Designing a Fair Salary Structure to Reduce Wage Differentiation

The organization should formulate salary of employees on the basis of skills and experience of the employees, following all rules and regulations determined by the parliament under Equality Act 2010, which aims to provide a safe and equality environment to employees. The National Minimum Wage was introduced in the UK during 1999, and it is necessary that the organization should follow all rules and regulations related to the wages to bring equality in the pay structure of employees. Employees have wage rights such as addressing the organization regarding issues, receiving annual holiday, and public holiday per year, receiving relevant minimum wages, and receiving overtime wages on a routine basis. On the other hand, employees also have duties such as enhancing productivity, exercising due care in the execution of provided work, protecting the interests of the employer, reporting for assigned work on regular basis. To reduce wage differentiation at the workplace, the organization should establish a specific goals regarding employee retention, adherence to budget, and wage distribution, and implement job evaluation method to examine the worth of the job based on which salary structure can be formulated.

WAGE DIFFERENTIALS

Table of Contents
Introduction......................................................................................................................................1
Issue of Organization.......................................................................................................................1
Justification......................................................................................................................................2
Rights and Duties of Company........................................................................................................3
Rights and Duties of Employees......................................................................................................4
Recommendations............................................................................................................................5
Conclusion.......................................................................................................................................6
References........................................................................................................................................7
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Introduction
Clarity Travel Management organization deliver efficient tourism services to its customers. It
provided travel services in the United Kingdom. Prior 2015, the organization was known as Co-
operative Travel Management, but from March 2015 it is known as clarity travel management. In
this assignment, we will study the pay differentiation issue faced by the employees of the
organization. This will give us a glimpse into the situation of the employees on the basis of
which we can suggest recommendations to the organization to solve the problem (Van Kerm,
2013). The organization also provide conference and event services to its customers. It was
established in 2006 with it’s headquarter in Manchester. From 2011 the organization was run as a
joint venture between the Co-operative group and Thomas Coo. It has more than 250 staff, which
provide management services for corporate level.
Issue of Organization
During 2009, the organization faces a problem of wage differentials in its organization. It was
paying a different amount to men and women on the same job profile. Due to it, the employees
of the organization felt dissatisfaction with the organization system. Wage differentials are
considered as a most significant issue. The organization is paying less than determined by the
industry standards. Equal Pay Act of 1963 concludes that pay should be equal for every
employee on the similar job level. But this had little influence because wage discrimination is
probably arising due to the faulty decisions of the management. The management of the
organization should pay high attention to solving the wage differential problem in its
organization. Women are almost half of the workforce. So, these should not be any difference
between the wages of men and women. They are the equal to men, and they have the right to
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receive the same wages which are paid to the men. The organization is paying high money to
men on the basis of their skill but with the same skills women receive fewer amounts. Women
are contributing more than 55% profits of the organization (Depalo, 2015). But still, they are
behind. As per the Equality Act 2010, it is the right of every employee to recive the equal wages
to other employees of the organization. This will able to bring large level of coordination
between all members. Due to differential wage problem between men and women the
organization faces a decline in its profit. The profit of the organization during 2008 was 75$
billion. But due to the wage differential problem the organization faces strikes, and
dissatisfaction among employees which declined its profit with 20$ billion (Currie, 2013). Now,
it is the responsibility of the organization to maintain its overall pay structure. This will bring
satisfaction among employees, and they like to be the part of the organization. With the equal
pay system the organization able to earn a huge profit as well as reputation in the market.
Justification
Wage differentials have a great social and economic significance. They are directly linked with
the allocation of the economic resources to different employees of the organization. Wage
differential highly influences the overall growth of the organization. The organization faced
wage differential due to which it lost their competitive edge in the market and not able to attract
large customers towards its services. Wages proves as a carrot which motivates employees to put
their high efforts in performing their tasks. In the absence of adequate wages, it spread
dissatisfaction among employees which hinders the overall success of the organization (Lee,
2012). Wage differentials bring inequality among employees of the organization, due to which it
is difficult for the management to establish coordination among employees. This will reduce the
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overall efficiency and organization suffers more. Thus, it can be said that wage differential
among employees is a complex problem for an organization.
Rights and Duties of Company
Generally, the following are the duties of the management of the organization regarding wages
of employees:
 They should convey the rate of remuneration to the employees.
 The management of the organization should also depict the method of calculating
employee’s pays so that they don't have any doubt regarding the basis of their pay.
 Wages of the employees should be determined as per the industry salary structure.
 Bonus and performance-related pay should tell employees so that they don't have any
problem in future regarding the bonus and their performance.
 The management should provide a written description about the salary of employees.
 The organization should formulate salary of employees on the basis of skills and
experience of the employees.
 The organization should follow all the rules and regulations determined by the parliament
under Equality Act 2010 because it is created for the purpose of provide a safe and
