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A SALARY STRUCTURE

A SALARY STRUCTURE. A series of pay grades and pay ranges. Grades and ranges may overlap The range is the minimum and maximum offered for a single grade. Grade can have a midpoint pay rate. 4 KEY DECISIONS IN DEVELOPING A PAY STRUCTURE. HOW MANY GRADES AND RANGES WILL BE INCLUDED

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A SALARY STRUCTURE

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  1. A SALARY STRUCTURE • A series of pay grades and pay ranges. • Grades and ranges may overlap • The range is the minimum and maximum offered for a single grade. • Grade can have a midpoint pay rate.

  2. 4 KEY DECISIONS IN DEVELOPING A PAY STRUCTURE • HOW MANY GRADES AND RANGES WILL BE INCLUDED • WHAT IS THE SPREAD OR RANGE OF EACH GRADE • WHAT IS THE PROGRESSION OR DIFFERENCE BETWEEN GRADES • HOW MUCH OVERLAP WILL THERE BE BETWEEN GRADES

  3. SIX STRATEGIC ISSUES IN MARKET ALIGNMENT • Internal or External Labor Market: How closely will market rates be followed in setting pay? • What positioning strategy will be followed (ie all jobs same level or dif jobs/dif levels) • What competitive level should the organization follow? Why? • Market Definition: How will relevant markets be defined? • Alignment Strategy: Which parts of the pay package will be aligned with the market?(ie base pay, total compensation, benefits? • Constancy of Strategy: Will the organization follow the same alignment strategy in all the different places it might have office/facilities?

  4. Why Base pay for the same job varies. • Locational factors (supply- demand/ COL) • Industry factors • Organizational factors • Job factors • Incumbent factors • Interaction factors

  5. Guidelines for improving salary surveys • Defining who is included in the sample --problem of convenience samples • Decide which jobs should be included (affects equity) • Defining the needed information correctly-- • Focus on instrumentation

  6. Emerging Issues in Market Alignment • Total compensation comparability • Hybrid and flexible jobs • Broad banded systems • Competency based pay

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