Compensation

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I NSTRUCTOR’S MANUAL Designing A Pay Structure CASe STUDy AND INTegRATeD APPLICATION exeRCISeS Designing A Pay Structure By Lisa A. Burke, Ph.D., SPHR Instructor’s Manual TOTAL REWARDS ©2008 SHRM Lisa Burke, Ph.D., SPHR 1 I NSTRUCTOR’S MANUAL Designing A Pay Structure 2 ©2008 SHRM Lisa Burke, Ph.D., SPHR CASe STUDy AND INTegRATeD APPLICATION exeRCISeS Designing A Pay Structure Designing a Pay Structure About this CAse Learning Objectives In this case, upper-level undergraduate or master’s level HR students In this case, students will learn to design a pay structure. To do so, they will: will learn how to design a pay structure using a case scenario and integrated application…show more content…
There are three methods of job-based evaluation: the point method (which is the most commonly used); ranking; and classification. Job evaluation helps to ensure that pay is internally aligned and perceived to be fair by employees. Step 3: Pay Policy Identification Pay policy identification is the process of determining whether the organization wants to lead, lag or meet the market in compensation. The pay policy or strategy will likely influence employee attraction and retention. Pay policies can vary across job families (i.e., groups of similar jobs) and job levels if the top management feels that different strategies can be effective in different areas of the organization. Step 4: Pay Survey Analysis Pay survey analysis is the process of analyzing compensation data gathered from other employers in a survey of the relevant labor market. Gathering external pay data (e.g., base pay, bonuses, stock options and benefits) is essential to keep the organization’s compensation externally competitive within its industry. Employee attraction and retention can be improved by maintaining externally aligned pay structures. Step 5: Pay Structure Creation Pay structure creation is the final step, in which the internal structure (Step 2) is merged with the external market pay rates (Step 4) in a simple regression to develop a market pay line. Depending on whether the organization wants to lead, lag or meet the market, the market pay line can be adjusted up or

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