Salary Management Process

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					                                                 TABLE OF CONTENTS
                                                                                                                                       Page
GUIDE TO ILLUSTRATIONS ................................................................................................................ 12

ABOUT THE DECISION MAKER'S GUIDE TO SALARY MANAGEMENT .................                                                                                                  15
        Introduction..................................................................................................................................................   15
        How to Use the Decision Maker's Guide.....................................................................................................                       15
        How the Decision Maker's Guide is Organized...........................................................................................                           15

I.      HOW TO ESTABLISH A COMPENSATION PHILOSOPHY .......................................                                                                               19
        Key Planning Decisions
        What factors will be used to determine the compensation philosophy? ......................................................                                       20
        What investment will be made in the compensation program? ...................................................................                                    20
        Key Implementation Decisions
        Who will determine the compensation philosophy? ....................................................................................                             21
        What will be the organization's pay position in the labor market? ..............................................................                                 21
        What combination of salary and variable pay will support the compensation philosophy? ........................                                                   22
        How will the compensation philosophy be communicated?........................................................................                                    23
        Key Management Decisions
        When will the compensation philosophy be reviewed?...............................................................................                                26
        How will the compensation philosophy be reviewed? ................................................................................                               26
        Guide to Section I Exhibits ..............................................................................................................                       27
           Exhibit I-A:               Overview of Short-Term Incentive Plans ....................................................................                        28
           Exhibit I-B:               Overview of Long-Term Incentive Plans ....................................................................                         29

II.     HOW TO ANALYZE JOBS............................................................................................................                                  31
        Key Planning Decisions
        What will be the scope of the job analysis study? .......................................................................................                        32
        What methods will be used to analyze jobs? ...............................................................................................                       32
         Guidelines for selecting methods of job analysis .....................................................................................                          32
         Direct interviews ......................................................................................................................................        33
         Written questionnaires .............................................................................................................................            33
         Supplemental methods of job analysis .....................................................................................................                      34
           Technical consultations ........................................................................................................................              34
           Direct observations ...............................................................................................................................           34
           Diaries and logs ....................................................................................................................................         34
        Key Implementation Decisions
        How will job analysis be conducted? ..........................................................................................................                   35
         Background information ..........................................................................................................................               35
         Job information needed for analysis.........................................................................................................                    35
         Analysis of job information......................................................................................................................               36
         Job classification ......................................................................................................................................       36
        What forms of communication will be used during job analysis? ...............................................................                                    37




                                                                                     3
                                  TABLE OF CONTENTS (continued)
                                                                                                                                                           Page
       Key Management Decisions
       How will job information be verified? ........................................................................................................          38
       Do the results of job analysis warrant further action in the salary management process?...........................                                      38
       Guide to Section II Exhibits ............................................................................................................               39
          Exhibit II-A:           Job Questionnaire ........................................................................................................   40
          Exhibit II-B:           Identifying Characteristics of Various Job Groups During
                                   the Job Analysis Process............................................................................................        51

