How to Create a Salary Structure: A Step-by-Step Guide for Thai Companies

A salary structure is a framework of salary ranges, one per grade, that lets you set and explain pay. Here is a common six-step process, with Thailand-specific notes at the end. For the basic idea first, read what a salary structure is.

Step 1: Group the jobs

List every position and group similar work. Job descriptions are the raw material. If they are out of date, fix the ones that matter first rather than rewriting all of them.

Step 2: Grade the jobs

Decide which jobs are worth more than others and form grades. Common approaches are a point-factor method, where jobs are scored on factors such as responsibility and skill, or a simpler ranking and classification. The aim is a grade level that you can defend by pointing to the work itself.

How many grades? Enough to reflect real differences in responsibility. Too many grades blur the differences, and too few put very different jobs in one range. There is no universal number.

Step 3: Gather market reference points

Pick benchmark jobs, the ones easy to compare with other employers, and collect pay data from sources you can name. Record the source and date. Reference points from different sources may disagree, and the difference is worth noting. Do not present a figure without saying where it came from.

Step 4: Set the ranges

For each grade, set a minimum, a midpoint and a maximum. The midpoint is set from what the company can afford to pay for that grade, checked against any market reference you have, and the width of the range comes from how long it takes to become fully proficient in that kind of work. Decide how much neighboring ranges overlap.

See Thailand salary structure guide for local context.

Step 5: Place people and cost it

Compare each employee with their grade’s range. Some will sit below the minimum and some above the maximum; see red circle and green circle employees. Measure position with compa-ratio. Then estimate the cost of bringing people in line and decide whether to phase it. Check for salary compression at the same time.

Step 6: Document and communicate

Write the rules for hiring offers, raises and promotions. Brief managers before employees hear anything, because managers will be asked to explain it.

Thailand-specific notes

• Pay is often discussed as total monthly cash. Decide up front whether the structure covers base pay only or base plus fixed allowances, and be consistent.
• Check your legal obligations, such as minimum wage and severance rules, with a qualified adviser. This article is not legal advice.
• If your company has grown by adding positions one at a time, a structure may be the first time pay is looked at as a whole, so expect more exceptions than the template allows for.

When to get help

If you have no internal HR capacity, or the stakes of getting it wrong are high, an outside team can run the process with you. Our salary structure service grades the jobs, sets the ranges from what the company can afford to pay, places every employee, and delivers Pay Compass, a tool for viewing pay against the ranges. External market benchmarking is not part of the package. A first conversation is free.