Designing a Pay Structure

Case You are the newly hired human resource (HR) director for an engineering consulting firm that is expanding its operations to Vadodara. The organization is headquartered in Ahmedabad. Based on the organizations mission statement, you know the firm strives to create customized and technically proficient electrical engineering plans for regional clients. Thus the company wants to attract talented people and wants to lead in base pay by 3 percent. The following personnel are required to start the Vadodara operation (the numbers in parentheses indicate the number of positions): Director of regional operations Assistant to the director of operations Operations analyst (2) Operations trainee HR director (this is you) Administrative assistant in HR Benefits manager Benefits counselor Payroll assistant Lead engineer (3) Engineer (6) Engineering associate for special projects Manager of information systems Senior information systems analyst Information systems analyst Security guard Front desk receptionist You can see from the list that there are several job families, including operations, HR, engineering, information systems and office support. You can now begin the process of designing a pay structure for the organization. Job analysis is central to many HR functions, including compensation, recruiting and training. You need to understand what tasks, duties and responsibilities various jobs will entail before you can assign fair and competitive pay rates. Begin the process by gathering the needed job description information. To do so, you can use information from O*NET (http://online.onetcenter.org), an online job analysis resource developed by the Department of Labor. Each job description includes the job title; a job summary; essential job tasks; the jobs work context; and job-relevant knowledge and skills that an incumbent must possess. Benchmark jobs (jobs that are common and consistent across a wide range of employers) will be the focus of this exercise because they will be used to design the pay structure. Appendix A

contains the job descriptions of the benchmark jobs. You have one description left to complete; your first task is to create a job description for the benefits manager position.

Task A: Create a complete job description for the Benefits Manager position using O*NET. Task B: Calculate the job evaluation points for the administrative assistant, payroll assistant, operational analyst, and benefits manager jobs. Provide a rationale for assigning specific degrees to the various jobs. One has been done as shown below for Front Desk Receptionist.

Four degrees should be sufficient for rating the various jobs. For example, the four degrees for education level are identified as: 1=High School/GED 2=Associates 3=Bachelors

4=Masters/Graduate Points are then calculated by multiplying the degrees by the weights. You present an example of how this point scheme is applied to the front desk receptionist benchmark job (see above). Task C: To ensure that the pay structure is externally competitive, a pay survey will be conducted. For the results of a survey to be valid, the market pay data must be from the relevant labor market for each benchmark job. You can take inputs using information from the internet for the project for collecting information on market pay data.

Task D: Conduct a simple regression in Excel to create a market pay line by entering the job evaluation points (on the X axis) and the respective average market base pay (on the Y axis) for each benchmark job. Task E: Using the regression output (the slope and y-intercept), calculate the predicted market pay rate (using Excel) for each benchmark job. Task F: Because your company wants to lead in base pay by 3 percent, adjust the predicted pay rates to determine the base pay rate you will offer for each benchmark job. Task G: Create pay grades by combining any benchmark jobs that are substantially comparable for pay purposes. Clearly label your pay grades and explain why you combined any benchmark jobs to form a grade. Task H: Use your answer to Task H to determine the pay range (i.e., minimum and maximum) for each pay grade. The percent guidelines, based on input from the job evaluation committee, are: Clerical and office positions: 10 percent above and below the midpoint. Entry to mid-level professional and management positions: 30 percent above and below the midpoint.

Appendix A Job Descriptions for Benchmark Jobs [Created using O*NET] Front Desk Receptionist Job Summary Answer inquiries and obtain information for general public, customers, visitors and other interested parties. Provide information regarding activities conducted at establishment; location of departments, offices, and employees within organization. Essential Job Tasks Operate telephone to answer, screen and forward calls, providing information, taking messages and scheduling appointments. Greet persons entering establishment, determine nature and purpose of visit, and direct or escort them to specific destinations. Hear and resolve complaints from customers and public. Transmit information or documents to customers, using e-mail, mail or fax machine. Analyze data to determine answers to questions from customers or members of the public. Provide information about the establishment, such as location of departments or offices, employees within the organization, or services provided. Job Context Indoor, environmentally controlled; telephone; contact with others. Knowledge, Skills and Abilities Knowledge of principles and processes for providing customer and personal services. This includes customer needs assessment, meeting quality standards for services and evaluation of customer satisfaction. Knowledge of administrative and clerical procedures and systems such as word processing, managing files and records, taking and organizing messages, and other office procedures and terminology. Awareness of others reactions and understanding why they react as they do. Gives full attention to what other people are saying, taking the time to understand the points being made, asking questions as appropriate and not interrupting at inappropriate times. Actively looks for ways to help people. Manages ones own time and the time of others. Talks to others to convey information effectively. Knowledge of the English language including the meaning and spelling of words, rules of composition, and grammar. Understands written sentences and paragraphs in work-related documents. Communicates effectively in writing as appropriate for the needs of the audience.

