LO5

• Both the job evaluation and the market-pricing methods focus on paying for the job done.
• Skill- or knowledge-based pay


  can reward the employee based on depth (gaining greater expertise in existing skills), breadth (increases in the employee’s range of skills), and self-management (gaining higher level management-type skills, such as budgeting, training, planning, and so forth).
• Depth-based pay


  used for professors who move from assistant to associate to full professor ranks over the

  course of their careers.
• Depth-based pay systems


  used in many white-collar careers, where there is a

  dual career ladder.
• Dual career ladders


  common in aerospace, pharmaceuticals, and high technology
• The greatest advantage of skill-based pay is the flexibility of the workforce.
• Skill-based pay systems


  tend to generate higher pay rates
• Matching Employees to Pay


  The final step in the compensation process includes integrating the data on pricing jobs obtained from job evaluations, market-pricing, and/or skill-based approaches to match pay to employees.
• Matching Employees to Pay

  • Establishing the pay level for each job​
• Establishing the pay level for each job​

  • Combines job evaluation rankings, survey wage rates, and other considerations (e.g. organization’s pay policy)​
  • Wage-trend line developed
• wage-trend line


  drawn as close to as many points as possible.
• wage-trend line


  uses two steps to help determine the wage rates for nonkey jobs.
• wage-trend line uses two steps to help determine the wage rates for nonkey jobs.

  1. the point value for the nonkey job is located on the horizontal axis.
  2. a line is traced vertically to the wage-trend line, then horizontally to the dollar scale.
• • Creating compensation structure​

  Job classes and rate ranges
• rate range


  simply a pay range for each job
• Challenges Affecting Compensation​ (PUPWG)


  1. Prevailing​ wage rates​
  2. Union​ power​
  3. Productivity​
  4. Wage & salary​ policies​
  5. Government​ constraints​
• Prevailing Wage Rates


  Market forces sometimes indicate that a job must be paid more than its relative worth.
• Union Power


  When unions represent a portion of the workforce, they may be able to use their power to obtain wage rates out of proportion to their relative worth.
• Productivity


  Companies must make a profit to survive. A company cannot pay workers more than they contribute back to the firm through their productivity over the long term. When this happens (because of scarcity or union power), companies usually redesign those jobs, train new workers to increase their supply, or automate.
• employment standards


  regulate the rights, restrictions, and obligations of nonunionized workers and employers in Canada
• federal employment standards


  apply to federally regulated occupations (such as banking, media, and transportation) that cross provincial boundaries, and all other employees are governed by the employment standards

  of their respective province.