Quiz 12: Establishing a Pay Structure


The case discusses that how an organization P which was paying a wage rate of $8.78 to most of its entry level staff which is a little higher than the minimum wages i.e. $7.25 set by federal law of the state. Most of the entry level staff includes positions like dietary, linen and environmental services. Criticism of quality and safety at its facility by federal government made the management to think on working for improving employee morale. They identified that entry level wages are lesser then the living wages in the state and thus decided to increase it to $10.38. This will cost the organization approx. $35000 in first year. Executive team decides to manage this from the bonus to be allocated to top performers which is around $75000 to $1.2 million. As top performers agreed to take lesser bonuses to motivate their entry workers and managers believed this will help to break the gap between top executives and those who are working directly with the patients thus this is a right thing. Pay level has a direct impact on the motivation level of the employees. This is one of the motives which drive employees to work daily. It also results in higher motivation levels and job satisfaction. Employees, who are motivated or satisfied, work effectively in achieving the organizational goals. Employees will also be working with this organization for long without seeking change elsewhere this will increase their performance and retention levels. As a result of this, organizational productivity increases leading to higher profitability.

The case shows that Employees with different occupations are paid differently. Managers are the highest paid professionals, followed by experts of computers and mathematics etc. The agriculture industry is the least paying profession. However, within a particular profession various industries or organization pay differently. The pay rate of every profession depends on various factors. The laws prevailing in the nation like minimum wages, economic factors like labor market, product markets, competition in availability of workforce. If more workers are available for performing a job the employer has choice and can thus pay lesser salaries. However, when there are few workers who are skilled to perform the job the higher pay will be offered by the employer to attract talent. The pay structure of 45.4$ for a human resource manager position seems to be on lower end. The highest paying job is of managers while the figures mentioned here is the median figure which could have more low paying juniors and very less high paying managers. This lowers the median figure and thus the value is lesser for human resource manager. However, as the pay levels are dependent on various factors and it might vary from organization to organization so based on that, the organization can decide the best pay level to be paid to the human resource manager to ensure effective management of work and organization.

The case discusses about the pay structures and overtime. It shows that when the legal department created it found to organizations in construction domain to pay their workers the back overtime wages. In first instance the employer didn't kept a proper record of scheduled and unscheduled work hours so that 1.5 times overtime wages could be paid for work hours exceeding 40hours. In another example the organization used a different pay structure for employees. Any employee who worked for less than 40 hours was paid on early basis by deducting amount of lesser hours. Whereas, employees who have worked for more than 40 hours has been paid as salaries like managerial positions for 40 hours only. Every nation has some of the laws with regard to pay or overtime pay. Organizations must abide by these laws to avoid legal action or heavy fines on them. Also, following all laws in a proper manner helps organizations to motivate employees. As per the law of operations of the organization the employer should pay employees 1.5 times of hourly wages if work week exceeds 40hours. The employee should maintain proper time in and time out for all the employees. This way they can keep a track of number of hours each employee spent on work in a week and his salary should be calculated accordingly. For example, suppose an employee has worked for 50 hours in a week considering his hourly wage is $100. He will be eligible for pay of $4000+$1500 for that week. Thus, by keeping a proper record of the time which an employee puts to work the employer can avoid any complications and legalities in managing pay.