Designing Compensation Plans Gundars Kaupins, Ph.D., SPHR Boise State University.

Designing Compensation PlansGundars Kaupins, Ph.D., SPHR

Boise State University

Outline

Equities End Results Preliminaries Details

Equity Theory

My Outcomes = Mark’s Outcomes

My Inputs Mark’s Inputs

$90,000 < $100,000

10 papers 1 paper

Equities (Competing Values)

External Internal Employee Strategic

End Results

Market Based Pay Competency Based Pay Skill Based Pay Mixed Methods Salary Structures

Market-Based Pay Example

Administrative

Assistant

Entry Level High 10%

Company A $11.50 $14.00

Company B $12.00 $15.00

Company C $12.50 $17.00

Competency Based Pay Example for Impact and Influence 0—Lets things happen 1—Appeals to reason; does not adapt to

audience 2—Tries different tactics when attempting to

persuade 3—Tailors presentations to appeal to the

audience 4—Uses experts to develop a planned network

of relationships with all business-related parties

Skill-Based Pay Example For Factory Worker Core--$9.00 for completion of core:

Quality course, shop floor control Core Electives—Panel fabrication $1.00,

pad welding $.50, flame spraying $2.00 degreasing $.10; end casting $1.50

Optional Electives—Career development $1.00, geometric tolerance $.40

Mixed Method Example

0-1 Yrs 2-5 Yrs 6-10 Yrs 11+ Yrs

BA 1.0 1.4 1.7 2.0

BA + 15 1.2 1.5 1.9 2.2

BA +30 1.4 1.7 2.0 2.4

MA 1.7 1.9 2.4 2.7

MA +30 2.0 2.4 2.7 2.9

Ph.D. 2.5 3.0 3.4 3.7

Pay Structure Example

Pay (External Equity) Points (Internal Equity) Pay or Policy Line (Strategic Equity) Pay Grades (Employee Equity)

Preliminaries

Job Analysis—Observation, diary, videotape, portfolio, questionnaire

Job Description—Identification, responsibilities, essential and nonessential job functions (tasks), job specifications

Job Analysis Questions

Identification: Job title, supervisor title, department, exempt/nonexempt, pay range, grade level

Responsibility Essential Job Functions Nonessential Job Functions Job Specifications: Education, Experience,

Working Conditions, Knowledge, Skills, Abilities

September 30, 2011 NonexemptGrade 5 (Pay Range $12-$16/hr.)

Job Title: Maintenance Group Leader

Reports To: Facilities Manager

Responsibilities:Coordinates and schedules activities of workers engaged in facilities repair and maintenance. Orders department supplies.

Essential Job Functions:

1. Coordinates and schedules activities of workers engaged in the repair and maintenance of machines and utility systems and new construction activities such as carpentry, plumbing, and electrical activities.

2. Monitors and orders all repair and maintenance materials.

3. Monitors the facilities to ensure that machines and utility systems are operated in compliance with federal, state, and local laws.

4. Repairs equipment.

Other Job Functions:

1. Coordinates contract labor with in-house labor repair and maintenance activities.

2. Suggests changes to utility systems to assist the layout of new work areas.

3. Contracts minor repair work.

4. Performs special projects as assigned.

Job Specifications:Education:High school graduate or equivalent with vocational courses in heating, ventilation, and air conditioning (HVAC), electrical installation and maintenance, and facilities systems.Experience:Must have a minimum of three years experience as a maintenance worker or equivalent work experience.Working Conditions:May have to occasionally work outdoors to maintain HVAC systems.Knowledge:Must know how to read and interpret HVAC instruction manuals.Skills: Must use listening and reading skills to understand maintenance issues. Must use technical skills to fix equipment and facilities.Abilities:Must be able to lift at least fifty pounds of equipment as needed.

Employee Signature: _________________ Date: ___________Supervisor Signature: _________________ Date: ___________Human Resources Signature: ___________ Date: ___________

Details

External Equity—Pay Surveys Internal Equity—Job Evaluation Strategic Equity—Goals (e.g., lag) Employee Equity—Merit, Seniority,

Incentives

External Equity—Pay Surveys

Federal—National Compensation Survey State—Idaho Department of Labor

Employment and Wage Survey Private—Salary.com

Internal Equity—Job Evaluation

Nonquantified Quantified

Job To Job Ranking Factor Comparison

Job To Predetermined Standard

Job Classification

Point

Ranking I

Legal Secretary--Perform secretarial duties utilizing legal terminology, procedures, and documents. Prepare legal papers and correspondence, such as summonses, complaints, motions, and subpoenas.

Ranking II

Paralegal--Assist lawyers by researching legal precedent, investigating facts, or preparing legal documents. Conduct research to support a legal proceeding, to formulate a defense, or to initiate legal action.

Ranking III

Lawyer--Represent clients in criminal and civil litigation and other legal proceedings, draw up legal documents, and manage or advise clients on legal transactions.

Job Classification

Grade 1—8th Grade Education, No experience, easy working conditions

Grade 2—HS Education, one year experience, moderate working conditions

Grade 3—College Education, two years experience, harsh working conditions

Factor ComparisonEducation

Required

People Contact

Working Conditions

$0

$4 Plumber Recruiter

$6 Recruiter Plumber Architect

$8 Recruiter

$12 Architect Plumber

$25 Architect

Point System Compensable Factors Education Experience Working Conditions Monotony People Contact Know-How Responsibility

Education Factor

10 8th Grade 20 High School Graduate 50 Associates Degree 70 Bachelors Degree 100 Masters Degree 150 Ph.D.

Experience Factor

10 0-1 years 30 2-3 years 50 4-5 years 80 6 years +

Working Conditions

5 Easy 10 Moderate 30 Harsh

Hay System

Know-How Problem-Solving Accountability

Strategic Equity

Lead Lag Lead-Lag Lag-Lead

Employee Equity—Design of Pay Grades Broadbanding Two-tier Systems Expanding

Employee Equity--Plans

Taylor Plans Standard Hour Plans Commissions