Salary Structures and Pay Grade Dimensions Pay Grade

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Salary Structures and Pay Grade Dimensions • Pay Grade Width – Distance from min.

Salary Structures and Pay Grade Dimensions • Pay Grade Width – Distance from min. to max. of range – Typical ranges are 30 -40 percent • Midpoint to Midpoint Difference – Represents pay differential from one pay grade to the next one in a sequence – Must be Meaningful in amount – Ranges from 8 percent (non-exempts) to – 12 percent (management and exempts) MGMT 4030 - Managing Employee Reward Systems

Pay Grade Dimensions • Pay Grade Overlap – Salaries that are Common to adjacent

Pay Grade Dimensions • Pay Grade Overlap – Salaries that are Common to adjacent Pay Grades. – Overlap gives managers flexibility to move employees to higher grades when promoted without an overly generous pay raise. – Too much overlap leads to pay inequity, too little overlap causes barriers to promotion and inefficiencies • Compa Ratio – The Average of all actual salaries in a pay grade divided by the midpoint of the range MGMT 4030 - Managing Employee Reward Systems

Pay grade Dimensions • Compa Ratio (Continued) – Compa Ratios let Compensation Managers view

Pay grade Dimensions • Compa Ratio (Continued) – Compa Ratios let Compensation Managers view the distribution of salaries and identify grades that are out of control - too many above, or too many below the desired pay policy position in the market indicates a problem. – CR > 1. 10 is quite high – CR <. 90 is quite low – CR = 1. 00 is the ideal • Red Circle Pay Rates – Pay Rate above the maximum for special situations such as outstanding employee that requires executive approval MGMT 4030 - Managing Employee Reward Systems