III. HOW TO PREPARE JOB DESCRIPTIONS ..........................................................................                                                53
     Key Planning Decisions
       How many job description formats are needed?..........................................................................................                  54
       What information will be included in job descriptions? ..............................................................................                   55
       Key Implementation Decisions
       Who will prepare, verify and approve job descriptions? .............................................................................                    57
       How will job descriptions be prepared? ......................................................................................................           57
        Organization of the job description..........................................................................................................          57
        Steps to completing the job description ...................................................................................................            58
          Step I: Assemble and review source material ......................................................................................                   58
          Step II: Complete identifiers................................................................................................................        58
          Step III: Draft duties and responsibilities ............................................................................................             58
          Step IV: Write the basic function ........................................................................................................           59
          Step V: Complete level indicators .......................................................................................................            59
       Who will receive copies of job descriptions? ..............................................................................................             59
       Key Management Decisions
       When will job descriptions be reviewed? ....................................................................................................            60
       How will job descriptions be reviewed?......................................................................................................            60
       Guide to Section III Exhibits ...........................................................................................................               61
          Exhibit III-A:          Job Descriptions and the Americans with Disabilities Act (ADA) .............................                                 63
          Exhibit III-B:          Non-Management Job Description Form ....................................................................                     67
          Exhibit III-C:          Management Job Description Form.............................................................................                 68
          Exhibit III-D:          Job Description Planning Grid ....................................................................................           69
          Exhibit III-E:          Non-Management Job Description: Janitor ................................................................                     70
          Exhibit III-F:          Non-Management Job Description: Chemical Technician II .....................................                                 71
          Exhibit III-G:          Non-Management Job Description: Executive Secretary ...........................................                              72
          Exhibit III-H:          Non-Management Job Description: Human Resources Administrator.......................                                         73
          Exhibit III-I:          Management Job Description: Quality Control Supervisor........................................                               75
          Exhibit III-J:          Management Job Description: Customer Services Manager ......................................                                 76
          Exhibit III-K:          Management Job Description: Controller...................................................................                    77

IV. HOW TO EVALUATE JOBS ........................................................................................................                              79
    Key Planning Decisions
       How will job evaluation be used?................................................................................................................        80
       What factors should be considered when designing or changing a job evaluation system?........................                                           81



                                                                              4
                                 TABLE OF CONTENTS (continued)
                                                                                                                                                            Page
     Key Implementation Decisions
     Who will evaluate jobs?...............................................................................................................................      82
     What methods will be used to evaluate jobs? ..............................................................................................                  83
      Ranking evaluation plan...........................................................................................................................         83
        Card sorting method .............................................................................................................................        83
        Paired comparison method ...................................................................................................................             84
      Classification evaluation plan ..................................................................................................................          85
        Evaluation process................................................................................................................................       87
      Market pricing evaluation plan ................................................................................................................            88
        Evaluation process................................................................................................................................       88
        EVALUCOMP ..................................................................................................................................            89
      Factor comparison evaluation plan...........................................................................................................               90
        Selecting factors ...................................................................................................................................    91
        Evaluation process................................................................................................................................       92
      Point factor evaluation plan......................................................................................................................         93
        Weighting factor values........................................................................................................................          93
        Point assignments .................................................................................................................................      94
        Evaluation process................................................................................................................................       96
        FACTORCOMP ................................................................................................................................             98
      Guide chart evaluation plan......................................................................................................................          98
        Evaluation process................................................................................................................................       98
      Dimension based evaluation plan.............................................................................................................              100
        Evaluation process................................................................................................................................      100
        MULTICOMP ...................................................................................................................................          100
     What forms of communication will be used during the job evaluation process? ........................................                                       101
     Key Management Decisions
     When will job evaluations be reviewed? ..................................................................................................... 102
     How will job evaluations be reviewed? ....................................................................................................... 102
     Guide to Section IV Exhibits ........................................................................................................... 105
        Exhibit IV-A:             Comparison of Steps to Implementing the Seven Most
                                   Prevalent Job Evaluation Systems ............................................................................. 106
        Exhibit IV-B:             Comparison of Key Advantages of the Seven Most
                                   Prevalent Job Evaluation Systems ............................................................................. 108
        Exhibit IV-C:             Comparison of Key Disadvantages of the Seven Most
                                   Prevalent Job Evaluation Systems ............................................................................. 109

V.   HOW TO ESTABLISH AN INTERNAL JOB HIERARCHY ......................................... 111
     Key Planning Decisions
     How will the internal job hierarchy be used? .............................................................................................. 112
     How many internal job hierarchies are needed? .......................................................................................... 112
     Key Implementation Decisions
     How will the internal job hierarchy be prepared?........................................................................................ 113
     Who will prepare and maintain the internal job hierarchy?......................................................................... 113



