Career Information - UsingInformation on Salary Scales

Introduction

Apart from needing advice on which career path to take, clients also seek advice on their earning potential within each career. CDPs therefore need a solid working knowledge of salary scales to advise clients on different careers and what monetary value each job holds.

Case study

Claudia recently completed her diploma in business administration and was looking for work with her newly acquired qualification. She had always been a keen learner — dedicated and meticulous in her tasks — but Claudia did not know much about the range of professions available to her, and had only studied what her parents could afford at the local TVET college. She had big dreams of buying a home and taking care of her parents, so there was some urgency for her to start working. After making an appointment at the college's recruitment office, Claudia met with the CDP, Carol.

Carol showed Claudia the most recent vacancy information for administrators. Claudia was disheartened by how little remuneration was on offer for someone with her qualification — would she ever be able to afford a home on that salary? Carol was empathetic and reassured Claudia that this was an entry-level salary, and that she could always upskill and study further as she gained experience within the industry. Carol reminded Claudia that, given the scarcity of work, any related job was a valuable "foot in the door" for the time being. Claudia smiled, recognising the truth in this, made a copy of the available vacancies, and started applying.

Like many South Africans, Claudia studied to secure a comfortable future for herself and her loved ones. As in every country, some people earn more while others earn less, depending on their qualification and experience. Understanding salary scales relevant to the country helps practitioners advise learners on their earning potential, helping learners set realistic goals and make informed decisions accordingly.

What are salary scales?

The Longman Business Dictionary defines pay or salary scales as showing the pay rates for employees at each level within an organisation. It also demonstrates the pay increases an employee may receive after spending a certain amount of time at a particular level. Salary scales also refer to the range of wages a company is willing to pay a potential new employee for a particular job, reflecting the minimum and maximum salaries a company will pay a candidate depending on their qualifications. This information is important, as it allows practitioners to guide clients towards the best career for themselves and educate them on what to expect in terms of pay, so they can plan their financial lifestyle accordingly.

The different types of salary scales

There are several different types of salary scales, as each business operates differently. CDPs need to know the different types, what each entails, which are most common in different industries, and how to explain this information to clients so they can make the best possible choice, especially before accepting a job offer.

The following are the most common types of salary scales used by companies:

- The going rate. The market rate is determined by what other businesses in the same industry and region are paying for similar jobs; the business then structures its own pay accordingly.

- Job evaluation and pay grading. This is when a business evaluates each job based on several factors — such as how it affects the bottom line, how difficult or dangerous it is, and what training is necessary — and develops an appropriate pay range on this basis.

- Management fit. This is when a business decides what to pay each employee without using a formal system. This type of salary scale usually results in inconsistent pay, which can lead to resentment, frustration and reduced teamwork once employees discover these inequities.

The following types of salary scales are alternative structures based more on what the employee can do, and less on the job description itself:

- Skill-based pay. Pay scales are determined by skill level, not job title. A business creates a list of skills necessary for each job and develops criteria for what mastery of each skill looks like. As employees master a skill, they receive a pay increase.

- Competency-based pay. This system bases compensation on an employee's qualities or characteristics, rather than on specific skills. Salaries and raises are based on how well employees demonstrate the core competencies needed for their positions.

- Broadbanding. Businesses group several related jobs — such as office assistant and receptionist — into one band, for example, "administrative staff", and assign a pay range to that band rather than basing it on a specific job title.

- Variable pay. This system links a certain percentage of an employee's pay to their performance and accomplishments. The business establishes a base pay rate, and then defines group and individual objectives as a variable component of salary. Commission-based pay is one example of variable pay.

If a CDP understands the different types of salary scales, this allows them to be a more well-rounded career counsellor, as they can explain to clients what to expect in terms of monetary compensation. Clients will then know whether they are receiving fair pay for their job, and what to expect in terms of salary increases as they move up within the company.

Private versus government salaries

Salary scales and salaries differ between the private sector and government. In South Africa, some careers offer greater earning potential within government than in the private sector, while for other careers the opposite is true, particularly in more senior positions. There is also a difference in the benefits a person receives within the private sector versus government, which can further affect overall compensation. CDPs also need to explain to clients that a salary scale is not an indication of take-home pay, but rather the gross amount before tax and other deductions — such as medical aid, UIF and pension contributions — are made. This helps a client choose which sector suits them best, with a realistic understanding of their likely take-home pay whether they choose to work in government or in the private sector.

Conclusion

If a CDP wants to give a client proper guidance when advising them on which career path to choose, it is essential that they understand salary scales within a South African context. It should be noted, though, that South Africa is struggling in certain sectors, and expecting high starting salaries in these areas might lead to disappointment. Clients should be encouraged to speak to unions and human resources divisions when maki