Methods to draw a pay policy line

Freehand line: After the points have been plotted the trend of the data can often be easily visualized. In this case it is possible to draw a freehand line that best describes the plotted points. In drawing such a line, it is useful to follow the principle that vertical deviations from the line are minimized if the line follows the obvious slope of the data. Although the line may be straight or curved, its advantages are greatest when it is straight. The obvious advantages of using a freehand line are that it is easy to plot and simple to explain.

Figure: Freehand line

Division Approach: Another relatively simple approach is to use the horizontal dimension of the wage structure, usually the job evaluation points, to determine the number of pay grades. This is done most easily by determining a set number of points for each pay grade and, starting with the least number of points, marking off the lines between adjacent grades.

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Figure: Division Approach to Pay Grades

An alternative to using a set number of points for each grade is to use increasing numbers of points as we move up the scale. This would reflect the difficulty experienced in job evaluation of determining exact differentials between jobs higher in the hierarchy. In the division approach, the job rate for each grade should be set by placing the range midpoint at the point where a vertical line from the point value in the middle of the grade, say 200 points for level 3 in shown in figure, meets the pay-policy line. This method can be used successfully with a point system of job evaluation and can also be adapted to other systems, such as classification.

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Continuum Approach: In this approach each job evaluation point on the horizontal axis has its own rate range, there is no grouping of jobs. The pay-policy line constitutes the midpoints. A standard maximum and minimum which are a set percentage above and below the midpoint are defined. As can be seen in below figure, these lines widen as the wage level rises, making the range broader at the top than at the bottom.

Figure: Continuum approach The continuum approach has gained popularity with the Hay Plan, who uses it. As noted, a system such as this requires a lot of confidence in the job evaluation system. It is likely to engender considerable argument over small differences in the number of points assigned to jobs. Small, technically oriented organizations are most likely to use this method.

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