Designing a Pay Structure
The importance of compensation varies depending on the viewpoint (Gerhart, 2020). Society views compensation as a measure of justice; managers may view compensation as a major expense or a motivator; employees view compensation as an entitlement or as an incentive. Regardless of the viewpoint, fairness and equity are essential. Compensation must also be up-to-date, competitive in the market, and easy to understand.
Aligned pay structures support the way the work gets done, fit the organization’s business strategy, and are fair to employees. Organizations typically task an in-house HR professional or hire an HR consultant to create and maintain the company’s pay structure. In this case study, you will design a pay structure using a specially designed case scenario.
Case Study
You are the Human Resource Director for a premier supplier of rubber floor mats and matting that is expanding its production operations to Rockville, MD. The organization is headquartered in San Antonio, TX. Based on the organization’s mission statement, the company’s goal is to provide top-quality products with customer service that well exceeds expectations with a strong commitment to continuous improvement. The following personnel are required to start the Rockville operation (the numbers in parentheses indicate the number of positions):
| Director of regional operations Assistant to the director of operations Operations analyst (2) HR director (this is you) HR administrative assistant Benefits manager Payroll assistant Lead production worker (3) | Production worker (10) Engineer for special projects Production manager Information systems manager Information systems technician HR generalist Front desk receptionist |
Part 1: Job Family
A job family is a group of jobs involving work of the same nature but requiring different skill and responsibility levels (Gerhart, 2020). Grouping similar jobs provides a basis for relevant comparisons. Such groupings lead to reasonable pay differences between positions, logical career pathing, and internally consistent job structures. Organizations may use different evaluation methods, pay strategies, or pay structures for different job families within the same organization.
The positions needed for the new Rockville location fall into several different job families such as production, office support, and human resources.
Read more about job families on page 111 of your textbook:
Gerhart, B., & Newman, J. (2020). Compensation (13th ed.). McGraw-Hill
Individual Project Part One: Job Families
Create job families for the roles at the Rockville location. The families may be illustrated in a table or bullet format. List positions within each family based on the difficulty level. Provide a rationale for why jobs were assigned to the various families.
Part 2: Job Description
Job analysis is central to many HR functions especially compensation. It is the systematic process of collecting information for a specific job and provides information needed to define that job (Gerhart, 2020). A job description is a summary of the most important features of a job. We need to understand what tasks, duties, and responsibilities various jobs will entail before we can assign fair and competitive pay rates.
Writing a job description starts with job analysis. At times, it is appropriate to gather information from other job descriptions such as previous company descriptions or O*NET (an online job analysis resource developed by the Department of Labor). A company’s job description should be personalized, specific to the job, and tailored to the company. Job descriptions often vary by organization but often include the job title, a job summary, essential job tasks, job-relevant knowledge, and skills that an incumbent must possess. A well written, detailed job description provides a foundation to any internally consistent compensation system.
Read more about job descriptions on page 123 of your textbook:
Gerhart, B., & Newman, J. (2020). Compensation (13th ed.). McGraw-Hill
Individual Project Part Two: Job Descriptions
Create complete job descriptions for the benefits manager and production worker position using O*NET. Note: there may be several versions of these positions on O*NET. You should create personalized job descriptions that is tailored to the company.