Pay Level, Mix, and Ranges Exercise

(1) Determine the appropriate pay-policy mix. A pay-policy mix describes how total compensation is allocated. This may include base wage, short-term incentives, long-term incentives, and benefits.

See page 237 in the textbook for examples of possible mixes, but you don’t have to use these.

Research current benefit information on the BLS website (http://www.bls.gov/bls/newsrels.htm#OCWC) to find out how much benefits cost employers, on average, in the U.S. (Look for news releases about the employer costs of compensation.) Use that information to inform your decision about the pay mix.

(2) Decide whether the company should lead, match, or lag competitors.

If a lead or lag approach is chosen, what % above or below market (between 1-10%)? Explain why you think this is a good approach.

(3) Decide how many pay grades are needed. Look for natural breaks in the job evaluation points (i.e., between jobs) to determine how many grades to use and which jobs go in which grades. Set minimum and maximum point values for each grade. Be sure to show which jobs fall in each grade, along with their job evaluation points.

Be sure to show the minimum and maximum points for each grade.