Week 2 Project

Pay Structures

It is a known fact that employees want to be recognized for the work they perform. This can show up as monetary and nonmonetary rewards. The initial compensation plan is based on the pay structure. The HR professional is tasked with determining the number of pay structures, marketing pay lines, pay grades, and pay ranges for each position. The pay structure is also based on exempt and nonexempt status. To gain a better understanding of what constitutes an exempt versus nonexempt position, one must peruse the Fair Labor Standards Act (FLSA). While the FLSA provides guidelines to ensure pay fairness, the internal pay structures can differ due to the geographical location and pay rates in a particular location on the basis of the cost of living. Pay policy levels and pay mixes can be assessed through surveys. These surveys can be used to help the HR professional uncover the pay levels, pay grades, incentives, and bene�ts offered by the competitors. The HR professional must decide whether the organization will match, lead, or lag within the given market. Calculating the pay ranges for each pay grade requires a very complex analysis. In addition to determining ranges of pay for each pay grade, the HR professional should be knowledgeable about the following pay structures: merit pay, sales incentive plans, and person-focused structures. Lastly, the HR professional should understand and utilize the broadbanding concept and the two-tier pay structure. The HR professional and other managers within the organization must develop a well-structured compensation plan to remain competitive. Here are a few questions to consider for this unit:

What happens when an organization has a fair and competitive pay plan? 

What occurs when the pay plan is poorly structured? 

When should the HR professional use broadbanding? 

When should the HR professional use the two-tier pay structure?

Pay Structure Concept and Consequence

Additional Materials

From your course textbook, Strategic Compensation: A Human Resource Management Approach, read the following chapter:

Building Pay Structures That Recognize Employee Contributions

From the South University Online Library, read the following article:

Perceptions of Politics and Fairness in Merit Pay (https://www.thecampuscommon.com/library/ezproxy/ticketdemocs.asp? sch=suo&turl=http://search.ebscohost.com.southuniversity.libproxy.edmc.edu/login.aspx? direct=true&db=bth&AN=49389516&site=eds-live)

