unit 4 eestasblishing external & internal equity

Unit 4

Establishing external & internal equity

Content

• Wage and salary surveys• Pay level policy• Wages and compensation benchmarking

I. Wage and salary surveys

THREE POSSIBLE BASE PAY SYSTEMS

A SINGLE RATE FOR EACH JOB There is no range, this job pays $12.00/hrThere are no pay increments awarded for either seniority or merit

A PAY RANGE FOR EACH JOBThe pay for this job ranges from $11.00 to $17.00/hrOn what basis do employees progress through the range?

SENIORITY? TIME-IN-GRADE? MERIT?

How large should each step or increment be? $.50? $1.00? $2.00?

A PAY GRADE SYSTEMSeveral jobs are grouped together into a single pay gradeAll these jobs will share a common pay rangePainters, mechanics, and truck drivers are paid from $10.50 to 16.85/hr

COMPENSATION SURVEYS

• Needed to attract and retain workers with scarce skills• Develops a sense of external equity and fairness• Helps the firm maintain an adequate pay structure

DETERMINING THE SCOPE OF THE SURVEY

Where are we having trouble retaining workers?Where are market rates likely to be different from internal rates?Which jobs are the most difficult to fill?Where are we adding new positions to our organization?

SHOULD WE USE STANDARD WAGE SURVEYS?

PROS:Minimal time investment needed for the individual firmData is based on large samples – adequate representationSurveys conducted by experts…people who know how to do itData is summarized, categorized, easy to interpret

CONS:There may be a fee (cost) for access to the dataYou can’t select the specific companies surveyedCan’t control the type of data reported (which jobs? benefits?)Data summaries may mask differences you want to examine

COLLECTING YOUR OWN WAGE SURVEY DATA

PHONE INTERVIEW -- (easiest)

+ Quick and relatively easy to do+ Job content can be clarified to ensure the jobs are comparable+ Can build rapport with respondent over time. Future contacts will be easier.- Puts a burden on the responder to reply immediately (to a possible stranger)- May yield incomplete answers because the respondent didn’t anticipate your call- Long phone calls are not welcome. You can’t get much data in five minutes.

MAILED QUESTIONNAIRE -- (most common)

+ Can collect data on many different job titles, benefits, etc+ Responses aren’t rushed – allows time for careful thought before answering- Response rates may be very low- Misunderstanding or confusion about comparable jobs cannot be clarified- Only gathers responses to specific questions posed - if you forgot to ask – too bad!

COLLECTING WAGE SURVEY DATA, CONTD

INTERVIEW – (most reliable)+ Can ask questions, clarify job titles, etc+ Gathers data with minimum impact on respondent+ Builds relationships which can make future data exchange easier- Very time consuming to make and set appointments, conduct interviews, etc- Costly method; the expense of travel, etc

CONFERENCE -- (least used, but promising)+ Takes advantage of professional meetings and conferences of HR personnel+ Agenda of jobs to be reviewed, etc. established ahead of time—people come prepared+ Face-to-face meetings allow clarification and detailed discussion of jobs, benefits, etc- Meetings can be time consuming and tiring, after a day of conference activities- Determining when and where to gather requires coordination with several other firms

II. Pay Policy

The Elements of Total Compensation

Total Compensation

PayIncentives

IndirectCompensation/

Benefits

BaseCompensation

Forms of Compensation

COMPENSATION

Indirect

Protection

Programs

Employee Services

& Perquisites

Pay for time not

worked

Direct

Base Pay

Merit Pay

(Reward)

Incentives

– Short & Long

Term

Cost of living Adjustments

The Nine Criteria for Developing a Compensation Plan

1. Internal versus External Equity Will the compensation plan be perceived as fair within the company, or will it be perceived as fair relative to what other employers are paying for the same type of labor?

2. Fixed versus Variable Pay Will compensation be paid monthly on a fixed basis —through base salaries —or will it fluctuate depending on such preestablished criteria as performance and company profits?

