Professional Documents
Culture Documents
Salary Structures
Pay for jobs according to prevailing pay levels and preferred position (lead, lag, match) in the market Establish pay ranges for each job with a minimum, maximum, and midpoint to the range. Use control points (maximum and midpoint) to control payroll expenses Create pay grades to more simply classify jobs according to similar worth
500
600 Points
700
800
$$ Maximum
Midpoint
Salary Structures
Minimum
Provides flexibility to hire new employees who need training and experience. Employee paid more as competency is certified through performance reviews.
Maximum of Range
Caps the salary Only exceptional cases may receive more pay Normal way to earn more is with a promotion.
MGMT 4030 - Managing Employee Reward Systems
Or might be set to 25th and 75th percentiles in salary survey Range above and below midpoint may be different
MGMT 4030 - Managing Employee Reward Systems
Pay Grade Dimensions Pay Grade Overlap Provides flexibility to promote employees without an overly generous pay raise. Too much overlap leads to pay inequity, Too little overlap causes barriers to promotion and inefficiencies
Compa-Ratio
Average of all actual salaries in a pay grade divided by the midpoint of the range Used to monitor distribution of salaries and identify grades that are out of control
CR = 1.00 is the ideal (for market match policy) CR > 1.10 is quite high CR < .90 is quite low charminglife
MGMT 4030 - Managing Employee Reward Systems
Broadbanding
IV 40%
$85K
40%
$35K
MGMT 4030 - Managing Employee Reward Systems
Advantages of Broadbanding
Facilitate Lateral career moves
Enhanced flexibility for transfers Cross-functional teams with fluid duties More flexible pay decisions Few control points such as midpoints or salary caps. More pay opportunities based on skills
MGMT 4030 - Managing Employee Reward Systems