Section 3 - The Guaranteed Pay Package

Overview

The guaranteed pay package is unquestionably the most important component of the more broadly-defined remuneration package - regardless of whether it constitutes more or less than 50% of total pay in a particular year, or even for that matter for several years in succession.

 

It is important because it anchors the whole package relative to the market and relative to other employees in the organization. Incentives are invariably scaled as a percentage of ‘base pay’ or of ‘the package’.

 

Beyond this, it fulfils another vitally important function - funding employment benefits. These cover the career risks and the risks of death, disability and dreaded disease.

 

Today, it has become the convention to negotiate guaranteed pay on the basis of an annual all-inclusive Rand amount package. There are several reasons why this is the most popular basis for remuneration in SA, dealt with in Chapter 3.1.

 

Employment benefits within the package need to be carefully selected. As to how this should be done, see Chapter 3.2.

 

The way in which guaranteed pay packages are managed is dealt with in Chapter 3.3, covering both how to benchmark in order to correctly measure and reward ‘competency’, and then how to regulate merit increments.