A ROLE PLAY PRESENTATION

Ch. 11 Establishing Strategic Pay Plans

INTRODUCTION

DETERMINING PAY RATES
Several basic factors that influence the design of any pay plan are:  Legal  Union  Company Policy  Equity

ESTABLISHING PAY RATES
Step 1: The Salary Survey  Commercial, Professional, and Government Salary Surveys  Using the Internet to Do Compensation Surveys

Step 2: Job Evaluation  Compensable Factors  Preparing for the Job Evaluation  Job Evaluation Methods:
1. Ranking 2. Job Classification 3. Point Method 4. Factor Comparison

Step 3: Group Similar Jobs Into Pay Grades Step 4: Price Each Pay Grade – Wage Curves Step 5: Fine-Tune Pay Rates

PRICING MANAGERIAL JOBS
Compensation for a company’s top executives usually consists of four main elements:  Base pay  Short-term incentives  Long-term incentives  Executive benefits & Perks

CASE 1: Salary Inequities at Acme Manufacturing

CASE 2: Carter Cleaning Company

DISCUSSION QUESTIONS
Que 1. What is the difference between exempt and nonexempt jobs? Que 2. Should the job evaluation depend on an appraisal of the jobholder’s performance? Why? Why not?

Que 3. What is the relationship between compensable factors and job specifications? Que 4. Compare and contrast the following methods of job evaluation: ranking, classification, factor comparison, and point method.

Que 5. What are the pros and cons of broadbanding, and would you recommend an employer to use it? Why or why not? Que 6. Do small companies need to develop a pay plan? Why or why not?

Que 7. It was recently reported in the news that the average pay for most university presidents ranged around $ 250,000 per year, but that a few earned much more. For example, the new president of Vanderblit received $ 852,000 in 2003. Discuss why you would (or would not) pay university presidents as much or more than many corporate CEO’s.

Thank You…

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