Setting Up Pay Structures In Your Workplace - IELTS Reading Answers & Explanations
From IELTS Simulation Tests General Training Reading Test 2 · Part 2 · Questions 15–27
Reading Passage
Read the text below and answer Questions 15–23.
Setting up pay structures in your workplace:
When it comes to setting up a pay structure for your new business, there are two broad options to choose from: the internal equity method, or the market pricing method.
The internal equity method
The internal equity method of pay structuring involves creating a series of grades with each grade representing a different level of pay within the company. Employment positions are set within these grades depending on the rank of internal advancement the job represents.
A company determines how many grades it needs based on the number of employees and the variety of jobs in the organisation. The number of grades can be expanded at any point. As a result of their frequent use of hybrid positions, small businesses do not always benefit from pay grades.
Each grade should also be given a spread, so that employees can move within their grade as they progress within their current position. Creating a minimum and a maximum spread for the company is also recommended. There should be a 15 percent progression between grades. This is vital for ensuring that promotions incur meaningful pay increases and maintain incentives for the employee to rise within the company.
Market pricing method
An alternative to this more traditional, grid-based method of remuneration is what is called the market pricing approach. This is quickly becoming the dominant method of pricing jobs. This approach involves an employee's position being compensated in relation to the market value of that job, not the level that specific position holds within the organisation.
Using the internal equity method, for example, the chief financial officer (CFO) will probably be in the top grade and remunerated higher than an information technology worker in that organisation. Under the market pricing method there is no guarantee of this. An information technology worker with a highly demanded skill-set may be paid much more than what the CFO earns.
Which is right for your business?
Only you can decide which pay method is right for your business. As a general rule you may find that small, dynamic, high-turnover and high-speed growth-orientated businesses respond well to the market pricing method. This way you can individually select the most qualified and skilled candidates for each position by remunerating them at or just above the market rate so that your precious capital is not wasted on simply rewarding status.
For those companies that seek to expand in a firm, controlled and more cautious manner while maintaining robust internal cohesion and high levels of staff loyalty and discipline, the internal equity method may be more suited.
______________
Read the text below and answer Questions 24-27.
If you want to find a job that motivates you, maybe change your career or start out on your own in a small business or as a freelancer, or even make a fresh start after redundancy, think about making a quick planner to help you identify your interests and motivating factors.
To be successful and happy at work, you have to figure out what it is you really love—you need to recognise your passion. To do well at self-employment or freelance work too, you need to know what your own personal strengths are. More than that, you should be aware of your working styles—things like whether you are good around people or not; whether you are better at working with figures, design or text. Perhaps you like working with machinery or certain materials. The next step is very important: investigate the potential for your ideas, in other words, carry out some research and educate yourself about all the possibilities. Don't rush it. Let your ideas take shape slowly and work out your plans for the future. Time is crucial for refining and developing what you have to offer. At the end of it all, you'll be in the most appropriate and fulfilling job for you whether it's running your own business or enjoying being in a new occupation.
Questions
Questions 15–23 Note Completion
Complete the notes below.
Choose NO MORE THAN TWO WORDS from the text for each answer.
Internal equity method
Pay organised according to a range of 15—each one denotes different level of pay based on employee's position within the company.
The company decides on the number of grades according to how many workers and how many different 16.
Not suitable for 17 which often have 18.
Gaps between pay grades are important to 19 for promotion.
Market pricing method
Pay is based on the job's 20.
A worker with sought-after 21 may earn more than a CFO.
How to decide?
Internal equity - Good for maintaining steady growth and keeping constant, reliable 22.
Market pricing - Money does not go on paying for 23 alone, but acquiring the best performers.
Questions 24–27 Flow Chart Completion
Complete the flow chart below.
