Designing a Pay Structure Name: Andrew Gambino Date: 01/30/2013 A: Create a job description for the Benefits Manager

position using O*NET Job Summary: Plan, direct, or coordinate benefit activities of an organization. Essential Job Tasks * Design, evaluate and modify benefits policies to ensure that programs are current, competitive and in compliance with legal requirements. * Fulfill all reporting requirements of all relevant government rules and regulations, including the Employee Retirement Income Security Act (ERISA). * Direct preparation and distribution of written and verbal information to inform employees of benefits and personnel policies. * Administer, direct, and review employee benefit programs, including the integration of benefit programs following mergers and acquisitions. * Identify and implement benefits to increase the quality of life for employees, by working with brokers and researching benefits issues. Job Context: Be able to communicate effectively and efficiently via e-mail, telephone, or one-on-one discussions. Also will be organizing, planning, and analyzing work as well as evaluating information. Knowledge, Skills and Abilities * Critical Thinking Using logic and reasoning to identify the strengths and weaknesses of alternative solutions, conclusions or approaches to problems. * Management of Personnel Resources Motivating, developing, and directing people as they work, identifying the best people for the job. * Written Expression The ability to read, communicate, and understand information and ideas while communicating in writing so others will understand. * Problem Sensitivity The ability to tell when something is wrong or is likely to go wrong. It does not involve solving the problem, only recognizing there is a problem. * Deductive Reasoning The ability to apply rules to specific problems to produce answers that make sense. * Speech Clarity The ability to speak clearly so others can understand you and the ability to identify and understand the speech of another person.

B: Calculate the job evaluation points; provide a rationale Job Evaluation for Front Desk Receptionist Degree Weight Skill (50%) -Education level 1 25% -Technical skills 1 25% Responsibility (30%) -Scope of Control 1 10% -Impact of Job 2 20% Effort (20%) -Degree of Problem Solving 1 10% -Task complexity 1 10% Total Points Additional Rational: Job Evaluation for Administrative Assistant Degree Weight Skill (50%) -Education level 1 25% -Technical skills 2 25% Responsibility (30%) -Scope of Control 1 10% -Impact of Job 1 20% Effort (20%) -Degree of Problem Solving 2 10% -Task complexity 1 10% Total points Additional Rationale Job Evaluation for Payroll Assistant Degree Skill (50%) -Education level 1 -Technical skills 2 Responsibility (30%) -Scope of Control 2 -Impact of Job 2 Effort (20%) -Degree of Problem Solving 2 -Task complexity 2 Total Points Additional Rationale

Points 25 25 10 40

10 10 120

Points 25 50 10 20

20 10 135

Weight 25% 25% 10% 20%

Points 25 50 20 40

10% 10%

20 20 175

Job Evaluation for Operational Analyst Degree Skill (50%) -Education level 2 -Technical skills 3 Responsibility (30%) -Scope of Control 2 -Impact of Job 3 Effort (20%) -Degree of Problem Solving 3 -Task complexity 3 Total Points Additional Rationale Job Evaluation for Benefits Manager Degree Skill (50%) -Education level 3 -Technical skills 2 Responsibility (30%) -Scope of Control 3 -Impact of Job 3 Effort (20%) -Degree of Problem Solving 4 -Task complexity 3 Total Points Additional Rationale

Weight 25% 25% 10% 20%

Points 50 75 20 60

10% 10%

30 30 265

Weight 25% 25% 10% 20%

Points 75 50 30 60

10% 10%

40 30 285

C1: If there were any outliers, what would you do? I would most liekly ignore any outliers but check if any one company dominates. I would also check if all employers show similar patterns and observe if any employees show above or below average performance. C2: Calculate the weighted means (for base pay) for each benchmark job. Receptionist # incumbents Total incumb. Average Base A 1 9 $ 21,000.00 B 2 9 $ 22,000.00 C 1 9 $ 18,000.00 D 2 9 $ 21,000.00 E 2 9 $ 18,500.00 F 1 9 $ 17,500.00 9 Admin. Assistant A 4 24 $ 25,000.00 B 4 24 $ 31,000.00 C 3 24 $ 30,000.00 D 5 24 $ 33,000.00 E 4 24 $ 29,000.00 F 4 24 $ 28,000.00 24 Payroll Assistant A 2 13 $ 35,000.00 B 3 13 $ 34,000.00 C 1 13 $ 35,000.00 D 3 13 $ 35,000.00 E 2 13 $ 36,000.00 F 2 13 $ 29,000.00 13 Ops Analyst A 2 20 $ 55,000.00 B 4 20 $ 57,000.00 C 3 20 $ 56,000.00 D 5 20 $ 58,500.00 E 3 20 $ 59,000.00 F 3 20 $ 54,000.00 20 Benefits Manager A 1 10 $ 62,000.00 B 2 10 $ 61,500.00 C 1 10 $ 60,000.00 D 3 10 $ 64,000.00 E 2 10 $ 63,000.00 F 1 10 $ 66,000.00 10

