Administering Salaries of Office Employees

Reasons Why Fair, Equitable Compensation is Important to Employees 1. It is a basic determinant of their worth to the organization. 2. It provides a measure of status and recognition. 3. It directly affects their standard of living. 4. It is a reward for the time and effort they contribute to the organization.

Goals of Salary Administration Programs 1. To provide a systematic determination of equitable compensation for employees. 2. To help the organization conform with existing legislation pertaining to employee compensation. 3. To help the organization control its salary costs. 4. To help reduce employee turnover. 5. To motivate employees to perform at an optimum level. 6. To promote good employer-employee relations.

Responsibility for Salary Administration Program Generally falls under the guidance of the director of the salary administration program. In large organizations, Generally falls under the guid- ance of the human resources manager. In small organizations, In many organizations, The input of an advisory committee is also available.

Factors that Affect the Salary Structure (1 of 2) 1. Relative worth of jobs-determined by job evaluation. 2. Going rates-can determine comparable rates for comparable jobs using salary surveys. 3. Cost-of-living index-giving raises that at least match the cost-of-living index enables employees to maintain their purchasing power. 4. Legislation-a variety of federal and state laws affect employee’s salaries.

Factors that Affect the Salary Structure (2 of 2) 5. Collective bargaining-in unionized organizations, collective bargaining often plays a role in setting salaries and salary increases. 6. Organization’s ability to pay-the more able the organization is to pay, the more likely its salary program is comparable to other organizations in the community. 7. Level of productivity-the more productive an organization is, the more able it is to have a competitive salary program.

Employees receive salary increases at specific, predetermined times, such as once or twice a year. Interval Method Ties the quality of an employee’s performance to the amount of his or her salary increase. Merit Method Employees whose work is distinctly superior receive a larger increase than those whose performance is less than superior.

Properly Designed Incentive Pay Plans Are designed to take into consideration employees’ performance in relation to work standards established through work measurement procedures. Incentive Pay Plans Properly Designed Incentive Pay Plans Benefit Both Employees and the Organization Are able to increase their level of compensation. Employees Is able to increase its productivity, which improves its profitability. Organization

Performance-Based Pay Plans Tend to put greater emphasis on key employees than do the incentive plans. Performance- Based Plans Reward total performance rather than just one component of an employee’s job.

Trends in Salary Administration Competency-based pay: paying employees on the basis of the breadth and depth of skills they possess as well as on the basis of the job knowledge they use in carrying out their assigned duties. Broadbanding: reduces the number of salary grades and pay ranges in an organization.

Legally Required Plans Social Security Worker’s Compensation Unemployment Compensation Disability Insurance

Federal Legislation Impacting Salary Administration Covered in this Class Fair Labor Standards Act Equal Pay Act Civil Rights Act Pregnancy Discrimination Act Age Discrimination in Employment Act