Human Resource Management
Fifteenth Edition

Chapter 11
Establishing Strategic Pay
Plans

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Learning Objectives (1 of 2)
11-1. List the basic factors determining pay rates.
11-2. Define and give an example of how to conduct a job evaluation.
11-3. Explain in detail how to establish a market-competitive pay plan.

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Learning Objectives (2 of 2)
11-4. Explain how to price managerial and professional jobs.
11-5. Explain the difference between competency-based and traditional pay.
11-6. Describe the importance of total rewards for improving employee engagement

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I.
List the basic factors determining pay rates.

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drive will develop that motivates him or her to reduce the tension and perceived
inequity.

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Equity and its Impact on Pay Rates (2 of 2)
Type of Equity

1.

External

2.

Internal

3.

Individual

4.

Procedural

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Legal Considerations in Compensation



Employee Retirement Income Security Act (1974)

– Vesting & Portability Rights
– Fiduciary Standards

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Other Legislation Affecting Compensation

•

Age Discrimination in Employment Act

•

American with Disabilities Act (1990)

•

Family and Medical Leave Act

•

Executive Orders

•

Worker’s Compensation Laws

Independent Contractors
Figure 11-3 Independent Contractor
Source: Reproduced with permission from the publisher BLR—
Business & Legal Resources (www.HR.BLR.com)

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Union Influences on Compensation Decisions

•

Wagner Act

•

NLRB

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Pay Polices

•

Seniority-based

•

Performance



II.
Define and give an example of how to conduct a job
evaluation.

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Job Evaluation Methods

•

Market-Base

•

Job Evaluation

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Compensable Factors

•

Compensable Factors - a fundamental, compensable element of a job, such as skill,
effort, responsibility, and working conditions.

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Select and group jobs

3.

Select compensable factors

4.

Rank jobs

5.

Combine ratings

6.

Compare current pay with what others are paying based on salary surveys

7.

Assign a new pay scale

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Job Evaluation Methods: Ranking (2 of 2)
Table 11-2 Job Ranking at Jackson Hospital
Ranking Order


4. Nurse

32,500

33,000

32,750

5. Cook

31,000

32,000

31,500

6. Nurse’s aide

28,500

30,500

29,500

7. Orderly

25,500

27,000



situations; develops information, identifies

work is evaluated for conformance to policy; guidelines, such as

interrelationships, and takes actions consistent with

regulations, precedent cases, and policy statements require

objectives of the function or program served.

considerable interpretation and adaptation.

Source: From “Grade Level Guide for Clerical and Assistance Work” from U.S. Office of Personnel Management, June 1989.

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