                                                                               5
                                   TABLE OF CONTENTS (continued)
                                                                                                                                                                  Page
     Key Management Decisions
     When will the internal job hierarchy be reviewed? ..................................................................................... 114
     How will the internal job hierarchy be reviewed? ....................................................................................... 114
     Guide to Section V Exhibits ............................................................................................................. 115
        Exhibit V-A:               Sample Internal Hierarchy of Jobs .............................................................................. 116
        Exhibit V-B:               Sample Internal Hierarchy of Jobs by Classification................................................... 117
        Exhibit V-C:               Sample Internal Hierarchy of Jobs by Functional Category........................................ 118

VI. HOW TO COLLECT AND ANALYZE MARKET DATA ............................................... 119
    Key Planning Decisions
     How will the market be defined? ................................................................................................................. 120
     How will benchmark jobs be selected?........................................................................................................ 120
     What market data is needed? ....................................................................................................................... 121
     Key Implementation Decisions
     How will market data be collected?.............................................................................................................                  123
      Centralized management of labor market data .........................................................................................                           123
      Sources of market data .............................................................................................................................            123
      Self and jointly conducted surveys...........................................................................................................                   124
        Step I: Schedule key dates ...................................................................................................................                125
        Step II: Determine what techniques will be used to collect survey data..............................................                                          125
        Step III: Solicit survey participation....................................................................................................                    125
        Step IV: Prepare job summaries and job matching tools.....................................................................                                    125
        Step V: Design questions and input form ............................................................................................                          126
        Step VI: Clarify participant responses .................................................................................................                      126
      'Off-the-shelf' third party surveys.............................................................................................................                126
      Customized third party surveys................................................................................................................                  127
     How will market data be analyzed? .............................................................................................................                  127
      Measurements of central tendencies and dispersions of survey data .......................................................                                       127
        Average or mean...................................................................................................................................            127
        Weighted average .................................................................................................................................            127
        Mode.....................................................................................................................................................     128
        Median (50th percentile).......................................................................................................................               128
        Low.......................................................................................................................................................    128
        10th percentile ......................................................................................................................................        128
        First quartile (25th percentile) ..............................................................................................................               128
        Third quartile (75th percentile).............................................................................................................                 129
        90th percentile ......................................................................................................................................        129
        High ......................................................................................................................................................   129
        Calculation of percentiles .....................................................................................................................              129
      Measurements of market trends ...............................................................................................................                   130
        Maturity curves.....................................................................................................................................          130
        Regression analysis...............................................................................................................................            130
        Market differentials ..............................................................................................................................           131




                                                                                  6
                                   TABLE OF CONTENTS (continued)
                                                                                                                                                              Page
       Analysis of the sample .............................................................................................................................       131
      How will market data be communicated?....................................................................................................                   132
       Top management communications...........................................................................................................                   132
       Communications with middle and supervisory management...................................................................                                   132
       Employee communications ......................................................................................................................             133
       Communications with survey participants ...............................................................................................                    133
      Key Management Decisions
      How will market surveys be evaluated? ...................................................................................................... 134
      How will market data be updated? .............................................................................................................. 134
      Guide to Section VI Exhibits ........................................................................................................... 137
         Exhibit VI-A:             Labor Market Characteristics of Various Job Classifications......................................                              138
         Exhibit VI-B:             Sample Salary Survey Package....................................................................................               139
         Exhibit VI-C:             Annual ECS Compensation Survey Reports ...............................................................                         144
         Exhibit VI-D:             Salary Survey Evaluation Checklist ............................................................................                146

