MGMT Managing Employee Reward Systems Salary Structures Purpose and Goals –establish series of grades to classify jobs according to similar worth based on job evaluation points –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 –adjust ranges to changes in market on periodic basis

MGMT Managing Employee Reward Systems Salary Structures (cont’d) Midpoint of Range - Control point that ties the pay range to the market. Being paid at the midpoint of the range means to be paid at the competitive point in the market according to the firm’s pay policy. One is expected to be fully competent in job to be paid at the midpoint. Maximum of Range - Control point that caps the salary at this point. Only exceptional cases may receive more pay than the max. Normal way to earn more is with a promotion.

MGMT Managing Employee Reward Systems Salary Structures (Cont’d) Minimum - Lowest point on the pay range. Gives managers flexibility to hire new employees who need training and experience to gain competence in the job. Paid below market position until competency is certified through performance reviews.