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

Outline Equities n End Results n Preliminaries n Details n Outline Equities n End Results n Preliminaries n Details n

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

Equities (Competing Values) External n Internal n Employee n Strategic n Equities (Competing Values) External n Internal n Employee n Strategic n

End Results Market Based Pay n Competency Based Pay n Skill Based Pay n End Results Market Based Pay n Competency Based Pay n Skill Based Pay n Mixed Methods n Salary Structures n

Market-Based Pay Example Administrative Assistant Company A Entry Level High 10% $11. 50 $14. Market-Based Pay Example Administrative Assistant Company A Entry Level High 10% $11. 50 $14. 00 Company B $12. 00 $15. 00 Company C $12. 50 $17. 00

Competency Based Pay Example for Impact and Influence n n n 0—Lets things happen Competency Based Pay Example for Impact and Influence n n n 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

Skill-Based Pay Example For Factory Worker Core--$9. 00 for completion of core: Quality course, Skill-Based Pay Example For Factory Worker Core--$9. 00 for completion of core: Quality course, shop floor control n Core Electives—Panel fabrication $1. 00, pad welding $. 50, flame spraying $2. 00 degreasing $. 10; end casting $1. 50 n Optional Electives—Career development $1. 00, geometric tolerance $. 40 n

Mixed Method Example 0 -1 Yrs 2 -5 Yrs 6 -10 Yrs 11+ Yrs Mixed Method Example 0 -1 Yrs 2 -5 Yrs 6 -10 Yrs 11+ Yrs BA 1. 0 1. 4 1. 7 2. 0 BA + 15 1. 2 1. 5 1. 9 2. 2 BA +30 1. 4 1. 7 2. 0 2. 4 MA 1. 7 1. 9 2. 4 2. 7 MA +30 2. 4 2. 7 2. 9 Ph. D. 2. 5 3. 0 3. 4 3. 7

Pay Structure Example Pay (External Equity) n Points (Internal Equity) n Pay or Policy Pay Structure Example Pay (External Equity) n Points (Internal Equity) n Pay or Policy Line (Strategic Equity) n Pay Grades (Employee Equity) n

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

Job Analysis Questions n n n Identification: Job title, supervisor title, department, exempt/nonexempt, pay Job Analysis Questions n n n 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

September 30, 2011 Nonexempt Grade 5 (Pay Range $12 -$16/hr. ) Job Title: Maintenance 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.

Essential Job Functions: 1. Coordinates and schedules activities of workers engaged in the repair Essential Job Functions: 1. 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. 2. Monitors and orders all repair and maintenance materials. 3. Monitors the facilities to ensure that machines and utility systems are operated in compliance with federal, state, and local laws. 4. Repairs equipment.

Other Job Functions: 1. Coordinates contract labor with in-house labor repair and maintenance activities. Other Job Functions: 1. Coordinates contract labor with in-house labor repair and maintenance activities. 2. Suggests changes to utility systems to assist the layout of new work areas. 3. Contracts minor repair work. 4. Performs special projects as assigned.

Job Specifications: Education: High school graduate or equivalent with vocational courses in heating, ventilation, 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.

Employee Signature: _________ Date: ______ Supervisor Signature: _________ Date: ______ Human Resources Signature: ______ Employee Signature: _________ Date: ______ Supervisor Signature: _________ Date: ______ Human Resources Signature: ______ Date: ______

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

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

Internal Equity—Job Evaluation Nonquantified Quantified Job To Job Ranking Factor Comparison Job To Predetermined Internal Equity—Job Evaluation Nonquantified Quantified Job To Job Ranking Factor Comparison Job To Predetermined Standard Job Classification Point

Ranking I n Legal Secretary--Perform secretarial duties utilizing legal terminology, procedures, and documents. Prepare Ranking I n Legal Secretary--Perform secretarial duties utilizing legal terminology, procedures, and documents. Prepare legal papers and correspondence, such as summonses, complaints, motions, and subpoenas.

Ranking II n Paralegal--Assist lawyers by researching legal precedent, investigating facts, or preparing legal Ranking II n 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.

Ranking III n Lawyer--Represent clients in criminal and civil litigation and other legal proceedings, Ranking III n Lawyer--Represent clients in criminal and civil litigation and other legal proceedings, draw up legal documents, and manage or advise clients on legal transactions.

Job Classification Grade 1— 8 th Grade Education, No experience, easy working conditions n Job Classification Grade 1— 8 th Grade Education, No experience, easy working conditions n Grade 2—HS Education, one year experience, moderate working conditions n Grade 3—College Education, two years experience, harsh working conditions n

Factor Comparison Education Required People Contact Working Conditions $0 $4 Plumber $6 Recruiter Plumber Factor Comparison Education Required People Contact Working Conditions $0 $4 Plumber $6 Recruiter Plumber $8 Recruiter $12 Architect $25 Architect Plumber

Point System Compensable Factors Education n Experience n Working Conditions n Monotony n People Point System Compensable Factors Education n Experience n Working Conditions n Monotony n People Contact n Know-How n Responsibility n

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

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

Working Conditions 5 Easy n 10 Moderate n 30 Harsh n Working Conditions 5 Easy n 10 Moderate n 30 Harsh n

Hay System Know-How n Problem-Solving n Accountability n Hay System Know-How n Problem-Solving n Accountability n

Strategic Equity Lead n Lag n Lead-Lag n Lag-Lead n Strategic Equity Lead n Lag n Lead-Lag n Lag-Lead n

Employee Equity—Design of Pay Grades Broadbanding n Two-tier Systems n Expanding n Employee Equity—Design of Pay Grades Broadbanding n Two-tier Systems n Expanding n

Employee Equity--Plans Taylor Plans n Standard Hour Plans n Commissions n Employee Equity--Plans Taylor Plans n Standard Hour Plans n Commissions n