The Basics of Salary Structure Design & Administration

The Basics of Salary Structure Design & Administration

Louisiana SHRM Annual Conference 2013

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? James T Stodd, 2013

Why Use Pay/Salary Structures?

$

A salary structure defines the relationship

between the "internal value" placed upon jobs within

the organization relative to the "external value"

found in the market place.

Market Value

Minimum Wage

? James T Stodd, 2013

Job Complexity & Requirements

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Establishing a

Base Pay/Salary Structure

? James T Stodd, 2013

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Step 1: Identifying "Benchmark" Jobs

Requirements for good "benchmark" jobs include the following:

1. Very common to organizations within your industry (i.e., those that provide similar goods and services) or employ comparable workers doing very similar work

2. The work performed is very, very standardized from one employer to another, as well as performed under similar working conditions

3. The incumbent job requirements (i.e., knowledge, education, skills, experience, abilities, etc.) are also very standardized from one employer to another

4. There is a rich supply of reliable market data for the job

? James T Stodd, 2013

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Step 2: Collecting Benchmark Data

Common Sources of "Benchmark Data"

1. Government

? Bureau of Labor Statistics (BLS) ? State & Municipal Surveys

2. Published Surveys (purchased from a private firm for a fee)

? Sibson ? Hewitt ? Wyatt

3. Online Subscription Services

? ? ? Economic Research Institute (ERI) ? Business & Legal Resources (BLR)

4. Professional, Industry and Trade Associations

5. Custom-Built Surveys

? James T Stodd, 2013

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