VII. HOW TO DEVELOP AND USE PAY LINES ........................................................................ 147
     Key Planning Decisions
      How will pay lines be established?..............................................................................................................            148
       Pay line defined........................................................................................................................................   148
       Calculation of pay lines............................................................................................................................       148
         Regression analysis and the "least squares" method.............................................................................                          148
         Regression analysis and the logarithmic method..................................................................................                         149
           Coefficient of correlation ..................................................................................................................          149
           Standard error of estimate .................................................................................................................           149
       Depiction of pay lines ..............................................................................................................................      149
      How will pay lines move in relation to the labor market? ...........................................................................                        151
      Key Implementation Decisions
      How will pay lines be used to determine salary increase budgets? ............................................................. 152
      How will pay lines be used to make other salary management decisions?.................................................. 152
      Key Management Decisions
      When will pay lines be reviewed? ............................................................................................................... 154
      How will pay lines be reviewed? ................................................................................................................. 154
      Guide to Section VII Exhibits ......................................................................................................... 155
         Exhibit VII-A:            How to Determine a Common Logarithm ................................................................... 156
         Exhibit VII-B:            Checklist of Variables Used to Calculate Pay Lines ................................................... 161

VIII. HOW TO DESIGN SALARY GRADES AND STRUCTURES ....................................... 163
      Key Planning Decisions
      How many salary structures will be established? ........................................................................................                    164
       Number of structures................................................................................................................................       164
       Types of structures ...................................................................................................................................    164
         Single rate structures ............................................................................................................................      164
         Step rate structures................................................................................................................................     165



                                                                                7
                                 TABLE OF CONTENTS (continued)
                                                                                                                                                             Page
       Salary (merit) range structures..............................................................................................................             165
       Combined step rate and salary range structures....................................................................................                        166
    How many salary grades will be identified for each structure? ...................................................................                            166
    What types of salary ranges will be used? ...................................................................................................                166
     Narrow vs. wide percent spreads..............................................................................................................               167
     Fixed vs. variable percent spreads............................................................................................................              167
     Broad bands..............................................................................................................................................   167
     Comparison of fixed, variable, and broad band salary range structures ..................................................                                    168
    Key Implementation Decisions
    How will grades be determined? .................................................................................................................             170
    How will salary ranges be constructed? ......................................................................................................                170
     Target salary 'prices'.................................................................................................................................     170
     Calculation of intergrade differentials......................................................................................................               171
     Calculation of range spreads ....................................................................................................................           172
     Calculation of minimum and maximum salaries ......................................................................................                          172
    How will information on salary grades and ranges be communicated?.......................................................                                     172
     Management communications..................................................................................................................                 172
     Employee communications ......................................................................................................................              173
    Key Management Decisions
    When will salary grades and structures be reviewed? ................................................................................. 174
    How will issues related to salary grades and structures be resolved?.......................................................... 174
    How will salary ranges be updated? ............................................................................................................ 175
    Guide to Section VIII Exhibits ....................................................................................................... 177
       Exhibit VIII-A:           Sample Step Rate Structure .........................................................................................            178
       Exhibit VIII-B:           Sample Salary Range Structure ...................................................................................               179
       Exhibit VIII-C:           Sample Combined Step Rate and Salary Range Structure...........................................                                 180
       Exhibit VIII-D:           Sample Hierarchy of Jobs Grouped by Salary Grade ..................................................                             181
       Exhibit VIII-E            Sample Hierarchy of Jobs Grouped by Salary Grade and Job Classification..............                                           183
       Exhibit VIII-F:           Sample Hierarchy of Jobs Grouped by Salary Grade and Functional Category..........                                              187

IX. HOW TO ESTABLISH SALARY RATES AND DETERMINE INCREASES ......... 191
    Key Planning Decisions
    How will the compensation function manage the process of establishing
     salaries and determining increases? ...........................................................................................................             192
    How will the salary management process maintain the link between pay and performance? .....................                                                  192
      The challenges to rewarding superior performance .................................................................................                         192
      Increasing both flexibility and controls to link pay to performance.........................................................                               193
      Rewarding superior achievement in spite of limited salary increase budgets ..........................................                                      193
    Key Implementation Decisions
    Who will be responsible for determining pay? ............................................................................................                    195
     Top management responsibilities .............................................................................................................               195
     Responsibilities of a salary management committee................................................................................                           195
     Supervisory and middle management responsibilities .............................................................................                            195



