Quiz 8: Designing Pay Levels, Mix, and Pay


Pay policy of an organization need to be approached strategically and comprehensively to gain competitive advantage through employee performance. A misfit pay policy can lead to failure of attracting, retaining and motivating human talent. A pay policy may be defined as a set of rules and regulations decided by the management of an organization to compensate its employees. The employers not only need to have an internal balance in the compensation of various employees at different levels, but also have to match the pay levels to competitive market. There is no fixed pay policy for all organizations, the pay decisions depends on the situations and circumstances of an organization. For example, the pay policy for an organization that is in start stage can be different from that of an established organization. The following factors are vital for determining the pay policy of an organization. • The quality of relationship or partnership an organization intends to establish with its employees • The aspiration of an organization to match the expectation of employment market • The achievement of a balance between revenue generation and the employee remuneration • A company's ability to include or allow flexible compensation forms • A company's ability to develop or create individualized pay mix to satisfy the employees A company may arrive at a pay policy considering the above factors.

Salaries for an Accountant I position for two cities and the U.S. national average are provided below. Accountant I Base Salary img Accountant I Total Cash (Base + Bonus) img img Accountant I Total Compensation (Total cash+ Benefits) img img Accountant I jobs in Boston are paid more due to the higher cost of living when compared to Boulder and the U.S. national average. Several factors affect the differences in salary rates: employer size, industry, geographic location, and employee credentials (education, years of experience, etc.). An individual employer is also constrained by its ability to pay. img Note : This data is based on the analysis by Salary.com 's team (comprised of Certified Compensation Professionals) using survey data collected from thousands of HR departments at employers of all sizes, in different industries, and in different geographic locations.

Company G's current pay level, as given in the case is $90,000 to $105,000 for students having computer science as their majors when they are just out of college. This is $20,000 more than what such graduates were being paid few months back. The pay level at company G is way higher than the industry standard of $80,000 for similar fresh graduates. The pay level at company G will be considered and termed as highly lucrative. The pay level for company G is highly desirable for the potential employees and the pool of candidates outside in the industry. The Company G's pay level can be measured as described below: • The pay level for a similar level of job can be compared with other organizations in the industry like Microsoft, yahoo, etc. • The pay level can be measured on the basis as to what is the contribution of internal as well as external factors in the determination of the pay level. • The pay level of company G can also be measured on the basis of the satisfaction level of its employees.