Chapter #9
#1 Decide upon how many pay structures Exempt, Non exempt, by job families, by geography? #2 Determine market pay line. Look #213 Clerks
#3 Define Pay Grades Will you go Wider? It will decrease hierarchy Will you go narrow? It will increase hierarchy
Look #215 Establish mid points first Then maximum then minimum rates They should overlap so ee can be promoted without a pay increase
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
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
Should encourage ees to perform at their best. Research does NOT show that merit pay increases productivity UNLESS it is enough to be meaningful
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 Merit pay grid Look #222
Budgets are a percentage of employee’s ◦ Total base pay 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./
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?
Straight % of sales Graduated `Increase sales increased commission Multiple tiered Increase $ only after a certain amount of sales
Depends on TRAINING Access to Training Inhouse or outsourced Certification and Recertifications SPHR PHR