3. Performance versus Membership Will compensation emphasize performance and tie pay to individual or group contributions, or will it emphasize membership in the organization —logging in a prescribed number of hours each week and progressing up the organizational ladder?

The Nine Criteria for Developing a Compensation Plan (cont.)

4. Job versus Individual Pay Will compensation be based on how the company values a particular job, or will it be based on how much skill and knowledge an employee brings to that job?

5. Egalitarianism versus Elitism Will the compensation plan place most employees under the same compensation system (egalitarianism), or will it establish different plans by organizational level and/or employee group (elitism)?

6. Below-Market versus Above-Market Compensation Will employees be compensated at below-market levels, at market levels, or at above-market levels?

The Nine Criteria for Developing a Compensation Plan (cont.)

7. Monetary versus Nonmonetary Awards Will the compensation plan emphasize motivating employees through monetary rewards like pay and stock options, or will it stress nonmonetary rewards such as interesting work and job security?

8. Open versus Secret Pay Will employees have access to information about other workers’ compensation levels and how compensation decisions are made (open pay) or will this knowledge be withheld from employees (secret pay)?

9. Centralization versus Decentralization of Pay Decisions Will compensation decisions be made in a tightly controlled central location, or will they be delegated to managers of the firm’s units?

Factors that Influence Wage Levels

WAGEMIX

Conditions ofLabor Market

Area WageRates

Cost ofLiving

CollectiveBargaining

LegalRequirements

CompensationPolicy of

Organization

Worth ofJob

Employee’sRelative Worth

Employer’sAbility to Pay

Pay Model1. Concepts Compensation techniques Compensation objectives

2. Internal equity Job Analysis Job Description Job Evaluation

3. External equity Market definitions Surveys Policy lines Pay structures

4. Employee equity Seniority Increases Performance Evaluation Increase Guidelines

5. Administration Planning Budgeting Monitoring Evaluation

Designing Pay level & Structure

Major Decisions

• Major Steps:

1. Determine the pay level policy2. Design, conduct, & analyze surveys3. Update the data4. Construct the policy lines5. Design ranges, flat rates, & / or incentives

Determine Pay Level Policies

• 3 classes of pay level policies:

1. To lead2. To meet3. To follow competition

• Relative importance of pay level factors (ranked by importance)

a. Rates paid by other employers in the industry or areab. Union strengthc. Cost of living changesd. Surplus / shortage of qualified workerse. Employee unrestf. Employer’s overall financial positiong. Firm’s profits

Design Pay Ranges

• Construction of ranges

– Develop classes or grades

• Note down the illustration

– Set midpoints, maximums, and minimums

• Note down the illustration

– Degree of overlap

Pay Structure – fitting into compensation strategyABC Mission/Vision

Business Strategy

Total CompensationStrategy

Direct CompensationIndirect Compensation

(Benefits)Intrinsic Rewards

(Individual Determines)

Base Pay Variable Pay

PerformanceManagement

PerformanceManagement

Pay Structure

Pay Structure – fitting into compensation strategy

Base Pay Strategy

Pay “Mix” Pay DeliveryJob Value

ExternalValue

InternalValue

Strategic ValueIndividual PayDetermination

SalaryStructure

Policies &Procedures

•Desired Market Position•Management Philosophy•External Economic Environment•Short- vs. Long-term Orientation

Typical Pay Structures Remain the Basis for Reality Based Pay

Grade

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

MidpointDifferential

RangeSpread

1 2 3 4

Midpoint

Range Spread =

Midpoint Differential =

Compa-ratio =

Range Penetration =

max pay - min payminimum pay

mid-point of higher pay grademid-point of lower pay grade

employee payrange mid-point

pay - range minimumrange max - range min

-1 ) x 100(

Maximum

Minimum

Establishing Internal & External Equity

Preparing for the Job Evaluation

• Identifying the need for the job evaluation– Employee feedback, high turnover, etc.

• Getting the cooperation of employees– They may fear having their pay reduced

• Choosing an evaluation committee.– Should include employees who actually perform the job

• Performing the actual evaluation.