                                                                               8
                            TABLE OF CONTENTS (continued)
                                                                                                                                                       Page
 Responsibilities of other human resources functions ...............................................................................                       195
How will pay be established? ......................................................................................................................        196
 Pay for new-hires .....................................................................................................................................   196
 Pay for part-time, independent contractor and other alternative working arrangements .........................                                            196
 Effect of demotion on salary ....................................................................................................................         196
How and when will pay increases be determined? ......................................................................................                      196
 Calculation of salary increases .................................................................................................................         196
 Types of salary increases..........................................................................................................................       197
   Merit/performance-based increases ......................................................................................................                197
   Promotional increases...........................................................................................................................        198
   Skill/knowledge-based increases ..........................................................................................................              199
   Lateral transfers and pay determination................................................................................................                 199
   Effect of job re-evaluation to a new salary grade .................................................................................                     199
   Structural increases...............................................................................................................................     199
   General and cost of living increases .....................................................................................................              199
   Other special increases .........................................................................................................................       200
      Equity adjustments ............................................................................................................................      200
      Increases for red and green circle jobs..............................................................................................                200
      Increases for completion of orientation and training period .............................................................                            200
      Temporary assignments and increases ..............................................................................................                   200
      Special recognition increases ............................................................................................................           200
 Alternative forms of pay delivery ............................................................................................................            201
   Lump sum merit payments ...................................................................................................................             201
   Two-tier systems...................................................................................................................................     201
 Timing of salary increases........................................................................................................................        202
What types of pay differentials will be used? ..............................................................................................               203
 Differentials related to pay relationships..................................................................................................              203
 Geographic and industry differentials ......................................................................................................              204
 Differentials related to time at work.........................................................................................................            204
 Differentials related to the working environment ....................................................................................                     204
How will information on salary rates and increases be communicated? .....................................................                                  204
Key Management Decisions
How will pay decisions be reviewed and monitored? .................................................................................                        206
How will pay determination issues be identified and resolved? ..................................................................                           206
 Probability of pay issues ..........................................................................................................................      206
 Preventive measures.................................................................................................................................      207
 Issue assessment.......................................................................................................................................   207
 Resolution and control .............................................................................................................................      207
Guide to Section IX Exhibits ........................................................................................................... 209
   Exhibit IX-A:             Sample Exempt Overtime Plan....................................................................................               210
   Exhibit IX-B:             Sample Salary Committee Charter...............................................................................                213
   Exhibit IX-C:             Salary Increase Calculation Form................................................................................              214
   Exhibit IX-D:             Sample Skill/Knowledge-Based Pay Plan ...................................................................                     215
   Exhibit IX-E:             Sample Lump Sum Merit Program ..............................................................................                  218


                                                                          9
                                  TABLE OF CONTENTS (continued)
                                                                                                                                                              Page
        Exhibit IX-F:             Planning Grid for Analyzing and Resolving Day-to-Day
                                   Salary Management Issues ........................................................................................ 219

X.   HOW TO CONTROL THE SALARY MANAGEMENT PROCESS............................ 221
     Key Planning Decisions
     What types of salary controls are needed?................................................................................................... 222
     How much control is needed?...................................................................................................................... 223
     Key Implementation Decisions
     Who will be responsible for controlling the salary management process? ..................................................                                    224
     What methods will be used to control the salary management process? .....................................................                                    225
      Organizational controls ............................................................................................................................        225
      Statistical controls ....................................................................................................................................   225
        Distribution within range......................................................................................................................           225
        Compa-ratio analysis ............................................................................................................................         227
      Budgetary controls ...................................................................................................................................      228
        General or cost of living increase budgets............................................................................................                    228
        Salary increase budgets.........................................................................................................................          229
        Department salary budget calculations .................................................................................................                   229
        Individual salary budget calculations ...................................................................................................                 230
     Key Management Decisions
     How will salary controls be reviewed and monitored?................................................................................ 231
     When should salary controls be modified?.................................................................................................. 231
     Guide to Section X Exhibits ............................................................................................................. 233
        Exhibit X-A:              Sample of Current Accounting Department Salaries................................................... 234
        Exhibit X-B:              Sample Budgeted Accounting Department Salary Changes........................................ 235
        Exhibit X-C:              Sample Month-to-Month Accounting Department Salary Expenses........................... 236

