Designing A Base Pay Structure Designing A Base Pay Structure Pay Structure Design Questions in addition to Issues Pay Structure Design Questions in addition to Issues Pay Structure Design Questions in addition to Issues
Nutt, Christian, Features Editor has reference to this Academic Journal, PHwiki organized this Journal Designing A Base Pay Structure After determining internal equity relationships among jobs, in addition to Identifying competitive pay practices in the market place, The next order of business is the design of a pay structure. Designing A Base Pay Structure The Architects of the Pay Structure Must: Establish a pay policy line. Design pay grades using pay grade minimum in addition to maximum in addition to desired spreads of the range. Determine overlap between pay grades. Determine if the organization needs more than one pay structure in addition to why. Compensation Policy Guidelines Decisions that provide guidelines as long as the compensation manager to follow in developing a pay structure are made at the highest levels of the organization.
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Compensation Policy Guidelines THESE POLICY DECISIONS INCLUDE: Minimum in addition to maximum levels of pay. The general relationship among pay levels. Whether or not the pay structure should lead or lag or laglead the market. The division of the total compensation dollar. Compensation Policy Guidelines Additionally Senior management decides how best to administer its pay policies. How much, to whom, when, where in addition to how. Pay Structure Design Questions in addition to Issues What is the lowest rate of pay that can be offered in addition to still hire desirable employees What is the rate of pay necessary to retain employees Will the organization want to recognize seniority in addition to merit through the base pay schedule
Pay Structure Design Questions in addition to Issues Is it wise or necessary to offer more than one rate of pay to employees per as long as ming either identical or similar kinds of work What is considered to be a sufficient difference in base rates of pay among jobs in a class-series that requires varying levels of knowledge, skills, responsibilities, in addition to duties. Pay Structure Design Questions in addition to Issues Does the organization wish to recognize dangerous working conditions in its base pay schedule Should there be a difference in changes in base pay progression opportunities among jobs of varying worth Pay Structure Design Questions in addition to Issues Do employees have a significant opportunity to progress to higher level jobs If so, what should be the relationship between promotion to a higher job in addition to changes in base pay Will policies in addition to regulations permit incumbents to earn rates of pay higher than established maximums in addition to lower than established minimums What should be the reasons as long as allowing such deviations
How will the pay structure accommodate across-the-board, cost-of-living, or other adjustments not related to employee tenure, per as long as mance, or responsibility in addition to duty changes Pay Structure Design Questions in addition to Issues Pay Structure Architecture With the generation of internal in addition to external pay data in addition to in as long as mation, managers are now ready to design a pay schedule. To do so they must: Determine a trend or pay policy line. Decide on the need as long as one or more pay structures. Pay Structure Architecture Display job data Establish the characteristics of the pay structure (number, width, in addition to height of pay grades, in addition to overlap) Lock overlapping pay structures (when using more than one)
Determining A Pay Policy Line Each organization must develop its own pay policy line, which is a trend line or line of best fit that best represents the middle value of jobs that have been evaluated or classified to have particular worth. Determining A Pay Policy Line The procedure most organizations follow in establishing a pay policy or trend line is to identify the market rates as long as various benchmark jobs that cover the entire spectrum from lowest to highest rates of pay. By plotting on a chart the pay-rate in as long as mation obtained through surveys, a scatter diagram or scatter plot can be developed. Determining A Pay Policy Line Different procedures are available as long as developing a trend line from a scatter diagram Line of sight Two-point And the least squares methods. Another simple procedure is to obtain the market rate or going rate of pay as long as the lowest in addition to highest paid jobs. Connecting these points can also provide a first approximation as long as a pay policy line.
Determining A Pay Policy Line Many organizations use the pay policy line to set midpoint values as long as all their jobs. Pay policy lines are useful when plotting survey data in addition to comparing them with the internal pay structure. From the pay policy line, organizations establish the minimum in addition to maximum pay levels, the relationship between pay grades, in addition to the range of a pay grade. The Need For More Than One Pay Structure There are a number of logical in addition to rational considerations as long as having multiple pay structures that focus on the as long as ces that influence the actual pay of the various occupational groups comprising most organizations. A major reason as long as using multiple pay structures is that rates of pay as long as more advanced jobs increase geometrically rather than linearly. The Need For More Than One Pay Structure
The Need For More Than One Pay Structure It is not unusual as long as large organizations to have at least three pay structure lines: Blue collar manual labor, craft, in addition to trade workers. Nonexempt white collar salaried workers. Managerial, administrative, in addition to professional exempt employees. Some organizations have a fourth pay structure as long as their highly paid executives. The Need For More Than One Pay Structure Displaying Job Data Even when there is an apparent need as long as more than one trend line or pay policy line that would lead to more than one pay structure, there is a statistical procedure as long as avoiding multiple structures.
Displaying Job Data This procedure allows pay data to be presented by means of some as long as m of curvilinear relationship rather than a relationship that must be a straight line. A pay structure using arithmetic progression will produce a straight pay police line. Displaying Job Data Geometric progression where pay rates vary by some constant rate of increase will produce a curved pay policy line. To display a geometric progression in a straight line a logarithmic scale is used. Displaying Job Data Two values of central tendency most used in analyzing pay relationships are the: Mean Median When the market value or going rate of a job is being determined, the average value or mean is frequently the value selected.
Displaying Job Data But it is not always the best choice In the final analysis it depends on the distribution of the data. Identifying The Lowest And Highest Rates Of Pay In identifying the lowest rate of pay it is important to pay attention to: Legal requirements. The prevailing union scales in local markets. All area wage scales. Identifying The Lowest And Highest Rates Of Pay A high low-end rate pushes all rates too high And a low low-end rate promotes to much turnover. Highest rates of pay are a more subjective consideration.
Identifying The Lowest And Highest Rates Of Pay The highest in addition to lowest average values should be the midpoint of the pay as long as those jobs assigned this rate when there is a range of pay available as long as each category. Determining Progression From Lowest To Highest Pay Rate The basic design criterion that determines pay differences in moving through a pay structure is the midpoint-to-midpoint differences. Midpoint-to-midpoint pay difference is the percentage change in the middle value from one adjacent pay grade to the next. Determining Progression From Lowest To Highest Pay Rate Midpoint-to-midpoint pay progressions range from as low as 3% to as high as 25%. in addition to possibly higher is some cases.
Pay Structure Terms Broadb in addition to ing (cont) This pay grouping or exp in addition to ed pay grade may have a range varying from 50 percent to 100 percent in addition to include jobs that have responsibilities in addition to duties that vary in complexity in addition to difficulty in addition to require significantly different knowledge in addition to skills. Pay Structure Terms Range or Spread Dimension The difference between the upper in addition to lower limits of the grade. It may be expressed in absolute dollar amounts or as a percentage. Pay Structure Terms Pay Grade Width Procedures as long as establishing a pay grade width are not as specific or precise as those related to the spread or height of the pay grade. When using a point-factor plan, points often are the x axis values.
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