Sunday, November 11, 2007

Determining Fair Pay

Pay issues at work can be among the most emotional in the workplace. When employee pay amounts are allowed to evolve without benefit of some structure, they can sometimes become skewed and unfair. Many a sleepless night is experienced by people who are unhappy about pay or related issues, along with turnover and other problems experienced by the organization.

Compensation system development programs determine how much to pay employees using objective and unbiased guidelines. Organizations need to make valid comparisons in order to keep rates of pay fair and current. It is essential to also consider such factors as total compensation (i.e., pay, benefits, etc.), and legal exposure, in order to make the best use of compensation dollars.

Such compensation processes provide for development and implementation of strategies, systems for the control, validation and integrity of compensation data, and benefits products. These processes also play a quality assurance role, such as analyzing and evaluating compensation plan deliverables and providing advice and guidance to the management team.

There are three key issues that must be addressed when designing a compensation structure:

Internal equity - Are the jobs within the organization fairly priced in comparison to one another?

External equity - Are the jobs within the organization fairly priced in comparison to those of other organizations with which it competes for employees?

Individual equity - Are the jobs within the organization fairly priced in comparison to one another in the eyes of employees?

Have you noticed evidence of these tools being used within organizations or companies you are/were involved with? Watch for them and see the role they play in providing fair and equitable compensation.

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