XI. HOW TO ESTABLISH A SALARY COMMUNICATIONS PROGRAM ................. 237
    Key Planning Decisions
     Is a communications program necessary?....................................................................................................                   238
     What will be the goals of salary management communications? ................................................................                                 239
        Salary administration goals ......................................................................................................................        239
        Human resources goals.............................................................................................................................        239
     Key Implementation Decisions
     Who will be responsible for salary management communications? ............................................................ 241
     What forms of communications will be used?............................................................................................. 241
     Key Management Decisions
     How will the effectiveness of salary management communications be measured?..................................... 242
     When will the communications program be updated?................................................................................. 242
     Guide to Section XI Exhibits ........................................................................................................... 243
        Exhibit XI-A:             Worksheet for Planning Salary Management Communications .................................. 244
        Exhibit XI-B:             Salary Management Communication Needs and Responsibilities............................... 246
        Exhibit XI-C:             Goals and Forms of Salary Management Communications......................................... 248



                                                                        10
                                 TABLE OF CONTENTS (continued)
                                                                                                                                               Page
XII. HOW TO AUDIT THE SALARY MANAGEMENT PROCESS .................................... 251
     Key Planning Decisions
        What will be the goals of salary management audits? ................................................................................. 252
        How will salary management audits be planned and organized? ................................................................ 252
        Key Implementation Decisions
        Who will be responsible for salary management audits?............................................................................. 253
        What methods will be used to conduct the audits? ...................................................................................... 253
        Key Management Decisions
        When will salary management audits be conducted? .................................................................................. 254
        What audit follow up actions are needed? ................................................................................................... 254
        Guide to Section XII Exhibits ......................................................................................................... 255
          Exhibit XII-A:          Checklist for Auditing the Salary Management Process ............................................. 256

LIST OF WYATT OFFICES .................................................................................................................... 263




                                                                         11
                                     GUIDE TO ILLUSTRATIONS
                                                                                                                                                             Page
I.    HOW TO ESTABLISH A COMPENSATION PHILOSOPHY
      Key Features of Various Cash Compensation Methods ..............................................................................                           22
      Sample Statement of Salary Management Philosophy ................................................................................                          24
      Sample Statement of Total Compensation Philosophy................................................................................                          25

II.   HOW TO ANALYZE JOBS
      The Five "Ws" of Job Analysis....................................................................................................................          36

III. HOW TO PREPARE JOB DESCRIPTIONS
      Identifiers Used in Job Descriptions ............................................................................................................          55
      Narrative Content of Job Descriptions.........................................................................................................             55
      Indicators of Job Level ................................................................................................................................   56

IV. HOW TO EVALUATE JOBS
      Job Evaluation Issues and Problem Solving Guidelines.............................................................................. 80
      Summary Job Description Ranking Card .................................................................................................... 84
      Paired Comparison Ratings ......................................................................................................................... 84
      Assignment of Salary Grades in a Ranking Evaluation Plan....................................................................... 85
      Classification Evaluation Plan Generic Job Description ............................................................................. 86
      Job Level (Salary Grade) Assignments........................................................................................................ 87
      Guideline Salary Structure........................................................................................................................... 88
      Market Pricing Evaluation Spreadsheet....................................................................................................... 89
      Composite of EVALUCOMP Ranked Jobs.............................................................................................. 90
      Factor Comparison Results - Knowledge and Skill Factor Rankings.......................................................... 92
      Factor Comparison Results - Composite Rankings for All Factors ............................................................. 92
      Factor Description - Education .................................................................................................................... 93
      Factor Values and Weights .......................................................................................................................... 94
      Assignment of Factor Point Values ............................................................................................................. 95
      Assignment of Point Values by Geometric Progression .............................................................................. 95
      Comparison of Methods for Assigning Point Values .................................................................................. 96
      Development of Point and Salary Ranges ................................................................................................... 96
      Individual Job Evaluations........................................................................................................................... 97
      Comparison of Point Factor Job Evaluation Results by Department........................................................... 97
      Guide Chart Evaluation Plan ....................................................................................................................... 99
      Checklist for Measuring the Effectiveness of Job Evaluation ..................................................................... 103

