CreatingSalary - INTRODUCTION Each employee in an...

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INTRODUCTION Each employee in an organization is paid a salary. Salaries vary greatly, with executives earning as much as (or greater than) 100 times an entry-level employee's salary. This variation is not by chance. It is rationally established through a salary structure – a hierarchy of salaries. Organizations develop this structure based upon internal factors (such as current rates, job relationships, and custom) and external factors (such as labor markets and laws). Salary structures integrate these factors to create a hierarchy, in which every job of the organization has its place. Before establishing a salary structure, you must first have a job structure: a hierarchy of your organization's jobs based upon their value to the company. Distance Learning Center Courses 33 ( Conducting Job Analysis ) and Course 34 ( Installing Job Evaluation in Your Organization ) teach you how to create a job structure. For the purposes of this course, we will assume that you have conducted job evaluation for your company, established a job structure, and are now ready to create a salary structure. We will teach you how to do this by: plotting your organization's jobs on a matrix drawing a line through the scattering of dots using this line to determine median salary rates, with which you can establish salary ranges You will then learn how to administer and maintain this salary structure, including how to audit it using research software.
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DEVELOPING A SALARY STRUCTURE The job structure (covered in DLC Course 34 on Job Evaluation ) presents the compensation decision maker with a hierarchy of the jobs in the organization. A dollar value now needs to be placed on this hierarchy. This value is available from either: the jobs' current salary rates OR market data collected from salary surveys Current Rates The present wage and salary rates in an organization will clearly influence any changes made in its current salary structure. In most organizations there is a fairly well-defined group of jobs that represents an important segment of the total labor costs of the company. 1 Prices assigned to this group of jobs may greatly affect an organization's competitive position. Rates assigned to these jobs during job-structure pricing largely determine the competitive salary level of the firm, and salary structure relationships are built around this cost center. Market Rates Most often, however, the job structure is priced out through the use of market rates. This means the employment of salary surveys. (See DLC Course 73: Analyzing Salary Surveys for information on wage surveys.) One such source of salary survey data is , which provides median pay data for 4,000 positions in 6,000 cities worldwide. When you use salary survey data, you must adjust the figures for:
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CreatingSalary - INTRODUCTION Each employee in an...

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