Job structure and pay-level decisions
job structure
·
relative pay for
different jobs within the organization
pay level
·
average amount the
organization pays for a particular job
pay structure
·
pay policy resulting
from job structure and pay-level decisions
issues in developing a
pay structure
·
-legal requirements
-market forces
-organizations goals
legal requirements for
pay
·
-equal employment
opportunity
-minimum wages
-overtime pay
-prevailing wages for federal contractors
minimum wage
·
lowest amount that employers
may pay under federal or state law, stated as an amount of pay per hour
fair labor standards
act (FLSA)
·
federal law that
establishes a minimum wage and requirements for overtime pay and child labor
-$7.25/hr federal
-Illinois $8.25/hr
training wage
-under age of 20 for up to 90 days
-85% of minimum wage
exempt employees from
overtime pay
·
mangers, outside
salespeople, and other employees not covered by FLSA requirement for overtime
pay
exempt status depends on:
-job responsibilities
-salary level (at least $455 per week)
-salary basis that employee is being paid amount regardless of the number of
hours worked or quality of work
nonexempt employees
·
employees covered by
FLSA requirements for overtime pay
most workers paid on hourly basis are non exempt and therefore subject to the
laws governing overtime pay
child labor
·
-children 16 &17
may not be employed in hazardous occupations defnied by US department of Labor
-14 & 15 may work only outside school hours, in jobs defnied as
nonhazardous, and for limited time periods
-under age 14 may not be employed in any work associated with interstate
commerce
-exemptions include baby-sitting, acting, and delivering newspapers
Davis Bacon Act of
1931
·
covers construction
contractors that receive more than $2,000 in federal money
Walsh-Healy Public
Contracts Act of 1936
·
covers all government
contractors recieveing $10,000 or more in federal funds
product markets
(economic influences on pay)
·
organizations product
markets includes orgs that offer competing goods and services
Organizations compete on quality, service, and price.
Cost of labor is a significant part of an organization's costs
labor markets
·
Organizations must
compete to obtain human resources in labor markets.
Competing for labor establishes minimum an organization must pay to hire an
employee for a particular job.
Benchmarking
·
procedure in which an
organization compares its own practices against those of successful competitors
-pay surveys
-trade and industry groups
-professional groups
pay equity
·
If employees conclude
that they are under-rewarded, they are likely to make up the difference in one
of three ways:
1. They might put forth less effort (reducing their inputs).
2. They might find a way to increase their outcomes (e.g., stealing).
3. They might withdraw (by leaving the organization or refusing to cooperate).
Employees' beliefs about fairness also influence their willingness to accept
transfers or promotions
job evaluation
·
administrative
procedure for measuring relative internal worth of the organization's jobs
compensable factors
·
5 chracteristics of a
job that the organization values and chooses to pay for:
1.experience
2. education
3. complexity
4. working conditions
5. responsibilty
key jobs
·
jobs that have
relatively stable content and are common among many organizations.
Organizations can make the process of creating the job and pay structures more
practical by defining key jobs.
Research for creating the pay structure is limited to key jobs that play a
significant role in the organization.
pay rates
·
-organization obtains
pay survey data for its key jobs
-pay policy line is established
-pay rates for non-key jobs are then determined
pay policy line
·
reflects the pay
structure of the external market in relationship to the job evaluation points
for the organizations key jobs
pay ranges
·
a set of possible pay
rates defined by a minimum, maximum, and midpoint of pay for employees holding
a particular job or a job within a particular pay grade.
red-circle rate
·
pay at a rate that
falls above pay range for the job
green-circle rate
·
pay at a rate that
falls below pay range for the job
pay differential
·
adjustment to a pay
rate to reflect differences in working conditions or labor markets.
Many businesses in the U.S. provide pay differentials based on geographic
location.
The most common approach is to move an employee higher in the pay structure to
compensate for higher living costs
delayering
·
Reducing number of
levels in organization's job structure.
More assignments are combined into a single layer called broad bands.
More emphasis on acquiring experience, rather than promotions
skill-based pay
systems
·
Pay structures that
set pay according to employees' levels of skill or knowledge and what they are
capable of doing.
Appropriate where changing technology requires employees to continually widen
and deepen their knowledge.