Designing Compensation Plans

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

2. Outline • Equities • End Results • Preliminaries • Details

3. Equity Theory My Outcomes = Mark’s Outcomes My Inputs Mark’s Inputs $90,000 < $100,000 10 papers 1 paper

4. Equities (Competing Values) • External • Internal • Employee • Strategic

5. End Results • Market Based Pay • Competency Based Pay • Skill Based Pay • Mixed Methods • Salary Structures

6. Market-Based Pay Example

7. 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

8. 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

9. Mixed Method Example

10. Pay Structure Example • Pay (External Equity) • Points (Internal Equity) • Pay or Policy Line (Strategic Equity) • Pay Grades (Employee Equity)

11. Preliminaries • Job Analysis—Observation, diary, videotape, portfolio, questionnaire • Job Description—Identification, responsibilities, essential and nonessential job functions (tasks), job specifications

12. 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

13. September 30, 2011 Nonexempt Grade 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.

14. Essential Job Functions: • 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. • Monitors and orders all repair and maintenance materials. • Monitors the facilities to ensure that machines and utility systems are operated in compliance with federal, state, and local laws. • 4. Repairs equipment.

15. Other Job Functions: • Coordinates contract labor with in-house labor repair and maintenance activities. • Suggests changes to utility systems to assist the layout of new work areas. • Contracts minor repair work. • 4. Performs special projects as assigned.

16. 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.

17. Employee Signature: _________________ Date: ___________ Supervisor Signature: _________________ Date: ___________ Human Resources Signature: ___________ Date: ___________

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

19. External Equity—Pay Surveys • Federal—National Compensation Survey • State—Idaho Department of Labor Employment and Wage Survey • Private—Salary.com

20. Internal Equity—Job Evaluation

21. 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.

22. 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.

23. 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.

24. 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

25. Factor Comparison

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

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

28. Experience Factor • 10 0-1 years • 30 2-3 years • 50 4-5 years • 80 6 years +

29. Working Conditions • 5 Easy • 10 Moderate • 30 Harsh

30. Hay System • Know-How • Problem-Solving • Accountability

31. Strategic Equity • Lead • Lag • Lead-Lag • Lag-Lead

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

33. Employee Equity--Plans • Taylor Plans • Standard Hour Plans • Commissions