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Dessler, Cole and SutherlandHuman Resources Management in Canada

Canadian Ninth Edition

Chapter Eleven

Establishing Strategic Pay Plans

© 2005 Pearson Education Canada Inc., Toronto, Ontario 11-1

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Basic Considerations in Determining Pay Rates

Legal-Employment/Labour Standards-Pay Equity-Human Rights-Canada/Quebec Pension Plan-Workers’ Compensation-Employment Insurance

Union - collective bargaining

Compensation policies - leader or follower in pay

Equity - internal and external

© 2005 Pearson Education Canada Inc., Toronto, Ontario

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Establishing Pay Rates

Factor comparison method

Step 1. Job Evaluation

Classification/grading method

Ranking method

Point method

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Establishing Pay Rates

Pay Grade

-jobs of approximately equal valueeg. -point: jobs falling within a range of points -ranking: all jobs falling within 2-3 ranks -classification: jobs already in classes/grades -factor comparison: specified range of pay rates

Step 2. Group Similar Jobs Into Pay Grades

© 2005 Pearson Education Canada Inc., Toronto, Ontario

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Establishing Pay Rates

-formal or informal survey by employer

-commercial, professional, and government

salary surveys

Step 3. Conduct a Wage/Salary Survey

© 2005 Pearson Education Canada Inc., Toronto, Ontario

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Establishing Pay Rates

Job Evaluation Points

AverageWageRates

* * * * *

* ** *

* * **

WageCurve

Step 4. Price Each Pay Grade – Wage Curves

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Establishing Pay RatesStep 5. Fine-Tune Pay Rates

Broadbanding

Band 1Trainee

Band 2IndependentContributor

Band 3SeniorSpecialist

Band 4Expert

Expertise and Responsibility (Pay Grade)

Pay

© 2005 Pearson Education Canada Inc., Toronto, Ontario

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Current Trends in Compensation

Skill/competency-based pay

Customized job evaluation plans

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Pay for Managerial and Professional Jobs

• Salary *reduced emphasis

• Benefits

• Short-term incentives *increased

• Long-term incentives emphasis

• Perquisites

© 2005 Pearson Education Canada Inc., Toronto, Ontario

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Important Current Issues in Compensation Management

-to eliminate systemic pay discrimination by

providing equal pay to:

-male-dominated job classes

-female-dominated job classes

of equal value

Pay Equity

© 2005 Pearson Education Canada Inc., Toronto, Ontario