Establishing pay in companies can be a tough task for HR professionals and general managers because doing it right is very important to the bottom line. Compensation is often one of the most expensive functions managed in organizations. The process can be particularly challenging when dealing with corporate jobs that function at the higher echelons of the hierarchy because of the inherent complexities of the work processes. HR leaders have to identify useful compensation data and appropriate benchmark jobs so that the compensation amounts offered are competitive with comparative market levels. The compensation approaches employed also need to support a firm’s overall pay ideas and philosophies.

One of the most important steps in developing reasonable pay involves securing sound salary data, information that is commonly collected through surveys. Luckily, HR professionals have many options for obtaining this information. The Bureau of Labor Statistics, various consulting firms, and many professional associations can provide companies with important pay survey data. There are many different types of free data that can be compiled from online sources, but HR departments should be cautious about using these data until the accuracy has been verified.

United Grinding Technologies, a grindingmachine firm located in Miamisburg, Ohio, had to deal with a number of these compensation issues. Christine Taylor, SPHR, the organization’s Director of Corporate Human Resources, had to create a compensation plan to determine the pay rates for all 140 individuals employed with the company. However, there were problems—it was difficult to find appropriate benchmark jobs that enabled her to easily develop a pay structure. To make things work, she enlisted the help of line managers to create sound job descriptions, which were then used to match jobs with BLS and trade association pay survey data.

Multiple jobs with similar skills were used as benchmarks, since there were no exact matches in the databases. This enabled Taylor to get an idea of what to pay individuals working in these jobs based on positions that were reasonably comparable to the jobs found in United Grinding Technologies. According to Taylor, “It is more of an art than a science.”

If you were to develop a pay structure in a company where you have worked, how would you approach doing it? What are the potential challenges associated with implementing your approach?

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MARKETING Employers use a pay structure to set the pay range of employees from the minimum to the maximum depending on the grade or brand Therefore when developing a pay structure for the organization ... View the full answer