Salary Structures and Pay Grade Dimensions

1
Salary Structures and Pay Grade Dimensions

• Pay Grade Width
• Distance from min. to max. of range
• Typical ranges are 30-40 percent
• Midpoint to Midpoint Difference
• Represents pay differential from one pay grade to
  the next one in a sequence
• Must be Meaningful in amount
• Ranges from 8 percent (non-exempts) to
• 12 percent (management and exempts)

2
Pay Grade Dimensions

• Pay Grade Overlap
• Salaries that are Common to adjacent Pay Grades.
• Overlap gives managers flexibility to move
  employees to higher grades when promoted without
  an overly generous pay raise.
• Too much overlap leads to pay inequity, too
  little overlap causes barriers to promotion and
  inefficiencies
• Compa Ratio
• The Average of all actual salaries in a pay grade
  divided by the midpoint of the range

3
Pay grade Dimensions

• Compa Ratio (Continued)
• Compa Ratios let Compensation Managers view the
  distribution of salaries and identify grades that
  are out of control - too many above, or too many
  below the desired pay policy position in the
  market indicates a problem.
• CR gt 1.10 is quite high
• CR lt .90 is quite low
• CR 1.00 is the ideal
• Red Circle Pay Rates
• Pay Rate above the maximum for special situations
  such as outstanding employee that requires
  executive approval