Job Evaluation Pay Systems• An alternative to market-based pay is to use a pay system based

on job evaluation• Job evaluation: systematically determine the relative value of

jobs with an organization to create an internal hierarchy of jobs, and then use the hierarchy to set pay ranges for the jobs– Which job has the highest value to the organization and so should

be paid the most?– Which job has the second highest value and so should be paid

second highest?– Etc.

• There are 4 job evaluation pay systems

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Job Evaluation Pay Systems

Source of figure: Fisher, Schoenfeldt, & Shaw (2006), Figure 11.3, p. 490

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Job Evaluation: Job Ranking

• Method:– Review the job descriptions– Rank the jobs in order of relative worth or importance to the

organization• Frequently done by a committee of managers

– Use the rank ordering to set pay for each job• Pay the highest ranked job the most, etc.

• Weaknesses:– The rank ordering tells us that one job is worth more than another,

but not how much more– While the ranking takes care of internal equity, it’s not obvious how

to take into consideration external equity

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Job Evaluation: Job Grading (Job Classification)

• Method:– Create a sequence of job grades

• Example: US Government GS system has 15 job grades: GS1 … GS15– For each job grade, define the job grade in words

• Example: Define each job grade in terms of:– Skill & knowledge– Responsibilities– Physical effort– Working conditions

– Use the job descriptions to classify each job into one job grade• Example (from the US Government GS pay system):

– Carpenter = GS9

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• Method (more)– Select a set of benchmark (key) jobs

• Jobs with well-known, stable job content• Jobs that are common in many organizations• Jobs that represent the full range of job grades• Jobs for which market pay data is available

– Collect market pay data for the benchmark jobs– Use the market pay data to set the pay range for the job

grades• Example: http://www.opm.gov/oca/08tables/html/gs.asp

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http://www.opm.gov/oca/08tables/html/gs.asp


• Strengths:– The sequence of job grades allows us to deal with

internal equity– The use of market pay data to set the pay range for each

job grade allows us to deal with external equity• Weaknesses:

– The classification of jobs into pay grades is subjective• Example: Carpenter = GS9, not GS8 or GS10 (are we sure?)

– The method relies heavily on job titles in setting pay• Example: We have to assume that all Carpenter jobs are identical

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Job Evaluation: Factor Comparison

• Method:– Define a set of compensable factors

• Compensable factors: the characteristics about jobs that are used to set pay

• Example: skill, effort, responsibility, & working conditions– Select a set of benchmark (key) jobs

• Jobs with well-known, stable job content• Jobs that are common in many organizations• Jobs that represent the full range of jobs being evaluated• Jobs that represent the range of each compensable factor

– Example: jobs with various skill levels, effort levels, etc.• Jobs for which market pay data is available

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• Method:– Rank the benchmark jobs on the basis of each

compensable factor• Example: Rank the jobs from least skilled to most skilled

– Collect market pay data for the benchmark jobs– For each benchmark job, allocate market pay across the

compensable factors• Example: If market pay for a benchmark job is $15, how much of

that $15 is for skill, how much for effort, how much for responsibilities, and how much for working conditions?

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• Method (more)– For each benchmark job, compare the factor rankings to

the pay rankings & make adjustments as needed to bring the rankings into agreement• Example: Make sure that the job ranked as having the greatest skill

requirements also has the greatest amount of pay for the skill compensable factor

– Construct a job comparison scale, and slot the benchmark jobs onto the pay scale for each compensable factor• Example: For the skill compensable factor, create a “skill” pay scale

that shows where each benchmark job falls on the scale

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• Method (more)– Slot all the non-benchmark jobs into their proper places

on the pay scale for each compensable factor– Determine the pay for each job by adding up the pay

from each compensable factor• Example: Pay = pay from skill + pay from effort + pay from

responsibility + pay from working conditions• Example: Fisher, Schoenfeldt, & Shaw (2006), Table 11.7, p. 498

– Job 4: Pay = $3.50 for skill + $2.50 for effort + $3.75 for responsibilities + $1.25 for working conditions = $11.00