Choose ONE WORD ONLY from the text for each answer.
identify 24
↓
identify 25
↓
identify preferred working style
↓
do 26
↓
allow ideas to form
↓
take time to develop
↓
new 27 or career
Answers & Explanations Summary
| # | Answer | Evidence | Explanation |
|---|---|---|---|
| Q15 | grades | The internal equity method of pay structuring involves creating a series of grades with each grade representing a different level of pay within the company | Excerpt/Passage Explanation: The passage explains that under the internal equity system, pay is organized into different levels called grades, where each grade equals a specific amount of pay inside the business. Answer Explanation: The answer "grades" refers to the different levels or categories used in a company's pay system to decide how much an employee earns. Reason For Correctness: The correct answer is "grades" because the text explains that the internal equity method works by setting up a series of pay levels. In the passage, "a series of grades" matches the phrase "a range of [grades]" in the notes, and "each grade representing a different level of pay" matches "each one denotes different level of pay". |
| Q16 | jobs | A company determines how many grades it needs based on the number of employees and the variety of jobs in the organisation | Excerpt/Passage Explanation: The passage explains that a business decides its total number of pay levels depending on how many workers it has and how many different types of work (jobs) exist in the company. Answer Explanation: The answer "jobs" means the different types of work or roles available in a company. Reason For Correctness: The correct answer is "jobs" because the text explains how a business chooses how many pay grades to create. The note says the decision is based on "how many workers and how many different ". In the text, this directly matches the phrase "based on the number of employees and the variety of jobs in the organisation". Here, "the variety of" means "how many different", and "the number of employees" means "how many workers". |
| Q17 | small businesses | As a result of their frequent use of hybrid positions, small businesses do not always benefit from pay grades | Excerpt/Passage Explanation: The passage explains that because small companies frequently have roles with mixed duties (hybrid positions), a fixed pay grade system is not always helpful or suitable for them. Answer Explanation: The answer "small businesses" refers to companies with a small number of staff that do not always gain advantages from using fixed pay grades. Reason For Correctness: The correct answer is found in the section explaining the internal equity method. The text states that "small businesses do not always benefit from pay grades" because they often use hybrid roles. In the summary note, the phrase "Not suitable for" corresponds directly to "do not always benefit from" in the passage. |
| Q18 | hybrid positions | As a result of their frequent use of hybrid positions, small businesses do not always benefit from pay grades | Excerpt/Passage Explanation: The passage explains that small companies regularly have roles that combine different responsibilities (hybrid positions), which makes using fixed pay grades less useful for them. Answer Explanation: The answer "hybrid positions" refers to jobs where a worker does a mix of different tasks or roles instead of just one standard job. Reason For Correctness: The correct answer is supported by the text explaining why pay grades may not work well for small companies. The passage states that because small businesses frequently use "hybrid positions", they do not always benefit from fixed pay grades. Therefore, "hybrid positions" correctly completes the note describing what these companies often have. |
| Q19 | maintain incentives | This is vital for ensuring that promotions incur meaningful pay increases and maintain incentives for the employee to rise within the company | Excerpt/Passage Explanation: The passage explains that having a 15 percent difference between pay grades is very important so that getting promoted gives a real pay raise and keeps workers motivated to move up in the company. Answer Explanation: The answer "maintain incentives" means to keep employees motivated and encouraged to work hard for higher positions. Reason For Correctness: The correct answer is "maintain incentives" because the text explains that having a pay gap or progression between grades is necessary to keep employees motivated to seek promotions. In the text, words like "vital" match "important", "progression between grades" matches "Gaps between pay grades", and "for the employee to rise" matches "for promotion". |
| Q20 | market value | This approach involves an employee's position being compensated in relation to the market value of that job, not the level that specific position holds within the organisation | Excerpt/Passage Explanation: The passage explains that under the market pricing method, an employee's pay is decided by what the job is worth in the wider job market, rather than their internal job rank. Answer Explanation: The answer refers to the worth or price of a specific job in the general employment market. Reason For Correctness: The correct answer is supported by the section describing the "Market pricing method". The passage explains that this system pays (or compensates) a worker based on the "market value" of their job rather than their rank or internal level in the company. In the notes, the phrase "Pay is based on the job's" matches the passage's description of a position "being compensated in relation to the market value of that job". |
