--- date: '2024-02-28' description: pay surveys, market competitors, external competitiveness, broadbanding, and employee benefits including flexible work arrangements and parental leave. id: Designing Pay Levels and Employee Benefits modified: 2026-06-05 15:08:37 GMT-04:00 tags: - commerce4be3 title: Designing Pay Levels and Employee Benefits created: '2024-02-28' published: '2024-02-28' pageLayout: default slug: thoughts/university/twenty-three-twenty-four/commerce-4be3/Designing-Pay-Levels--and-Employee-Benefits permalink: https://aarnphm.xyz/thoughts/university/twenty-three-twenty-four/commerce-4be3/Designing-Pay-Levels--and-Employee-Benefits.md generator: quartz: v4.6.0 hostedProvider: Cloudflare baseUrl: aarnphm.xyz full: https://aarnphm.xyz/llms-full.txt --- See also [[thoughts/university/twenty-three-twenty-four/commerce-4be3/Designing Pay Levels, Pay Mix and Pay Structure.pdf|Designing Pay Levels, Pay Mix and Pay Structure]] and [[thoughts/university/twenty-three-twenty-four/commerce-4be3/Pay Employment Benefits.pdf|Pay Employment Benefits]] ## decision for externally competitive pay levels and structure. - employer’s competitive pay policy - purpose of survey - construct market line. - balance competitiveness with internal alignment through _pay range, flat rates, bands_ ## survey. - adjust pay level - pay mix: stock, benefits - pay structure: job evaluation results. - estimate competitors’ labour costs (competitive intelligence) ### design Which job to include? - benchmark job approach, low-high approach, conversion/survey level What information to collect? - organisation data, total compensation data, information about incumbent ### interpretation Verify anomalies, accuracy of match, validation to other trends. ![[thoughts/university/twenty-three-twenty-four/commerce-4be3/survey-data-elements-for-inclusion.webp]] ## select relevant market competitors 1. Relevant labor markets 2. Fuzzy markets: new orgs/orgs with unique jobs fuse diverse factors for relevant markets fuzzy > \[!question\] Question > > What factors determine the relevant market for pay surveys? Why is the definition of the relevant market important? - **Industry and Job Function**: depending on the job sector and industry size. - **Geographic Location**: location-based pay - **Experience and Education Level**: pay for experience and education - **Market trends**: market trends and changes importance because: - **Competitiveness**: to attract and retain employees. - **Fairness and Equity**: enhance satisfaction and reduce turnover. - **Legal compliance**: to avoid discrimination. ### organization | Basic Elements | Examples | Rationale | | --------------------- | ---------------------------------------------- | ---------------------------------------------------------------------------------------- | | Identification | Company name, address, contact person | Further contacts | | Financial performance | Assets, sales, profits (after taxes), cashflow | Indicates nature of the product/service markets, the ability to pay, size and financials | | Size | Profit centres, product lines | Importance of specific job groups to business success | | | Total number of employees | Impact on labour market | | Structure | Organizational charts | Indicates how business is organized and how important managerial jobs are. | ### Total compensation - cash forms used - non-cash forms used | | Advantages | Disadvantages | | ---------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------- | | **Base pay** | Tells how competitors are valuing the work in similar jobs. | Fails to include performance incentives and other forms, so will not give true picture if competitors offer low base but high incentives. | | **Total cash** | Tells how competitors are valuing work; also tells the cash pay for performance opportunity in the job. | Not all employees may receive incentives, so it may overstate the competitors’ pay; plus, it does not include long-term incentives. | | **Total compensation (base + bonus + stock options + benefits)** | Tells the total value competitors place on this work. | All employees may not receive all the forms. Don’t set base pay equal to competitors’ total compensation. | ### incumbent & jobs | Basic Elements | Examples | Rationale | | -------------- | ---------------------------------------------------------------------------------------- | ----------------------------------------------------- | | Date | Date survey data in effect | Need to update rates to current date | | Job | Match generic job description | Indicates degree of similarity with survey’s key jobs | | Individual | Number of employees supervised and reporting levels | Describes scope of responsibilities | | | Years since degree, education, date of hire | Indicates training and tenure of incumbents | | Pay | Actual rates paid to each individual, total earnings, last increase, bonuses, incentives | | ### hr outcomes. | Basic Elements | Examples | Rationale | | ------------------ | -------------------------------------------------------------------------------------- | ----------------------------------------------- | | Productivity | Revenues to employee ratio, revenues to labour costs ratio | Reflect organization performance and efficiency | | Total labour costs | Number of employees x (average wages and benefits) | Major expense | | Attraction | Yield ratio, number accepting offer to number of job offers ratio | Reveals recruiting success | | Retention | Turnover rate; number of high or low performers who leave to number of employees ratio | Reveals outflow of people | | Employee views | Total pay satisfaction | Reveals what employees think about their pay | ## market pay line > links a company’s benchmark jobs on horizontal axis with market rates paid by competitors on the vertical axis. ### Internal structure and external market rates - pay-policy line - pay ranges #### pay-policy line > percent above or below market line intend to “lead”, “lag”, or “match” rate. > \[!tip\] Develop grades > > single grade will have same pay range #### pay range - midpoints where pay-policy line crosses centre of grade, minimum and maximum - larger ranges in managerial jobs reflect the greater opportunity for performance variants in the work - firm uses percentiles as maximum and minimums while other establish them separately. > pay disparity among candidates. 1. Internal pressures - recognize performance pay difference with pay - expectations pay over time 2. External pressures - difference in quality among individuals - difference in productivity or value variations - mix of pay forms #### range overlap Overlap ought to be large enough to induce employees to seek promotions. ## Broadbanding > collapse salary grades into a few broad bands, each with a minimum and maximum - flexibility - career growth --- ## Employee Benefits - Flexible hours - WFH: 45% of employees love their jobs (according to Forbes) - Vacation time and PTO: No timeout more prone to burnt out - Pay parental leave > part of compensation package, other than pay for time worked. Growth in Employee Benefits - Cost effectiveness of Benefits - Union - Employer impetus - Government Impetus ## issues. - ensure external competitiveness - adequacy of benefits - Who should be protected? - How much choice should employees have among an array of benefits? - How should benefits be financed? > \[!question\] Question > > How does external equity differ when pay versus benefits? - Pay is quantifiable regarding monetary values, whereas benefits are objective in terms of equity.