Morning says her grid takes into account three factors (market and business performance, individual performance, and position in range), plus there’s a lump sum option.
Pay increases are based on three main factors, says Morning, president of Teri Morning Enterprises in Carmel, Indiana, who made her suggestions during a recent webinar sponsored by BLR®.
In the table below, these three factors are expressed as follows:
- Base increase potential: 2.0% based on market movement of wages AND profitability (Adjust this part of the equation as needed to reflect your compensation philosophy. For example, make it 4% if you want to pay above the market.)
- Performance factor potential: 2.0%
- Position in range: plus or minus 2.0% as a catch-up or slowdown factor (for red/green circles)
So, employees have a potential of 2% for base, 2% for performance, and then an adjustment of plus or minus 2% for position in grade expressed as a comp-a-ratio (See top line of grid.).
The figures in parentheses are what a lump payment would be if given instead of a base raise. (You can give a higher lump sum payment because it is not in the base—and the salary won’t keep spiraling out of control year after year, Morning says.)
Setting up a market-based pay structure not as easy as you thought? Get up to speed with ABCs of Setting Up Job Grades: How to Successfully Build a Market-Based Pay Structure from Scratch. Join us for an interactive webcast on December 6. Learn More
Morning’s Merit Increase Grid
|
Comp-a-Ratio►
▼Performance |
<92% |
92 to 96.9% |
97to 103% |
103.1to 109.9% |
110> |
|
Far Exceeds |
6.0 |
5.0 |
4.0 |
3.0 (4.0) |
2.0 (4.0) |
|
Exceeds |
5.0 |
4.0 |
3.0 |
2.0 (3.0) |
1.0 (3.0) |
|
Meets |
4.0 |
3.0 |
2.0 |
1.0 (2.0) |
0 (2.0) |
|
Less Than |
2.0 |
1.0 |
0 |
0 |
0 |
|
Fails |
0 |
0 |
0 |
0 |
0 |
The idea of building a market-based pay structure from scratch may seem extremely daunting—but it doesn’t have to be. By following several key steps, you can develop a successful pay structure for your organization.
Fortunately, there’s a timely webinar that clarifies the challenges—ABCs of Setting Up Job Grades: How to Successfully Build a Market-Based Pay Structure from Scratch.
On December 6, in just 90 minutes, you’ll learn tips for developing a market-based pay structure from the ground up. And, as a bonus for attending, participants will receive a sample hourly job grade scale calculator, showing longevity, merit COLA increases, and more! Register now for this must-attend event risk free.
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Need to make a little more sense out of your comp system’s job grades and market positioning? Join us for an interactive webcast, ABCs of Setting Up Job Grades: How to Successfully Build a Market-Based Pay Structure from Scratch. Earn 1.5 hours in HRCI Recertification Credit. Register Now
By participating in this interactive webcast, you’ll learn:
- How your organization’s overall compensation strategy affects pay range development.
- How to tell which external market data sources you should use to price the jobs you’ve currently got.
- How to conduct a meaningful job analysis, including tips for gathering, documenting, and analyzing data necessary to describe the jobs your organization requires.
- How to tell which jobs are mission critical to your organization’s success (essential for developing a strategy on how to compensate for these positions).
- How to effectively conduct a market data analysis and apply the information you’ve gathered to create salary ranges for your organization.
- What to do about current salaries that don’t fall within the ranges you’ve set and how to best remedy these "red circle/green circle” rates.
- Where factors such as cost-of-living adjustments (COLA), longevity increases, and merit increases fit into the pay grade puzzle.
- What you need to know about "aging" to effectively manage pay grades successfully.
- How to figure out if your proposed pay ranges are matching, leading, or lagging the market.
- Strategies for rolling out your new market-based pay structure and how to evaluate its success.
- And much more!
Register now for this event risk-free.
Friday, December 6, 2013
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Approved for Recertification Credit
This program has been approved for 1.5 recertification credit hours through the Human Resource Certification Institute (HRCI).
Join us on December 6—you’ll get the in-depth ABCs of Setting Up Job Grades: How to Successfully Build a Market-Based Pay Structure from Scratch webcast AND you’ll get all of your particular questions answered by our experts.
Train Your Entire Staff
As with all BLR/HRhero webcasts:
- Train all the staff you can fit around a conference phone.
- You can get your (and their) specific phoned-in or emailed questions answered in Q&A sessions that follow each segment of the presentation.