1. Administering Salaries of
Office Employees

2. 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.

3. 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.

4. 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.

5. 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.

6. 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.

7. 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.

8. 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

9. 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.

10. 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.

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

12. 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