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Job Evaluation: Point Method

• Method:– Define a set of compensable factors

• Compensable factors: the characteristics about jobs that are used to set pay

• Example: 11 compensable factors:(1) Education(2) Experience(3) Knowledge(4) Physical demands(5) Mental demands(6) Responsibility for equipment & work processes(7) Responsibility for materials & products(8) Responsibility for safety(9) Responsibility for the work of others(10) Working conditions(11) Job hazards

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• Method (more)– Define a factor scale for each compensable factor

• Factor scale: define in words the different levels (or degrees) of the compensable factor

– Example: Factor scale for the “Knowledge” factor:» 1st Degree Knowledge: reading & writing; simple arithmetic

with whole numbers only; following instructions» 2nd Degree Knowledge: arithmetic with decimals & fractions;

use of formulas, charts, graphs, or diagrams» 3rd Degree Knowledge: mathematics with complex formulas,

drawings, or diagrams; precision measuring instruments» 4th Degree Knowledge: advanced trades mathematics;

advanced use of complex formulas, drawings, or diagrams» 5th Degree Knowledge: higher-level engineering math;

advanced use of complex engineering theories & practices

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• Method (more)– Assign points

to each degree of each compensable factor• Example:

Source of table: Fisher, Schoenfeldt, & Shaw (2006), Table 11.4, p. 495

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• Method (more)– Perform the job evaluation: evaluate each job to

determine the number of points to assign to that job on each compensable factor

• Usually done by a committee of managers• Use the job descriptions as the source of job information• Add up the number of points from each compensable factor

to get the total points for the job– Jobs with more total points have more of the things we value in

setting pay» This should take care of internal equity

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• Method (more)– Select a set of benchmark (key) jobs:

• Jobs with stable job content• Jobs that are common in lots of organizations• Jobs that can be defined with precision• Jobs that are performed similarly across different organizations• Jobs that represent the range of jobs being evaluated• Jobs for which market pay data is available

– Identify the relevant labor market for each benchmark job• Local, regional, national, or international

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Method (more)For each benchmark job, collect market pay data in the relevant labor

market Either use pay data collected by others, or Collect pay data yourself by performing a pay survey (wage & salary survey):

Identify a sample of organizations in the relevant labor market that have the benchmark job

Contact each organization & collect pay data for the job title (minimum pay & maximum pay) Avoid anti-trust (pay-fixing) concerns:

Use an independent consultant to collect the pay data Collect pay data that is several months old (e.g., 3 months) Include at least 5 employers for each job title Have the consultant report only averages (e.g., average minimum pay for the job

title, average maximum pay for the job title)

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• Method (more)– Estimate the market pay lines

• Estimate 2 simple regressions using the benchmark jobs as the data points– Minimum pay line: regress minimum pay (dependent variable) on points

(independent variable)– Maximum pay line: regress maximum pay (dependent variable) on points

(independent variable)

– Use the market pay lines to determine the pay ranges for each job (both benchmark & non-benchmark jobs)• This takes care of external equity

– Optional: create pay grades

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• Example of a website that implements the Point Method (this website would be a good resource to use for the Compensation element of your Team Project): http://data.bls.gov/PDQ/outside.jsp?survey=nc – Important note: The website uses pop-ups, so change your browser setting

to allow pop-ups from this website before starting– In Box 1, select the area based on the relevant labor market for the job title– In Box 2, select the occupation that includes the job title– In Box 3, click the “Get help choosing a Work Level” button

• This will pop open a new window where you perform the job evaluation using 9 compensable factors: Knowledge, Supervision Received, Guidelines, Complexity, Scope and Effect, Personal Contacts, Purpose of Contacts, Physical Demands, & Work Environment

• Perform the job evaluation, then click “Accept Level” (this will pop you back to the other page); suggestion: use a committee to do the job evaluation

– In Box 4, click “Get Data” (this will pop open a new window with the results)

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http://data.bls.gov/PDQ/outside.jsp?survey=nc



