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Establishing a Pay Structure

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Chapter 11 Establishing a Pay Structure Decisions About Pay Job Structure Relative pay for different jobs within the organization Pay level Average amount the ... – PowerPoint PPT presentation

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Title: Establishing a Pay Structure


1
Chapter 11
  • Establishing a Pay Structure

2
Decisions About Pay
  • Job Structure
  • Relative pay for different jobs within the
    organization
  • Pay level
  • Average amount the organization pays for a
    particular job
  • Pay structure
  • The pay policy resulting from job structure and
    pay-level decisions

3
Issues in Developing a Pay Structure
4
Legal Requirements
  • Equal Employment Opportunity
  • Differences in pay must be tied to
    business-related considerations
  • Fair Labor Standards Act of 1938
  • Establishes a minimum wage
  • Requirements for overtime pay
  • Child labor
  • Exempt vs Non-exempt

5
Market Influences
  • Product Markets
  • Organizations that offer competing goods and
    services
  • Labor costs per industry
  • Salary compression
  • Labor Markets
  • Attracting the best employees
  • Cost-of-Living

6
Judgments About Pay Fairness
7
Job Structure
  • Job evaluation
  • Measuring the relative internal worth of the
    organizations jobs
  • Hay Guide-Chart Profile Method
  • Creates a profile for each position
  • Required know how
  • Degree of problem solving
  • Accountability

8
Pay Structure
  • Pay rates
  • Pay policy line
  • Shows the mathematical relationship between job
    evaluation points and pay rate
  • Pay grades
  • Grouping sets of jobs having similar worth or
    content together to establish pay rates

9
Sample Pay Grade Structure
10
Alternatives to Job-Based Pay
  • Delayering
  • Reducing the number of levels
  • Creates broad bands
  • Skill-based pay systems
  • Pay structures that set pay according to the
    employees skill level or knowledge
  • Addresses capabilities as well

11
Pay Structure and Actual Pay
  • HR is typically responsible for setting and
    monitoring the pay structure
  • Compa-Ratio- ratio of average pay to the midpoint
    of the pay range

12
Chapter 12
  • Recognizing Employee Contributions with Pay

13
Effective Incentive Pay Plans
14
Individual Incentives
15
Team or Group Incentives
16
Organizational Incentives
17
Balanced Scorecard
  • A combination of performance measures directed
    toward the companys long- and short-term goals

18
Balanced Scorecard
19
Incentive Pay for Executives
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