Administrative Assistant Job Summary Provide administrative support by conducting research, preparing reports, handling information requests and performing clerical

functions such as preparing correspondence, receiving visitors, arranging conference calls, and scheduling meetings. Essential Job Tasks Manage and maintain executives schedules. Prepare invoices, reports, memos, letters, financial statements and other documents, using word processing, spreadsheet, database, or presentation software. Read and analyze incoming memos, submissions and reports to determine their significance and plan their distribution. Open, sort and distribute incoming correspondence, including faxes and e-mail. File and retrieve corporate documents, records and reports. Greet visitors and determine whether they should be given access to specific individuals. Prepare responses to correspondence containing routine inquiries. Perform general office duties such as ordering supplies, maintaining records, management systems and performing basic bookkeeping work. Make travel arrangements for executives. Job Context Indoor, environmentally controlled; telephone; contact with others. Knowledge, Skills and Abilities Knowledge of administrative and clerical procedures and systems such as word processing, managing files and records, designing and completing forms, and other office procedures and terminology. Knowledge of principles and processes for providing customer and personal services. This includes customer needs assessment, meeting quality standards for services, and evaluation of customer satisfaction. Knowledge of computer hardware and software. Knowledge of the structure and content of the English language including the meaning and spelling of words, rules of composition and grammar. Gives full attention to what other people are saying, taking time to understand the points being made, asking questions as appropriate, and not interrupting at inappropriate times. Monitors/assesses performance of self, other individuals or organizations to make improvements or take corrective action. Manages ones own time and the time of others. Talks to others to convey information effectively. Understands written sentences and paragraphs in work-related documents. Communicates effectively in writing as appropriate for the needs of the audience. Adjusts actions in relation to others actions. Payroll Assistant Job Summary Compile and post employee time and payroll data. Compute employees time worked, production and any commission. Compute and post wages and deductions.

Essential Job Tasks Process and issue employee paychecks and statements of earnings and deductions. Compute wages and deductions and enter data into computers. Compile employee time, production and payroll data from time sheets and other records. Review time sheets, work charts, wage computation and other information to detect and reconcile payroll discrepancies. Verify attendance, hours worked and pay adjustments, and post information to records. Record employee information, such as exemptions, transfers and resignations to maintain and update payroll records. Issue and record adjustments to pay related to previous errors or retroactive increases. Complete time sheets showing employees arrival and departure times. Job Context Indoor, environmentally controlled; telephone; contact with others. Knowledge, Skills and Abilities Knowledge of administrative and clerical procedures and systems such as word processing, managing files and records, designing and completing forms, and other office procedures and terminology. Knowledge of principles and processes for providing customer service. Knowledge of math, arithmetic, statistics to analyze data and solve problems and use of Microsoft Excel. Uses logic and reasoning to identify the strengths and weaknesses of alternative solutions, conclusions or approaches to problems. Knowledge of the English language including the meaning and spelling of words, rules of composition, and grammar. Understands written sentences and paragraphs in work-related documents. Gives full attention to what other people are saying, taking time to understand the points being made, asking questions as appropriate, and not interrupting at inappropriate times. Talks to others to convey information effectively. Communicates effectively in writing as appropriate for the needs of the audience. Operations Analyst Job Summary Formulate and apply mathematical modeling and other optimizing methods using a computer to develop and interpret information that assists management with decision making or other managerial functions. Frequently concentrates on collecting and analyzing data using decision support software. Essential Job Tasks Analyze information obtained from management to conceptualize and define operational problems. Collaborate with senior managers and decision makers to identify and solve a variety of problems and to clarify management objectives. Define data requirements and then gather and validate information, applying judgment.

 Study and analyze information about alternative courses of action to determine which plan will offer the best outcome. Prepare management reports defining and evaluating problems and identifying solutions. Formulate mathematical or simulation models of problems, relating constants and variables, restrictions, alternatives, conflicting objectives and their parameters. Job Context Indoor, environmentally controlled; telephone; contact with others. Knowledge, Skills and Abilities Knowledge and application of arithmetic, algebra, geometry, calculus and statistics. Knowledge of the practical application of engineering science and technology. This includes applying principles, techniques, procedures and equipment. Knowledge of computer hardware and software including applications and programming. Identifies complex problems and reviews related information to develop and evaluate options and implement solutions. Uses logic and reasoning to identify the strengths and weaknesses of alternative solutions, conclusions or approaches to problems. Analyzes needs and product requirements to create a design. Determines how a system should work and how changes in conditions, operations and the environment will affect outcomes. Considers the relative costs and benefits of potential actions to determine course of action. Understands the implications of new information for both current and future problem solving and decision making. Knowledge of the English language including the meaning and spelling of words, rules of composition, and grammar. Understands written sentences and paragraphs in work-related documents. Communicates effectively in writing as appropriate for the needs of the audience.