Compensation_09

Report
Chapter #9
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#1 Decide upon how many pay structures
Exempt, Non exempt, by job families, by
geography?
#2 Determine market pay line.
Look #213 Clerks
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#3 Define Pay Grades
Will you go
Wider? It will decrease hierarchy
Will you go narrow? It will increase
hierarchy
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Look
#215
Establish mid points first
Then maximum then minimum rates
They should overlap so ee can be
promoted without a pay increase
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New employees get paid equal to or
more than established employees.
Not a good idea….equity theory
Internal equity
External equity
Green circle rates, lower than minimum
Red circle rates, higher than maximum
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Very important!!!!!
Index the relative competiveness of internal
pay rates
Compa – ratios
EE Pay Rate/Pay range midpoint
Compa = 1 means that ee pay =pay range midpoint
Compa = more than 1 means that ee pay is greater than
midpoint
Compa = less than 1 means that ee pay is les than midpoint
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Should encourage ees to perform at their
best.
Research does NOT show that merit pay
increases productivity UNLESS it is enough
to be meaningful
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Will merit pay evaluations be on
Reoccurring ….Anniversary dates
Nonreocurring…..lump sum
 Depends on efficient performance of ee
 And ee’s [osition in pay range
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Merit pay grid Look #222
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Budgets are a percentage of employee’s
◦ Total base pay
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5% x $10,000,000
Merits budget will be $500,000
 HR has to ask supervisors to indicate distribution
according to performance ratings
 Then HR has to calculate the expected number of
ees that fall into each cell./
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Design sales depends on
◦ Sales volume?
◦ New Product sales?
◦ Overall sales growth?
 Should it be
 Salary only?
 Salary plus bonus?
 Salary plus commission?
 Commission plus draw?
 Commission only?
 Draws Recoverable or Non Recoverable?
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Straight
 % of sales
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Graduated
` Increase sales increased
commission
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Multiple tiered
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 Increase $ only after a certain amount of sales
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Depends on TRAINING
Access to Training
Inhouse or outsourced
Certification and Recertifications
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SPHR PHR
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