VI. HOW TO COLLECT AND ANALYZE MARKET DATA
      Labor Market Data Used to Analyze Competitive Pay Position.................................................................. 121
      Calculation of Average Salary and Weighted Average Salary .................................................................... 128
      Examples of Percentiles, Median, Quartiles, and Interpolations ................................................................. 130




                                                                               12
                           GUIDE TO ILLUSTRATIONS (continued)
                                                                                                                                                                  Page

VII. HOW TO DEVELOP AND USE PAY LINES
     Scattergram ..................................................................................................................................................     150
     Pay Line .......................................................................................................................................................   150
     Pay Policy Line in Relation to the Labor Market and Actual Pay Line.......................................................                                         151
     Comparison of Actual Pay Line vs. Labor Market Pay Line.......................................................................                                     152

VIII. HOW TO DESIGN SALARY GRADES AND STRUCTURES
     Salary Range ................................................................................................................................................ 165
     Fixed, Variable, and Broad Band Salary Structures .................................................................................... 169
     Guidelines for Resolving Common Salary Management Issues Related to
      Salary Grades and Structures..................................................................................................................... 175

IX. HOW TO ESTABLISH SALARY RATES AND DETERMINE INCREASES
     Definitions of Range Levels Related to Performance and Seniority ...........................................................                                       197
     Sample Distribution of Performance Ratings ..............................................................................................                          198
     Merit Matrix Based on Performance Level and Current Position in Salary Range .....................................                                                 198
     Interval Between Salary Increase Reviews Based on Position in Salary Range..........................................                                               202
     Interval Between Salary Increase Reviews Based on Performance Level
      and Position in Salary Range .....................................................................................................................                203

X.   HOW TO CONTROL THE SALARY MANAGEMENT PROCESS
     Examples of Salary Controls .......................................................................................................................                222
     Salary Control Responsibilities....................................................................................................................                224
     Sample Distribution within Range...............................................................................................................                    226
     Compa-Ratio for an Individual Employee ...................................................................................................                         227
     Compa-Ratio for a Group of Employees .....................................................................................................                         227
     Department Salary Increase Budget Allocation...........................................................................................                            229
     Department Salary Budget Calculation........................................................................................................                       229
     Monitoring Guidelines for Salary Controls .................................................................................................                        231

XI. HOW TO ESTABLISH A SALARY COMMUNICATIONS PROGRAM
     Salary Management Communications Issues and Problem Solving Guidelines.......................................... 238




                                                                                  13
                        KEY IMPLEMENTATION DECISIONS


How Will Job Analysis Be Conducted?
Background Information

In large part, job analysis is a fact-finding process, and facts about jobs are most easily identified when the
analyst knows what to look for. Therefore, the first step in the analysis process is to gain familiarity with each
job and its background. Primary sources of background information come from the following.

    Discussions with line management as to how and why the job(s) studied were established or changed, what
    issues have emerged (currently or in the past), and what special forms of communications should take place

    A review of job documentation, such as current and proposed (if available) organization charts, job
    descriptions, and past evaluations

    A review of policies and procedures that may have bearing on the jobs to be analyzed

    Technical consultations with trainers, recruiters, compensation and human resources professionals,
    compliance specialists and others with knowledge of the jobs under study

Secondary background sources provide information on how the jobs are structured, defined or compensated in
other organizations. Particularly useful is market survey data, which provides a perspective on how jobs are
defined, structured and compensated in other companies.

