• Organizations use different payment schedules to determine when their employees’ pay will change.
• For example, pay can be increased on a schedule or through a level system, and be based on units produced or knowledge or competency increase.

Another thing to consider is the payment schedules. How will the base pay be handled? Will there be a single or a flat-rate system? Will employees get raises based upon merit, performance? What about time-based payment systems?

Examples of payment systems

Some positions have customary pay or salary structures. Some organizations increase pay on certain schedules; for example, every year they raise employees’ pay by a certain percent. Sometimes the percent raised may fluctuate based upon performance (i.e., an organization may decide to provide all employees a 2.5 percent raise every year and from that level, the employer can determine how much more can be added for good performance).

Some organizations may have levels of pay to which employees advance, and in some cases, employees may skip levels if their performance warrants it.

An organization may compensate employees on a piece-rate system, meaning they get paid based upon units produced (units can be anything from customers serviced, items created, or phone calls made). These employees have a pay structure based on productivity, whereby the employees are paid a base salary and receive extra pay based on how many units they produced during a pay period. Other such pay adjustments may include cost of living raises or increases for seniority.

Some payment structures are based upon employees’ knowledge or competency. This is common for people such as professors or scientists. As their knowledge or competency increases, so do their salary levels.