Chapter #9

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#1 Decide upon how many pay structures
Exempt, Non exempt, by job families, by geography?
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#2 Determine market pay line.
Look #213 Clerks

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#3 Define Pay Grades
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Will you go
Wider? It will decrease hierarchy
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Will you go narrow? It will increase hierarchy

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Look #215
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Establish mid points first
Then maximum then minimum rates
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They should overlap so ee can be promoted without a pay increase

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New employees get paid equal to or more than established employees.
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Not a good idea….equity theory
Internal equity
External equity
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Green circle rates, lower than minimum
Red circle rates, higher than maximum

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Very important!!!!!
Index the relative competiveness of internal pay rates
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Compa – ratios EE Pay Rate/Pay range midpoint
Compa = 1 means that ee pay =pay range midpoint
Compa = more than 1 means that ee pay is greater than midpoint
Compa = less than 1 means that ee pay is les than midpoint

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Should encourage ees to perform at their best.
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Research does NOT show that merit pay increases productivity UNLESS it is enough to be meaningful

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Will merit pay evaluations be on
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Reoccurring ….Anniversary dates
Nonreocurring…..lump sum
 Depends on efficient performance of ee
 And ee’s [osition in pay range
Merit pay grid Look #222

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Budgets are a percentage of employee’s
◦ Total base pay
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5% x $10,000,000
Merits budget will be $500,000
 HR has to ask supervisors to indicate distribution according to performance ratings
 Then HR has to calculate the expected number of ees that fall into each cell./

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Design sales depends on
◦ Sales volume?
◦ New Product sales?
◦ Overall sales growth?
 Should it be
 Salary only?
 Salary plus bonus?
 Salary plus commission?
 Commission plus draw?
 Commission only?
 Draws Recoverable or Non Recoverable?

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Straight
 % of sales
Graduated
` Increase sales increased commission
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Multiple tiered
 Increase $ only after a certain amount of sales

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Depends on TRAINING
Access to Training
Inhouse or outsourced
Certification and Recertifications
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SPHR PHR