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A Human Resource Management Approach

The document discusses various approaches to building pay structures that recognize individual contributions, including 5 steps to constructing a pay structure, common types of pay structures, considerations for merit pay systems, and factors in determining fixed pay and compensation mixes for sales roles. Specifically, it outlines constructing market pay lines and defining pay grades, evaluating pay compression, setting merit increase amounts, and assessing in-house versus outsourced training options. Broadbanding and two-tiered pay approaches are also summarized.

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49 views24 pages

A Human Resource Management Approach

The document discusses various approaches to building pay structures that recognize individual contributions, including 5 steps to constructing a pay structure, common types of pay structures, considerations for merit pay systems, and factors in determining fixed pay and compensation mixes for sales roles. Specifically, it outlines constructing market pay lines and defining pay grades, evaluating pay compression, setting merit increase amounts, and assessing in-house versus outsourced training options. Broadbanding and two-tiered pay approaches are also summarized.

Uploaded by

amcuc
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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STRATEGIC COMPENSATION

AHumanResource
ManagementApproach

Chapter9

BuildingPayStructuresThat
RecognizeIndividual
Contributions

91

PreparedbyDavidOakes

ConstructingAPayStructure
5Steps
Decidehowmany
Determinemarketpayline
Definepaygrades
Calculatepayranges
Evaluateresults

92

CommonPayStructures
Exempt&nonexempt
Basedonjobfamilies
Basedongeography

93

Exempt&NonexemptPay
Structures
Exempt
Notsubjecttoovertimeprovisions
Salariedsupervisors,managers,
professionals,&executives

Nonexempt
Subjecttoovertimeprovisions
Hourly,nonsupervisory

94

MarketPayLines
Marketpayratesrelativeto
companysjobstructure
Paylevelscorrespondingwith
paylinearemarketcompetitive
Ratespromoteinternalconsistency

95

PayGrades
Basedoncompensablefactors,
values,managementphilosophy
Widths
Narroworwide
Affectshierarchy&socialdistance
Absoluteorpercentagebased
jobevaluationpoints

96

PayCompression
Whenpayspreadissmall
Threatenscompetitiveadvantages
Causedby
Failuretoraisepayrangelimits
Scarcityofqualifiedapplicants

97

CompaRatios
Evaluatespaystructures
Indexcompetitivenessofinternal
payratesbasedonmidpoints
Dividepayratesbymidpoint
Comparatiomeanings
1=Marketmatchrate
<1=Marketlagrate
>1=Marketleadrate

98

MeritPaySystems
Considerations
Communicatelinkbetweenpay
andperformance
Useeffectiveappraisalmethods
Establishincreaseamounts&types
Settleonbasepaylevel

99

MeritIncreaseAmounts
Reflectspriorjobperformancelevels
Needstomotivate
Needstobemeaningful
Influencedbythecostofliving
Indexedasa%ofbudget

910

PresentLevel
ofBasePay
Needstobewithinlimitsofpaygrade
Consistentwithnewemployeesatsimilar
jobs
Needstoabidebymandatesof
TitleVII,1964CivilRightsAct
EqualPayActof1963
ADEAof1967

911

IncreasesWithinBudget
Determineperformancecategories
and%ofemployeesineach
Place%inquartiles
Put%andquartilesintocells
Estimateperformancedistribution
DistributeIncreasetoEachCell
Ensuretotaliswithinbudget

912

SalesObjectives
Salesvolume

Saleswithinatimeperiod

Newbusiness

Salestonewcustomers

Retainingsales

Highersalestoexistingcustomers

Productmixrewardssales

Salesofvariousproducts/services

913

SalesCompensationPlans
Salesonly
Salaryplusbonus
Salarypluscommission
Commissionplusdraw
Commissiononly

914

SalaryPlusCommissionPlans
Commissionsbasedon%ofprice
Spreadsrisks
Designedtoattractqualitysellers
Allowsemployeestodoothertasks

915

CommissionPlusDrawPlans
Draw
Advancepayforlivingexpenses
Chargedagainstfuturecommissions
Recoverableornonrecoverable

Providesstrongincentivetoexcel

916

CommissionOnly
Straight
Basedonfixed%ofsalesprice

Graduated

Increasedpercentageratesfor
highersalesvolume

Multitiered

Increasedpercentageratesfor
meeting&exceedingsalesgoal

917

FixedPay&CompensationMix
3MainFactors
Salespersonsinfluenceondecision
Competitivepaystandardswithin
industry
Amountofnonsalesduties

918

SkillBlocks
Includejobdescriptions

Skillsneeded
Trainingrequired
Accurateevaluationprocess

Organizejobsintofamily/group
Listsimilarskills&tasksperjob

Groupskillsintoblocks

919

TransitionMatters
Jobbasedpaytopayforknowledge
Assessmentofskills
Whoassesses
Onwhat
Howoften

Alignpaywithknowledgestructure
Accesstotraining

Equalaccesstoall

920

InHousevs.OutsourcedTraining
Expertise
Needed&available

Timeliness
Howsoon&howoften?

Numberoftrainees
Proprietarynatureoftopic
Toosensitivetoshare?

921

Broadbanding
Consolidatespaygrades&ranges
Flattenscorporatehierarchies
Emphasizesteamwork
Broadensjobduties&responsibilities
Promotesquickerdecisionmaking
Morelatitudeinpayratedecisions

922

TwoTieredPay
Newemployeespaidless
Temporaryorpermanentrewards
Mainlyinunionizedcompanies
Mayhinderrecruiting

Canloweremployeesmorale

923

PayRanges
Builduponpaygrades
Representverticaldimension
Includemidpoint,minimum&maximum
payrates
Midpoints(marketmedianrates)
Setbycompetitivepaypolicy
Marketleadmidpointhigher
Marketlagmidpointlower

Green&redcirclepayrates

924

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