Job Information Needed for Analysis

There is a basic core of information to be obtained. The job's actual duties and responsibilities are of primary
importance. The second requirement is information needed for later phases of the salary management process,
including job descriptions, job evaluations, labor market survey matches, and the establishment of pay levels.
Additional information may be required to meet the goals of other management processes, such as
reorganizations or regulatory compliance. The third need is for both quantitative and qualitative information as
to the job's scope of responsibility and authority, such as the following.

    Organizational level

    Budgetary authority

    Asset value of facilities or equipment




                                                     35
Exhibit IV - A
Comparison of Steps to Implementing the Seven Most
Prevalent Job Evaluation Systems

                   Preliminary                                                                         Conversion to Salary
Type of Plan      Documentation                    Development             Evaluation Process                Grades
Ranking          Prepare organization           Prepare job cards.         Sort and organize job        Group comparable jobs
                 chart.                                                    cards in rank order;         into grades.
                 Write job descriptions.                                   OR
                 Develop specifications                                    Rank jobs by paired
                 and scope data.                                           comparison, and
                                                                           compile results.
                                                                           Organize individual
                                                                           rankings into one overall
                                                                           hierarchy.
Classification   Prepare organization           Write generic job          Compare job                  Convert generic levels to
                 chart.                         descriptions.              descriptions to generic      salary grades.
                 Write job descriptions.        Identify and review        job types.
                 Develop specifications         generic job types and      Organize individual
                 and scope data.                levels to ensure full      assessments into one
                                                coverage.                  overall hierarchy.
Market Pricing   Prepare organization           Develop guideline salary   Match benchmark jobs         Convert market rates (or
                 chart.                         structure (optional).      to surveyed jobs.            pre-established
                 Write job descriptions.        Identify benchmark jobs    Slot benchmark jobs into     guideline structure) to
                 Develop specifications         (at least 25% of jobs in   guideline salary             grades.
                 and scope data.                the population).           structure (if developed).
                                                                           Compare non-
                                                                           benchmark jobs with
                                                                           benchmark jobs and slot
                                                                           accordingly.
Factor           Prepare organization           Identify benchmark jobs.   Evaluate each job            Group comparable jobs
Comparison       chart.                         Select and document        against each factor.         into grades.
                 Write job descriptions.        appropriate factors        Compile individual
                 Develop specifications         and/or degrees.            evaluation results into
                 and scope data.                Evaluate benchmark         one overall hierarchy.
                                                jobs to test selected
                                                factors.
Point Factor     Prepare organization           Identify benchmark jobs.   Evaluate each                Convert point values to
                 chart.                         Select, weight (by         benchmark job against        salary grades.
                 Write job descriptions.        points) and document       points established for
                 Develop specifications         appropriate factors        each factor.
                 and scope data.                and/or degrees.            Evaluate each non-
                                                Evaluate benchmark         benchmark job against
                                                jobs to test selected      points established for
                                                factors and points         each factor, and relate
                                                assigned to each level.    results to comparable
                                                                           benchmark jobs.
                                                                           Compile points and
                                                                           array on a scatter
                                                                           diagram against internal
                                                                           company pay levels and
                                                                           market data.

                                           Table continues on next page.




                                                          106
   VIII                            HOW TO DESIGN SALARY
                                   GRADES AND STRUCTURES


A salary structure is a system of related job groupings (grades) with established pay targets and guidelines (ranges)
designed to reflect the internal job hierarchy, respond to competitive pressures of the labor market, and facilitate pay
planning, administration and delivery.



KEY PLANNING DECISIONS
    How many salary structures will be established?

    How many salary grades will be identified for each structure?

    What types of salary ranges will be used?



KEY IMPLEMENTATION DECISIONS

    How will grades be determined?

    How will salary ranges be constructed?

    How will information on salary grades and ranges be communicated?



KEY MANAGEMENT DECISIONS

    When will salary grades and structures be reviewed?

    How will issues related to salary grades and structures be resolved?

    How will salary ranges be updated?




                                                          163

				
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