A

ROLE PLAY
PRESENTATION

Ch. 11
Establishing Strategic Pay Plans
INTRODUCTION
DETERMINING PAY RATES
Several basic factors that influence the
design of any pay plan are:
 Legal
 Union
 Company Policy
 Equity
ESTABLISHING PAY RATES
Step 1: The Salary Survey
 Commercial, Professional, and
Government Salary Surveys
 Using the Internet to Do Compensation
Surveys
Step 2: Job Evaluation
 Compensable Factors
 Preparing for the Job Evaluation
 Job Evaluation Methods:
1. Ranking
2. Job Classification
3. Point Method
4. Factor Comparison
Step 3:
Group Similar Jobs Into Pay Grades

Step 4:
Price Each Pay Grade – Wage Curves

Step 5:
Fine-Tune Pay Rates
PRICING MANAGERIAL JOBS
Compensation for a company’s top
executives usually consists of four
main elements:
 Base pay
 Short-term incentives
 Long-term incentives
 Executive benefits & Perks
 CASE 1:

Salary Inequities at
Acme Manufacturing
 CASE 2:

Carter Cleaning
Company
 DISCUSSION QUESTIONS

Que 1. What is the difference between

exempt and nonexempt jobs?

Que 2. Should the job evaluation depend

on an appraisal of the jobholder’s
performance? Why? Why not?
Que 3. What is the relationship between
compensable factors and job
specifications?

Que 4. Compare and contrast the

following methods of job evaluation:
ranking, classification, factor
comparison, and point method.
Que 5. What are the pros and cons of
broadbanding, and would you
recommend an employer to use it?
Why or why not?

Que 6. Do small companies need to

develop a pay plan? Why or why not?
Que 7. It was recently reported in the news
that the average pay for most university
presidents ranged around $ 250,000 per
year, but that a few earned much more.
For example, the new president of
Vanderblit received $ 852,000 in 2003.
Discuss why you would (or would not)
pay university presidents as much or
more than many corporate CEO’s.
Thank You…