Compensation structures are the pay-based frameworks companies use to establish fair and equitable pay for all employees in the organization. Elements of organizational structure are; (1) design jobs, (2) departmentalization, (3) establish reporting relationships, (3) distribute authority, (5) coordinating activities, and (6) differentiating among positions. Describe how the elements of organizational structure can be . McDonald's organizational structure establishes the arrangement or pattern of interactions among various business areas. How to Set a Salary and Create Pay Grades - ZipRecruiter Reading: The Organization Chart and Reporting Structure This structure must be totally aligned with strategy for the organization to achieve its mission and goals. Then we will examine how these building blocks come together to form two different configurations of structures. By associating each position with a grade or band, employers can use a salary structure to help manage compensation in an optimal way. 16.6 The Roles of Pay Structure and Pay for Performance Hierarchical Levels. Organizational structure enables quick decision-making and better coordination and communication . Which of the following should be the first step in establishing this framework Jay should focus on? . $55k - $70k. Other . Example broad-graded pay structure How Should You Determine An Employee's Salary? The first and most common is a functional structure. Toyota still maintains its global hierarchy despite its reorganization in 2013. Organizational change. Employee productivity is a major contributor to organizational effectiveness, which can impact: A worker's profitability. Determine the form of your employee compensation structure. While most companies will choose from the functional or divisional approaches, a flat approach . . Fill in employee data and metrics. Pay grades are the basis for salary ranges of different positions within the company. The hierarchy typically proceeds as follows, from highest in the system to the lowest: Centralized structures offer a structured and straightforward system, emphasizing organization and expertise and ensuring verified members of the organization are in proper decision-making positions of power.