compensation is fair, competitive, and aligned with the organization's goals and budget.

Pay Grade

A pay grade is a unit of monetary compensation assigned to specific jobs or positions within an organization. It reflects the level of responsibility, complexity, and importance of the job. Pay grades provide a structured framework for establishing and managing the compensation levels for different job classifications. Each pay grade represents a specific level within the overall pay structure, often based on factors such as job duties, experience, and qualifications.

Pay Range

A pay range, also known as a salary range or wage range, sets the upper and lower limits of compensation within a particular pay grade. It includes a minimum pay rate and a maximum pay rate for a job or position. The pay range helps organizations manage the compensation for new employees, determine appropriate pay increases for existing employees, and maintain equity among various jobs. Pay ranges are designed to accommodate different levels of experience, performance, and market conditions within the same pay grade.

• Pay Range Minimum: The lowest pay rate you can earn in a job's pay range. This is usually for people who are new to the role and still learning the responsibilities.

• Pay Range Midpoint: The middle pay rate in a job's pay range, also known as the "market" rate.

• Pay Range Maximum: The highest pay rate in a job's pay range. This is for employees who are earning more than the market rate for their role.

Differences Between Pay Grade and Pay Range

Scope:

• Pay Grade: Represents a level or classification within the organization's pay structure, reflecting the responsibility and complexity of the job

• Pay Range: Defines the specific monetary limits (minimum and maximum pay) within a particular pay grade

Purpose:

• Pay Grade: Establishes a hierarchical framework for organizing jobs and determining compensation levels

• Pay Range: Provides flexibility within a pay grade to accommodate different levels of experience, performance, and market conditions

Application:

• Pay Grade: Used to categorize jobs and ensure consistency in pay levels across similar positions

• Pay Range: Used to set and manage the actual compensation rates for employees within a specific pay grade

Open Pay Range

Open pay ranges emerged from the broader movement towards pay transparency and equity in the workplace, gaining momentum in the late 20th century. This shift was driven by evolving societal expectations, regulatory changes, and advocacy from labor unions and policymakers. The primary objective was to address pay inequities and ensure fair compensation practices by making pay ranges and decisions more transparent and accessible to employees and job candidates. In recent years, some companies have adopted open pay policies, publicly disclosing compensation ranges or specific salaries to promote fairness and reduce pay disparities. While not universally adopted, this trend reflects a growing focus on workplace equity and inclusion. This pay structure provides a broad pay range with a minimum and maximum pay rate for each unique position. Employee pay can vary within this pay range based on the factors outlined in the organization's compensation philosophy. The classification groups that use an open pay range structure include Educational Support Personnel, Custodial, Maintenance, Grounds, Carpentry, Professional Technical, and Administrators.

Step

The step pay structure emerged in the mid-20th century, particularly in unionized and government work environments. This approach aimed to ensure pay equity by providing incremental pay increases based on tenure. Also known as a step schedule, this pay structure determines employee pay based on a set scale of steps. Each step represents a predetermined pay rate for a specific level of experience or tenure within the organization. Employees move up the steps through a systematic process, usually based on their length of service, allowing them to receive incremental pay increases. The Bus Drivers classification group uses a step pay structure.

Step and Lane

After World War II, step and lane pay structures became widely adopted as the standard for compensating teachers in the United States. This approach aimed to eliminate arbitrary factors in salary determination. The National Education Association played a crucial role in advocating for the single-salary schedule. This pay structure uses a grid to specify the value of raises for teachers and special service providers. Staff earn a “step” increase for each additional year of experience, provided the school district has the funds. Additionally, they can move to higher “lanes” by earning additional education credits and degrees. The Certified/Licensed classification group uses a step and lane pay structure.

Base pay plans are available on the District website. Each year, the Compensation and Classification team within the Office of Human Resources collaborates with the third-party compensation consultant to review and assess all pay plans. This evaluation determines the necessary adjustments to pay ranges for the upcoming school year, taking into account state funding and market trends. Any proposed changes require approval from the Board of Education before being published.