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Plotting a Wage Curve

Figure 11–4

VALIDATING THE POINT MANUAL1 - Graph the Key Jobs

100 150 200 250 300 350 400 450 $7.00 $7.50 $8.00 $8.50 $9.00 $9.50

$10.00 $10.50 $11.00 $11.50 $12.00

Point-Factor Method14 Key Jobs

Points Assigned

Wag

es/h

r

VALIDATING THE POINT MANUAL2 - Plot the Regression Line

100 150 200 250 300 350 400 450 $7.00 $7.50 $8.00 $8.50 $9.00 $9.50

$10.00 $10.50 $11.00 $11.50 $12.00

Point-Factor Method14 key jobs

Points Assigned

Y = 6.4075 + 0.01075(X)

Wag

es/h

r

VALIDATING THE POINT MANUAL3 - Graph 10% Above and Below the Regression Line

Are >90% of Key Jobs Within the Bounds?

100 150 200 250 300 350 400 450 $7.00 $7.50 $8.00 $8.50 $9.00 $9.50

$10.00 $10.50 $11.00 $11.50 $12.00


Points Assigned

Y = 6.4075 + 0.01075(X)

Wag

es/h

r

10% above: Y1.1 = 7.0482 + 0.01183(X)

10% below: Y0.9 = 5.7667 + 0.00968(X)

VALIDATING THE POINT MANUAL4 - Graph 15% Above and Below the Regression Line

Are ALL Key Jobs Within the Bounds?

100 150 200 250 300 350 400 450 $7.00 $7.50 $8.00 $8.50 $9.00 $9.50

$10.00 $10.50 $11.00 $11.50 $12.00


Points Assigned

Y = 6.4075 + 0.01075(X)

Wag

es/h

r

15% above: Y1.15 = 7.3686 + 0.01236(X)

15% below: Y0.85 = 5.4463 + 0.00914(X)

CREATING PAY GRADES AND RANGESBuild Pay Grades 50 Points Wide

Between the High and Low Regression Lines

100 150 200 250 300 350 400 450 $7.00 $7.50 $8.00 $8.50 $9.00 $9.50

$10.00 $10.50 $11.00 $11.50 $12.00


Points Assigned

Y = 6.4075 + 0.01075(X)

Wag

es/h

r

Pay Grades

15% above: Y1.15 = 7.3686 + 0.01236(X)

15% below: Y0.85 = 5.4463 + 0.00914(X)

DISPLAY FINAL PAY GRADES AND RANGES(Point Method Pay System is now Complete)

100 150 200 250 300 350 400 450 $7.00 $7.50 $8.00 $8.50 $9.00 $9.50

$10.00 $10.50 $11.00 $11.50 $12.00


Points Assigned

Wag

es/h

r

Pay Grades

8.91

6.69

9.53

7.05

10.15

7.50

10.77

7.96

11.39

8.42

12.00

8.87

12.62

9.33

PLOT NON-KEY JOBS ON GRAPHWITH PAY GRADES AND RANGES

100 150 200 250 300 350 400 450 $7.00 $7.50 $8.00 $8.50 $9.00 $9.50

$10.00 $10.50 $11.00 $11.50 $12.00

Point-Factor Method40 Non-key Jobs

Points Assigned

Wag

es/h

r8.91

6.69

9.53

7.05

10.15

7.50

10.77

7.96

11.39

8.42

12.00

8.87

12.62

9.33

WHAT SHOULD BE DONE ABOUT UNDERPAID JOBS?(Green Circle Rates)

100 150 200 250 300 350 400 450 $7.00 $7.50 $8.00 $8.50 $9.00 $9.50

$10.00 $10.50 $11.00 $11.50 $12.00


Points Assigned

Wag

es/h

r8.91

6.69

9.53

7.05

10.15

7.50

10.77

7.96

11.39

8.42

12.00

8.87

12.62

9.33

Green Circle

WHAT SHOULD BE DONE WITH OVERPAID JOBS?(Gold Circle Rates)

