Download Salary Structures and Pay Grade Dimensions

Salary Structures and Pay Grade
Dimensions
• Pay Grade Width
– Distance from min. to max. of range
– Typical ranges are 30-40 percent
• Midpoint to Midpoint Difference
– Represents pay differential from one pay grade
to the next one in a sequence
– Must be Meaningful in amount
– Ranges from 8 percent (non-exempts) to
– 12 percent (management and exempts)
MGMT 4030 - Managing Employee
Reward Systems
Pay Grade Dimensions
• Pay Grade Overlap
– Salaries that are Common to adjacent Pay Grades.
– Overlap gives managers flexibility to move employees
to higher grades when promoted without an overly
generous pay raise.
– Too much overlap leads to pay inequity, too little
overlap causes barriers to promotion and inefficiencies
• Compa Ratio
– The Average of all actual salaries in a pay grade divided
by the midpoint of the range
MGMT 4030 - Managing Employee
Reward Systems
Pay grade Dimensions
• Compa Ratio (Continued)
– Compa Ratios let Compensation Managers view the
distribution of salaries and identify grades that are out of
control - too many above, or too many below the desired
pay policy position in the market indicates a problem.
– CR > 1.10 is quite high
– CR < .90 is quite low
– CR = 1.00 is the ideal
• Red Circle Pay Rates
– Pay Rate above the maximum for special situations such as
outstanding employee that requires executive approval
MGMT 4030 - Managing Employee
Reward Systems