| Q21 | skill-set | An information technology worker with a highly demanded skill-set may be paid much more than what the CFO earns | Excerpt/Passage Explanation: The passage explains that if a worker has skills that many companies really want and need, that worker can get paid more than a high-ranking manager like the CFO. Answer Explanation: The answer "skill-set" means a special group of skills, abilities, and knowledge that a person has to do a specific job. Reason For Correctness: The correct answer is "skill-set" because the text talks about how the market pricing method works. In the text, an information technology worker who has a "highly demanded" (sought-after) "skill-set" can earn significantly more money than a chief financial officer (CFO). |
| Q22 | staff / employees / employes | For those companies that seek to expand in a firm, controlled and more cautious manner while maintaining robust internal cohesion and high levels of staff loyalty and discipline, the internal equity method may be more suited. | Excerpt/Passage Explanation: The passage explains that if a business wants to grow slowly and carefully, keep the team working well together, and keep workers loyal and well-behaved, the internal equity method is a better choice. Answer Explanation: The answer refers to the workers or people employed by a business. Reason For Correctness: The correct answer is correct because the passage discusses maintaining strong team relationships and "high levels of staff loyalty" within the company. In this context, "staff" (or "employees") refers to the company's workforce that remains dedicated and reliable under the internal equity system. |
| Q23 | status | This way you can individually select the most qualified and skilled candidates for each position by remunerating them at or just above the market rate so that your precious capital is not wasted on simply rewarding status | Excerpt/Passage Explanation: The passage explains that the market pricing method helps a company hire the most skilled workers and avoids wasting company money just to pay someone for having a high rank or title. Answer Explanation: The answer "status" means an employee's high rank, job title, or official position within an organization. Reason For Correctness: The correct answer is "status" because the summary notes that under the market pricing method, money is not spent purely to pay for someone's rank, but rather to hire the best performers. In the passage, the author writes that this method ensures "capital is not wasted on simply rewarding status." In this context, "capital is not wasted on simply rewarding" directly corresponds to "Money does not go on paying for alone". |
| Q24 | passion | To be successful and happy at work, you have to figure out what it is you really love—you need to recognise your passion | Excerpt/Passage Explanation: The passage explains that to feel happy and achieve success in your work, you must discover what you truly enjoy and identify what you are passionate about. Answer Explanation: The answer "passion" refers to a strong feeling of enthusiasm or a deep love for a specific activity or interest. Reason For Correctness: The correct answer is "passion" because the text describes the very first step to being happy and successful in a career. The passage states that you must figure out what you love and "recognise your passion." In this context, the word "recognise" matches the word "identify" from the flow chart. |
| Q25 | strengths | To do well at self-employment or freelance work too, you need to know what your own personal strengths are | Excerpt/Passage Explanation: The passage explains that to succeed in your own work, you must find out and understand the skills and qualities you are best at. Answer Explanation: The answer "strengths" means the things, talents, or skills that you are especially good at doing. Reason For Correctness: The correct answer is "strengths" because the text outlines the steps to finding the right job or career. After understanding what you love, the text explains that you need to know your own "strengths" before looking at your working styles. In this context, "identify" corresponds directly to "know what your own personal strengths are". |
| Q26 | research | The next step is very important: investigate the potential for your ideas, in other words, carry out some research and educate yourself about all the possibilities | Excerpt/Passage Explanation: The passage says that the next key action you need to take is to explore your ideas by doing research and learning about all possible options. Answer Explanation: The answer "research" means studying, searching for information, and learning more about your ideas and possibilities. Reason For Correctness: The correct answer is "research" because the passage explains the steps to plan your career. Following the step of identifying your working style, the text states the next step is to "carry out some research", which matches the flow chart prompt "do [research]". Key synonyms and phrases include "carry out" (meaning "do") and "educate yourself about all the possibilities". |
| Q27 | business | At the end of it all, you'll be in the most appropriate and fulfilling job for you whether it's running your own business or enjoying being in a new occupation | Excerpt/Passage Explanation: The passage explains that after going through the full process, you will reach the final result of either managing your own company or working in a new job. Answer Explanation: The answer means running or owning a company or self-employed trade of your own. Reason For Correctness: The correct answer is confirmed by the final sentence of the text, which explains the final outcome of following all the steps in the planning process. The text mentions that completing these steps will lead to either running your own "business" or having a new occupation (career). |