Chapter 11 Establishing a Pay Structure

MGMT Chapter2 Decisions About Pay Job Structure –Relative pay for different jobs within the organization Pay level –Average amount the organization pays for a particular job Pay structure –The pay policy resulting from job structure and pay-level decisions

MGMT Chapter3 Issues in Developing a Pay Structure

MGMT Chapter4 Legal Requirements Equal Employment Opportunity –Differences in pay must be tied to business-related considerations Fair Labor Standards Act of 1938 –Establishes a minimum wage –Requirements for overtime pay –Child labor –Exempt vs Non-exempt

MGMT Chapter5 Market Influences Product Markets –Organizations that offer competing goods and services –Labor costs per industry –Salary compression Labor Markets –Attracting the best employees –Cost-of-Living

MGMT Chapter6 Judgments About Pay Fairness

MGMT Chapter7 Job Structure Job evaluation –Measuring the relative internal worth of the organization’s jobs Hay Guide-Chart Profile Method –Creates a profile for each position Required know how Degree of problem solving Accountability

MGMT Chapter8 Pay Structure Pay rates Pay policy line –Shows the mathematical relationship between job evaluation points and pay rate Pay grades –Grouping sets of jobs having similar worth or content together to establish pay rates

MGMT Chapter9 Sample Pay Grade Structure

MGMT Chapter10 Alternatives to Job-Based Pay Delayering –Reducing the number of levels –Creates broad bands Skill-based pay systems –Pay structures that set pay according to the employees’ skill level or knowledge –Addresses capabilities as well

MGMT Chapter11 Pay Structure and Actual Pay HR is typically responsible for setting and monitoring the pay structure Compa-Ratio- ratio of average pay to the midpoint of the pay range

Chapter 12 Recognizing Employee Contributions with Pay

MGMT Chapter13 Effective Incentive Pay Plans

MGMT Chapter14 Individual Incentives

MGMT Chapter15 Team or Group Incentives

MGMT Chapter16 Organizational Incentives

MGMT Chapter17 Balanced Scorecard A combination of performance measures directed toward the company’s long- and short-term goals

MGMT Chapter18 Balanced Scorecard

MGMT Chapter19 Incentive Pay for Executives