1. Skill Builder: Developing a wage structure
MGT 4543: Compensation Management
Dr. Marler

2. assignment
Complete pay structure with pay grades (using info from pay step data & table with pay data)
Complete pay steps (using pay step data)
There are 5 steps for each pay grade
Determine which salaries (if any) fall outside of pay grades
What actions should the company take?

3. Completing the pay structure
Use the max for each pay grade to find the minimum for that grade. In the table, the max = “top of grade”
Example: Pay grade 1
Maximum is given ($36,000)
$36,000 x .655 = $23,580 (minimum for pay grade 1)
Draw each pay grade on the graph provided (label X & Y axis)

4. Calculating minimums for pay grades 2-4

5. Construct pay “Steps”
Use the pay step data to calculate pay steps for each pay grade
Pay Grade 1
Step 1: $23,580 to $25,200 (70% x $36,000 = $25,200)
Step 2:
Step 3:
Step 4:
Step 5:

6. Construct pay “Steps”
Use the pay step data to calculate pay steps for each grade
Pay Grade 2
Step 1: $25,545 to $27,300 (70% x $39,000 = $27,300)
Step 2:
Step 3:
Step 4:
Step 5:

7. Construct pay “Steps”
Use the pay step data to calculate pay steps for each grade
Pay Grade 3
Step 1: $31,113 to $33,250 (70% x $47,500 = $33,250)
Step 2:
Step 3:
Step 4:
Step 5:

8. Construct pay “Steps”
Use the pay step data to calculate pay steps for each grade
Pay Grade 4
Step 1: $35,239 to $37,660 (70% x $53,800 = $37,660)
Step 2:
Step 3:
Step 4:
Step 5:

9. Determine which salaries fall outside of pay grades
Name
Years
Step
Current Pay
Pay Grade
Step Range
Within Step?
Hamilton 6 3
$30,218 1
$27,000 to $29,520
Over
Richardson
Smith
Jones
Wadsworth
Johnston
Prescott
Lopez
Jensen

10. Your thoughts
Should the company take any action regarding employees who are out of step?
Why might some of these employees be out of step?