1. A Pay Structure melding of internal & external equity © Nancy Brown Johnson, 2000

2. Develop a Pay Policy Above market: Lead –Increases ability to attract & retain employees –Can be more selective in hiring Market –Reduces ability to select –Reduces labor expenses

3. Pay Ranges Productivity differences Employee performance differences Recognizes impreciseness of job evaluation Allows for seniority pay differentials

4. Construct Grades Pay grades are jobs that are similar in their worth to the organization Grouping of jobs Each grade will have its own pay range: minimum, maximum & midpoint Midpoint represents a fully trained employee, performing satisfactorily

5. PAY Job Evaluation Points ©a Times Mirror Higher Education Group, Inc., company, 1997 IRWIN 80120160 200 240 280 320 monthly salary ($000) 8765432187654321 40 Job Evaluation Points = 315 Predicted Salary = $6,486 Pay Policy Line

6. PAY ©a Times Mirror Higher Education Group, Inc., company, 1997 IRWIN monthly salary (000) 8765432187654321 Pay Structure Job Evaluation Points 100150200 250 300 350

7. Number of Ranges Judgment about career paths & promotions –number of jobs –hierarchical level –reporting relationships –flexibility –pay differentials Broadbanding –Flexibility –Simplicity –Potential for favoritism

8. More on Ranges Range Parameters - distance between midpoints Range Spread –market rate, percentage spread Range Overlap –inducing promotions –not restricting salaries artificially –great overlap does not recognize differentials

9. Issues Reconciling internal & external equity –potential for two structures –managers weigh external data more Pay compression –Wages filled outside pay rises faster than those filled within