equality environment to employees (Davies, 2015).
The National Minimum wage was introduced in the UK during 1999. It is the right of the
organization to follow all the rules and regulations defined in this act. It is the first and foremost
initiative of the UK government towards the wages of the organization (Ruan, 2012). As the
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organization exists in the UK, then it also bound with the rules determined by this act. With this
act, approximate one million low-paid workers have benefited.
So, it is necessary that the organization should follow all rules and regulations related to the
wages. It might reduce the problem of the organization and bring equality in the pay structure of
employees.
Rights and Duties of Employees
Basically, the following are the wage rights of the employees:
 The first right of the employees is to address the organization regarding the issues in the
case of a misunderstanding.
 Secondly, ask the management for a written assessment of their calculated pay
 Receive annual holiday, and public holiday per year.
 Receive relevant minimum wages determined by the government of the country
 Receive overtime wages on routine basis (Moore, 2014)
 Employees should work under the framed structure of the organization.
 Efficiently follow the conditions and terms setting by the management of the
organization.
 Form or be a member of Trade Union
 Receive relevant information about his or her work.
 Receive equal pay for equal work without any kind of difference.
Duties of Employees
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 Enhance productivity of the organization
 Exercise due care in the execution of provided work.
 Protect the interests of the employer.
 Report for the assigned work on regular basis
So, it is the responsibility of employees to fulfill their obligations towards the organization so
that both able to maintain long term relationship with each other.
Recommendations
The organization should formulate specific goals regarding employee retention, adherence to
budget, and wage distribution. These help the organization in establishing efficient wage
programs which can provide a high level of satisfaction to employees. It has been evaluated that
wage differentiation among employees is caused by outdated societal beliefs and values about
the place and value of the women in the workplace. Equality Pay Act 2010 is the combination of
different acts like Anti-Discrimination law, Equal Pay Act 1970, Race Relation Act 1975
(Daniels, 2012). So, the organization should follow Equal Pay Act 2010 which will help the
organization in efficiently resolving its problem. However, this difference of wages can only be
reduced through full participation of employees as well as management of the organization. So, it
is the responsibility of the organization to take the initiative to minimize the wage difference
among employees. This can be done in the following manner:
 The management of the organization should familiarize itself with the current set of
attitudes so that it can match itself with the modern culture. If it is not done so, then the
organization remains backward and not able to success in future.
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 The organization should actively participate in wage difference public education
campaign initiatives which encourage organization to perform high efforts towards
reducing wage difference among men and women at similar or difference job profile
(Englmaier, 2014).
 The organization should conduct an assessment which helps the organization in
enhancing their knowledge about the current salary standards of other organizations.
With this, they are able to set their salary structure with the current salary standards.
 The organization should formulate and implement a workplace wage difference reduction
plan for its workplace. With the formulation of this plan, they are able to utilize
preventive measures to stop wage differences.
 The organization must establish best practices to run the business in a smooth manner.
This will give the opportunity to the management of the organization to earn customer
and employees confidence in the working environment of the organization.
Compensation must reward to employees for their past efforts which derive a large level of
satisfaction to employees of the organization. It is the responsibility of the management to form
internal or external equity of the pay program this will influence the concept of fairness in large
extent. The last and final thing is that the organization should focus on job evaluation method
(EL-Hajji, 2015). The management of the organization should conduct job evaluation to examine
the worth of the job. On the basis of worth, it can formulate salary structure which reduces the
wage differentiation problem in large extent.
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Conclusion
After studying all this, it can conclude that the organization should perform lots of efforts to
reduce the wage differentiation at the workplace. This can be efficiently done by management
through establishing wage structure. Wage structure should have wage curve, rate ranges, and
pay grades. With the help of wage curve, the organization is able to depict its pay rates assigned
to jobs graphically. On the other hand, pay grade helps the organization in the grouping of
similar jobs on the basis of their relative worth. This will help the organization in maintaining
wage level among similar jobs. Rate range will have a midpoint and maximum and minimum
pay rates for all jobs in the pay grade. All these concepts, initially help the organization in
maintaining a pay level among all employees.
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References
Van Kerm, P., 2013. Generalized measures of wage differentials. Empirical Economics, 45(1),
pp.465-482.
Depalo, D., Giordano, R. and Papapetrou, E., 2015. Public–private wage differentials in euro-
area countries: evidence from quantile decomposition analysis. Empirical Economics, 49(3),
pp.985-1015.
Lee, L., 2012. Decomposing wage differentials between migrant workers and urban workers in
urban China's labor markets. China Economic Review,23(2), pp.461-470.
Pinheiro, R. and Visschers, L., 2015. Unemployment risk and wage differentials. Journal of
Economic Theory, 157, pp.397-424.
Englmaier, F., Strasser, S. and Winter, J., 2014. Worker characteristics and wage differentials:
Evidence from a gift-exchange experiment. Journal of Economic Behavior & Organization, 97,
pp.185-203.
Moore, M.J. and Viscusi, W.K., 2014. Compensation mechanisms for job risks: wages, Workers'
Compensation, and product liability. Princeton University Press.
Currie, J. and Hill, B., 2013. Gendered universities and the wage gap: Case study of a pay equity
audit in an Australian university. Higher Education Policy, 26(1), pp.65-82.
EL-Hajji, M. A. (2015). The Hay System of Job Evaluation: A Critical Analysis. Journal of
Human Resources, 3(1), 1-22.
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Ruan, N. and Moss, S.A., 2012. The Second-Class Class Action: How Courts Thwart Wage
Rights by Misapplying Class Action Rules. American University Law Review, 61, p.523.
Daniels, K., 2012. Equality Act 2010.
Davies, C., 2015. Positive Action under the Equality Act 2010 and the implications of the Public
Sector Equality Duty for positive action in the UK.Green's Employment Law Bulletin.
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