Pricing jobs: Wages along the “wage line” are target wages the wage structure

4. Pricing jobs: Wages along the “wage line” are target wages the wage structure

or salary rates for the jobs in each pay grade. It is possible that some of the plotted points may fall off the wage line.

This will mean that average for that grade is too high (or too The next step is to determine the wage structure. For this,

Preparation of Wage Structure

low), given the pay rates for other grade. several decisions need be taken, such as:

If the plot falls below the line, raises for jobs in this pay grade

a. whether the organization wishes, or is able, to pay amounts may be required. Such a raise may be given either immediately or above, below, or equal to the average in the community or in one or two steps.7 If the plot falls above the wage line, that industry; indicates rates are high and the over paid employees are often

b. whether wage ranges should provide for merit increases or called “red circle,” “flagged,” or “overrates.” This will necessitate whether there should be single rates;

either:

i. To freeze the rate paid until general salary increases bring the overlap;

c. the number and width of the ‘pay grades’ and the extent of

other jobs into line with it, or

d. which jobs are to be placed in each of the pay grades;

ii. To transfer or promote the employee to a job where -he can

e. the actual money value to be as signed to various pay grades legitimately be paid his current rate; or

iii. To cut to the maximum in the pay grade. It is a standard practice to establish ‘pay grades’ or equal width

or ‘point spread,’ i.e., each grade might include all those jobs

falling between 50 to 100 points, 100 to 150 points, 150 to 200 points, and so forth. Since each grade is of the same width, it is

WAGE LINE

necessary to determine how many grades there should be. In an industry, the number varies from as few as five to as high as

thirty.

Two points need consideration when deciding the number of

WAGE RATES

grades. They are mentioned below:

1. the size of the organization, i.e., if there are 1,000 jobs to be graded, more ‘pay grades’ will be needed, than where the

Plotting jobs on a curve (Some points fall well off wage

jobs are few, say 100.

line)

2. the broadness of the grades. For instance, in the case of

f. differentials between pay plans; and hourly jobs, the maximum of individual pay grades may vary

g. what to do with salaries that are out of line once these from 10 to 20% above the minimums; while in case of decisions have been made.

salaried employees the maximum of pay grades may vary There are though no hard and fast rules for making such

from 15 to 75% above the minimum. decisions, and procedure commonly used is the two-

Some authorities feel that there should be only one dimensional graph on which job evaluation points for key jobs

comprehensive ‘pay grade’ for each organization. But it is are plotted against actual amounts paid or against desired levels.

probably more realistic to have several pay grades/ranges Several probably more realistic to have several pay grades/ranges Several