Encourage employees to remain with organizationGrades and Ranges-Rangers are not used by all employersoSkill-based plans establish single flat rates for each skill level regardless of performance or seniorityoMany collective bargaining contracts establish single flat rates for each joboBroadbands are being adopted for greater flexibility-Develop gradesoGrades enhance an organization’s ability to move people among jobs with no change in payoEach grade will have its own pay rangeoAll the jobs within a single grade will have the same pay range-Gradesgroup JE data on horizontal axisoAll jobs considered substantially equal for pay purposes placed in same gradeoEach pay grade has its own pay range and all jobs in a single grade have same pay rangeoEnhances ability to move people among jobs within a grade with no change in pay-How many pay grades?oNumber of jobsoOrganization hierarchyoReporting relationships
Establish Range Midpoints, Minimums, and Maximums-Rangesgroup salary data on vertical axisEstablish upper and lower pay limits for all jobs in each gradeoWhat size should the range be?Based on judgment about how ranges support career paths, promotions, and other organization systemsSome compensation managers use the actual survey rates, particularly the 75th and 25thpercentiles, as maximums and minimums-Typical range spreadoTop-level management positions – 30 to 60% above and below midpointoEntry to midlevel professional and managerial positions – 15 to 30% above and below midpointoOffice and production positions – 5 to 15% above and below midpoint-Midpointscorrespond to competitive pay policyoPoint where pay-policy line crosses center of each gradeoOften represents base pay for a seasoned employeeOverlap-High degree of overlap and low midpoint differentials vs. small ranges with less overlap-Size of differentials between grades should support career movement through the structureoA managerial job is usually one grade higher than the jobs it supervises (or 15% differential)-
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- Fall '12