Chapter 11

Establishing a Pay Structure

MGMT 422 - Chapter 2

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 422 - Chapter 3

Issues in Developing a Pay Structure

MGMT 422 - Chapter 4

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 422 - Chapter 5

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 422 - Chapter 6

Judgments About Pay Fairness

MGMT 422 - Chapter 7

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 422 - Chapter 8

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 422 - Chapter 9

Sample Pay Grade Structure

MGMT 422 - Chapter 10

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 422 - Chapter 11

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 422 - Chapter 13

Effective Incentive Pay Plans

MGMT 422 - Chapter 14

Individual Incentives

MGMT 422 - Chapter 15

Team or Group Incentives

MGMT 422 - Chapter 16

Organizational Incentives

MGMT 422 - Chapter 17

Balanced Scorecard A combination of performance measures

directed toward the company’s long- and short-term goals

MGMT 422 - Chapter 18

Balanced Scorecard

MGMT 422 - Chapter 19

Incentive Pay for Executives