100 150 200 250 300 350 400 450 $7.00 $7.50 $8.00 $8.50 $9.00 $9.50

$10.00 $10.50 $11.00 $11.50 $12.00


Points Assigned

Wag

es/h

r8.91

6.69

9.53

7.05

10.15

7.50

10.77

7.96

11.39

8.42

12.00

8.87

12.62

9.33

Gold Circle

WHAT SHOULD BE DONE WITH OVERPAID JOBS?(Silver Circle Rates)

100 150 200 250 300 350 400 450 $7.00 $7.50 $8.00 $8.50 $9.00 $9.50

$10.00 $10.50 $11.00 $11.50 $12.00


Points Assigned

Wag

es/h

r8.91

6.69

9.53

7.05

10.15

7.50

10.77

7.96

11.39

8.42

12.00

8.87

12.62

9.33

Silver Circle

WHAT SHOULD BE DONE WITH OVERPAID JOBS?(Red Circle Rates)

100 150 200 250 300 350 400 450 $7.00 $7.50 $8.00 $8.50 $9.00 $9.50

$10.00 $10.50 $11.00 $11.50 $12.00


Points Assigned

Wag

es/h

r8.91

6.69

9.53

7.05

10.15

7.50

10.77

7.96

11.39

8.42

12.00

8.87

12.62

9.33

Red Circle

Pay Policy Issues• Periodically update the pay ranges• Jobs above or below the desired pay range:

– Green circle jobs: jobs whose current pay is below the pay range for the job• Develop & implement a plan to give these jobs slightly larger pay increases to

catch the job up with the pay range– Red circle jobs: jobs whose current pay is above the pay range for

the job• Develop & implement a plan to give these jobs slightly smaller pay increases to

allow the pay range to catch up with the job• Compression: the pay differences across jobs shrink over time

– Can mess up internal equity because the pay differences across jobs gets too small

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Pay Policy Issues• Broadbanding:

combine adjacent pay ranges to create a smaller number of pay ranges in which each pay range is wider– May help with red &

green circle jobs & with compression

– Frequently implemented as part of restructuring & downsizing


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Pay Policy Issues• Equal Pay Act: “equal pay for equal work”

– Forbids sex discrimination in pay when the employees perform the same job in the same organization• If a man and a woman are both doing the same job in the same

organization, don’t pay them differently because of their sexes– Pay differences based on other factors is okay (e.g., seniority, job

performance, etc.)

• Comparable worth: “equal pay for equal worth”– If a man and a women are doing different jobs, but the

company evaluates that both jobs are of equal value to the company, then they should be paid the same• Example: If a company’s job evaluation determines that a secretarial job

(held mostly by women) and a maintenance job (held mostly by men) make contributions of equal value to the company, then the two jobs should be paid the same

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STRATEGIES FOR HANDLING DEVIATIONS ABOVE AND BELOW THE RECOMMENDED BASE PAY RATE

GREEN CIRCLE RATESRAISE PAY UP AS SOON AS POSSIBLE TO THE APPROPRIATE LEVEL

GOLD CIRCLE RATESLEAVE RATE AS IS…DO NOT ADJUST…CONTINUE GIVING RAISES & COLAs

SILVER CIRCLE RATESLEAVE RATE AS IS…DO NOT ADJUST, CONTINUE COLAs BUT NOT RAISES

RED CIRCLE RATESMUST BRING RATES DOWN TO THE PROPER LEVEL

RED CIRCLE STRATEGIES

BRING RATES IMMEDIATELY DOWN INTO LINEGive proper notification first

PAY A “LUMP SUM” SETTLEMENTBring rates into line, but pay a one-time severance settlement

PROVIDE AN “ADDER” SUPPLEMENTBring rates into line, but issue a supplemental check each pay period that is gradually reduced over time

FREEZE PAY RATE IMMEDIATELYNo raises given for seniority or COLAEventually, the entire organizational pay structure will rise (due to COLAs and wage surveys) which will bring the pay rate back into range, at which time the worker will again get raises and COLAs.

