Building a Pay Structure

Topics: Interest rate, Factoring, Management Pages: 4 (856 words) Published: August 13, 2005
The following in an analysis of the overhaul of the pay structure for the non-union jobs at HealthRx (the

CEO position is also excluded). Our method for doing so follows the "Pay Structure" outline. Job evaluation

points of relevant benchmark jobs at HealthRx are indicated in the column labeled (Points (X) on the attached

Excel document. Market rates, from a pay survey analysis conducted by HealthRx, for jobs not included in case

2, are indicated in the next column. Rates from case 2 to complete the column.

Job evaluation points were used as X data; survey rates were used as Y data. A regression analysis to

Determine a market pay line, or "pay policy line" (PPL) is also provided through the attached Excel document.

This PPL is a mathematical way to translate our points into dollars, based on the external labor market.

Using the pay policy line equation provides calculated grade midpoints (in dollars). Calculated

midpoints for each grade are provided as well by using the established middle point of each point range in the PPL

equation, by substituting this value for X.

Grade maximums and minimums are also provided by calculating pay ranges around the midpoints.

Typically, the size of a pay range is based on some judgment about how the ranges support promotions, career

paths, and other organization systems. Commonly, top management positions have ranges of 60 to 120 percent;

entry level to mid-level professional and managerial positions, between 35 to 60 percent; office and production

work from 10 to 25 percent. In smaller organizations, such as HealthRx it is sometimes difficult to get pay ranges

above around 35%- 40% without creating a great deal of overlap. It is appropriate to use different percentages for

different grades.
The attached Excel document displays grades 14 through 18, which are clerical type positions. These Positions consist of the Mailroom Clerk, Billing Clerk,...
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