Ch.8 Designing Pay level
HOW MUCH TO PAY?
Most organizations make adjustments to employees’ pay on a regular basis. Such adjustments can be based on the overall movement of pay rates caused by the competition for people in the market. Adjustments may also be based on performance, ability to pay, or terms specified in a contract.
PAY STRUCTURE
Many employers use market surveys to validate their own job evaluation results. For example, job evaluation may place purchasing assistant jobs at the same level in the job structure as some secretarial jobs. But if the market shows vastly different pay rates for the two types of work, most employers will recheck their evaluation process to see whether the jobs have been properly evaluated. Some may even establish a separate structure for different types of work. IBM sets pay according to market conditions for each separate occupation (finance, engineering, law). Thus, the job structure that results from internal job evaluation may not match competitors’ pay structures in the external market. Reconciling these two pay structures is a major issue. Rather than integrating an internal and external structure, some employers go straight to market surveys to establish their internal structures. Such “market pricing” mimics competitors’ pay structures. Accurate market data is increasingly important as organizations move to more generic work descriptions (associate, leader) that focus on the person’s skill as well as the job. Former relationships between job evaluation points and dollars may no longer hold. Accurate information and informed judgment are vital for making all these decisions.
COMPETITIVE INTELLIGENCE
Survey data are used as part of employers’ broader efforts to gather “competitive intelligence.” To better understand how competitors achieve their market share and price their products/services, companies seek to examine (i.e., benchmark) practices costs, and so forth against competitors, including in the area of
Most organizations make adjustments to employees’ pay on a regular basis. Such adjustments can be based on the overall movement of pay rates caused by the competition for people in the market. Adjustments may also be based on performance, ability to pay, or terms specified in a contract.
PAY STRUCTURE
Many employers use market surveys to validate their own job evaluation results. For example, job evaluation may place purchasing assistant jobs at the same level in the job structure as some secretarial jobs. But if the market shows vastly different pay rates for the two types of work, most employers will recheck their evaluation process to see whether the jobs have been properly evaluated. Some may even establish a separate structure for different types of work. IBM sets pay according to market conditions for each separate occupation (finance, engineering, law). Thus, the job structure that results from internal job evaluation may not match competitors’ pay structures in the external market. Reconciling these two pay structures is a major issue. Rather than integrating an internal and external structure, some employers go straight to market surveys to establish their internal structures. Such “market pricing” mimics competitors’ pay structures. Accurate market data is increasingly important as organizations move to more generic work descriptions (associate, leader) that focus on the person’s skill as well as the job. Former relationships between job evaluation points and dollars may no longer hold. Accurate information and informed judgment are vital for making all these decisions.
COMPETITIVE INTELLIGENCE
Survey data are used as part of employers’ broader efforts to gather “competitive intelligence.” To better understand how competitors achieve their market share and price their products/services, companies seek to examine (i.e., benchmark) practices costs, and so forth against competitors, including in the area of