TRANSFER THE WORKER TO A HIGHER-RATED JOB

III. Wage & Benchmarking

Methodology for Developing Compensation Structure

Step 1 Selected Benchmark JobsStep 2 Obtained Market Data on Benchmark

JobsStep 3 Developed Salary Structures for CUAStep 4 Analyzed All Full-Time and Part-Time

Regular Positions in Comparison to Benchmark Jobs

Step 5 Identified Positions With Salaries Outside of the Assigned Salary Level

Step 1Selected Benchmark Jobs

• Standard Positions that are Commonly Defined Among Different Organizations

• Criteria for Selected Benchmark Jobs:– Representation from All Organizational Levels– Representation from All Divisions\Departments

• Benchmark Jobs:– 68 Positions Selected– Represents 34 Departments– Represents 247 Employees

Step 2 Reviewed Market Data

• Management Positions– Recruitment on a National Basis from Higher Education

– Market Data:• CUPA-HR* National Survey• CUPA-HR* Survey By Operating Budget• CUPA-HR* Survey By Peer Institutions• Price Waterhouse Coopers Survey of Non-Profits• Mercer Human Resources Management Survey• Watson Wyatt Industry Reports on Management Positions

* College and University Professional Association for Human Resources

Market Data (Cont.)

• Professional Positions– Recruitment on a National, Regional and Local Basis

Primarily from Higher Education

– Market Data:• CUPA-HR* National Survey• CUPA-HR* Survey By Operating Budget• CUPA-HR* Survey By Peer Institutions• Price Waterhouse Coopers Survey of Non-Profits• Mercer Metropolitan Benchmark Survey• Watson Wyatt Geographic Reports on Professional Personnel

* College and University Professional Association for Human Resources

Market Data (Cont.)

• Support Positions– Recruitment on a Regional and Local Basis from All

Industries– Market Data:

• Watson Wyatt Geographic Reports on Office Personnel• Watson Wyatt Geographic Reports on Skilled Trades• Human Resource Association of the Nat’l Capital Area• Mercer Metropolitan Benchmark Survey• Cordom Associates Survey of Non-Profits• Dietrich Associates Support Services Survey

Step 3Developed Salary Structure

• Three Salary Structures– General Industry (13 Levels)– Academic Support and Research (11 Levels)– Information Technology (11 Levels)

• Midpoint of Salary Range Based on 50 Percentile of Market Data (considered to be 100% of market wages since the midpoint matches the market midpoint)

• Midpoints Between Levels Separated by:– 18% for General Industry*– 16% for Academic Support and Research*– 13% for Information Technology*

• Spread of 60% Between Minimum and Maximum Salaries* Percentages Determined by Regression Analysis

Salary Structure (Cont.)

60%I I

Level 2 $20,900 $27,200 $33,400 Minimum Midpoint Maximum

18%

Level 3 $24,700 $32,000 $39,400

Minimum Midpoint Maximum

Step 4Analyzed Staff Positions

• Every Position Evaluated Against A Selected Benchmark Job

• Position Evaluated By Each Committee Member On:– Required Knowledge, Skills and Experience– Complexity and Conceptual Thinking– Decision Making Authority (Autonomy)– Required Interpersonal Skills– Supervisory\Management Level– Impact on CUA’s Strategic Plan

• Evaluations Shared With Area Administrators

Reference • Gary Dessler, text book of “Human resource management”,

10th edn, chapter 11.• Fisher ,Schoefeldt & Shaw, text book of “Human resource

management”, 6th edn, chapter 11.• A Roundtable Discussion: Market Based Pay Structures for

“Reality Based” Pay, July 2005 by Harlon Group.• Paul L. Schumann, Human Resource Management,

compensation systems, chapter 10.• Job evaluation,-

www.businessfaculty.utoledo.edu/ddwyer/HURM4650/.../jobeval.ppt

Thank You

unit 4 eestasblishing external & internal equity

Documents

market compensation

individual pay

compensation benchmarking

compensation plan1

hr compensation surveys

pay increments

variable pay

base pay merit