Weighted Avg $ 2,333.33 $ 4,888.89 $ 2,000.00 $ 4,666.67 $ 4,111.11 $ 1,944.44 $ 19,944.44 $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 4,166.67 5,166.67 3,750.00 6,875.00 4,833.33 4,666.67 29,458.33 5,384.62 7,846.15 2,692.31 8,076.92 5,538.46 4,461.54 34,000.00 5,500.00 11,400.00 8,400.00 14,625.00 8,850.00 8,100.00 56,875.00 6,200.00 12,300.00 6,000.00 19,200.00 12,600.00 6,600.00 62,900.00

D1: Conduct simple regression to create a market line by entering the job evaluation points (on the X axis) and the respective weighted average market base pay (on the Y axis) for each benchmark job Job Evaluation points x 120 135 175 265 285 Weighted average $ y 19944.44 29458.33 34000.00 56875.00 62900.00

Receptionist Admin. Assistant Payroll Assistant Ops Analyst Benefits Manager

Chart of Market Pay Line

Market Pay Line

70000.00 60000.00 50000.00 40000.00 30000.00 20000.00 10000.00 0.00 0 50 100 150 200 250 300 Job Evaluation Points Market Pay Line Linear (Market Pay Line) y = 242.96x - 6984.5 R = 0.9843

Slope: 238.47 Intercept: -6471.5 Equation of the line: y= 238.47x-6471.5 E1: What is your R-squared (variance explained)? 0.986 E2: Is it sufficient to proceed? Why is a high R-squared a good thing? It is sufficient to proceed because having a high R- squared means that the job evaluation points were distributed correctly and that more variance is covered by the line.

Salary

F: Calculate the predicted base pay for each benchmark job Slope J.E. Points Intercept Predicted=(slope*JE)+Intercept Receptionist 238.47 120 -6471.50 22144.90 Admin. Assistant 238.47 135 -6471.50 25721.95 Payroll Assistant 238.47 175 -6471.50 35260.75 Ops Analyst 238.47 265 -6471.50 56723.05 Benefits Manager 238.47 285 -6471.50 61492.45

G: Adjust the predicted pay rates (3%) to determine the base pay rate you will offer for each benchmark job Predicted 1.03 Receptionist $ 22,144.90 $ 22,809.25 Admin. Assistant $ 25,721.95 $ 26,493.61 Payroll Assistant $ 35,260.75 $ 36,318.57 Ops Analyst $ 56,723.05 $ 58,424.74 Benefits Manager $ 61,492.45 $ 63,337.22 H: Create pay grades by combining any benchmark jobs that are substantially comparable for pay purposes. Clearly label your pay grades and explain why you combined any benchmark jobs to form a grade. Grade A 100-145 Grade B 146-185 I combined the receptionist and the administrative assistant because I Grade C 186-265 felt their jobs were worth an equal amount to the company and Grade D 266-300 therefore should be on the same pay grade. Grade E? Grade F? I: Use your answers to Task H to determine the pay range (i.e., minimum and maximum) for each pay grade. Adjusted pay Average (mid) Minimum Maximum Grade A $ 22,809.25 $ 24,651.43 $ 22,186.28 $27,116.57 $ 26,493.61 Grade B $ 36,318.57 $ 36,318.57 $ 25,423.00 $47,214.14

Grade C

58,424.74 $

58,424.74 $

40,897.32

$75,952.16

Grade D

63,337.22 $

63,337.22 $

44,336.06

$82,338.39

Grade E?

Grade F?

Chart of Market Line with Grades and Ranges

80,000.00

70,000.00

60,000.00

127.5 175 265 285

24,651.43 36,318.57 58,424.74 63,337.22

y = 238.47x - 6471.50 R = .986

50,000.00 Salary

40,000.00

Series1 Linear (Series1)

30,000.00

20,000.00

10,000.00

0 50 100 150 Job Evaluation Points 200 250 300

J: Given the pay structure you have generated, consider the following: J1: Explain the process for putting non-benchmark jobs into the pay structure. The process for putting non-benchmark jobs into a pay structure is relatively easy and can follow a few steps. Firstly, a task description needs to be created. The purpose of the task description is to compare the job to other previously described and benchmarked jobs. Secondly, job evaluation points can be assigned. Lastly, the job evaluation points can be used to designate a spot for this non-benchmark job on the market pay line and then can be placed to scale.

J2: Does this pay structure make good business sense? Is it consistent with the firm's mission? This pay structure makes excellent sense because it is a scientific methodical way to determine a jobs worth to the company. Each pay grade is overlapping which shows that even if a promotion is awarded to an employee, his or her pay may not necessarily jump but may remain around the same number that they were receiving before. This structure also makes sense becuase employees are being valued fairly and recieve what they deserve/ what their job is worth.

J3: What are the implications of this pay structure for other HR systems, such as retention and recruiting? The implications of this pay structure are mostly positive. The fact that this company pays three percent above market pay rate makes this a very attractive company to work for. Employees will value their jobs higher then the jobs of other companies and will strive to keep their jobs by performing up to our standards. Also knowing that our company pays three percent above market rate will solicit our vacant positions, if any do arise, to everyone and the best. Our application pool will be filled with greater talent that would like to work for the company.