The Effect of Pay Level Structure on Job Satisfaction
HRM600
Advanced Organizational Behavior & Leadership
The Effect of Pay Level Structure on Job Satisfaction
Prepared by
Rana Nissan
Doris Bou Abdou
Freddy Khoury
Presented to
Dr. Dory Daw
2013
Pay Level Structure
The Pay level Structure should be balanced between internal equity (how much the job is worth to the organization) and external equity (to what extend the pay of the organization is competitive relative to what it’s paid elsewhere in its industry). The best pay system is to pay on the basis of job worth to the organization (internal equity) while paying competitively relative to the labor market.
Each kind of job has a range of pay; the labor market should be taken into consideration when setting a pay level. Some companies may pay above the market, for example in case of increasing in company’s profits, but others may lag the market if they do not have the necessary resources needed to be able to pay market rates. Wal-Mart Company, for instance, pays fewer than its rivals and often it subcontracts jobs abroad.
Some major decisions in Pay Level Determination (determine externally competitive pay levels and structures):
Determine the pay level policy: This policy should be competitive. It consists to specify how much to pay, what forms, establishing a pay level structure; take into consideration special situations, estimate competitors labor costs.
Define purpose of survey: this decision is based on collecting information about competitors pay structure and make judgments about their type of compensation.
Once surveys are set, the data to put a pay policy relative to competition are ready and the policy can be translated into pay levels and structures. Data elements to consider for surveys: Nature of the organization (financial performance, size, structure), nature of total compensation system (cash forms used, non cash forms used), incumbent and job (date, job, individual, pay).
Define relevant labor market: It is the act to identify employers who
Advanced Organizational Behavior & Leadership
The Effect of Pay Level Structure on Job Satisfaction
Prepared by
Rana Nissan
Doris Bou Abdou
Freddy Khoury
Presented to
Dr. Dory Daw
2013
Pay Level Structure
The Pay level Structure should be balanced between internal equity (how much the job is worth to the organization) and external equity (to what extend the pay of the organization is competitive relative to what it’s paid elsewhere in its industry). The best pay system is to pay on the basis of job worth to the organization (internal equity) while paying competitively relative to the labor market.
Each kind of job has a range of pay; the labor market should be taken into consideration when setting a pay level. Some companies may pay above the market, for example in case of increasing in company’s profits, but others may lag the market if they do not have the necessary resources needed to be able to pay market rates. Wal-Mart Company, for instance, pays fewer than its rivals and often it subcontracts jobs abroad.
Some major decisions in Pay Level Determination (determine externally competitive pay levels and structures):
Determine the pay level policy: This policy should be competitive. It consists to specify how much to pay, what forms, establishing a pay level structure; take into consideration special situations, estimate competitors labor costs.
Define purpose of survey: this decision is based on collecting information about competitors pay structure and make judgments about their type of compensation.
Once surveys are set, the data to put a pay policy relative to competition are ready and the policy can be translated into pay levels and structures. Data elements to consider for surveys: Nature of the organization (financial performance, size, structure), nature of total compensation system (cash forms used, non cash forms used), incumbent and job (date, job, individual, pay).
Define relevant labor market: It is the act to identify employers who
References: Pinnington, Edwards, “Introduction to Human Resource Management”, 2000, Oxford Spector, P. E. (1997). Job satisfaction: Application, assessment, cause and consequences. 1558, Institute for the Study of Labour (IZA), 2005, http://ideas.repec.org/p/iza/izadps/dp1558.html