Lead and Lag Pay scales regarding “fair
compensation”
Reply to the following post:
In defining what fair compensation is for my employer, I
would begin by recommending to my organization the four forms of equity:
external, internal, individual, and procedural (Dressler, p.353). Understanding
these concepts are an important first step to understanding what fair compensation
actually is. The main take away of this recommendation would be that a tiered
pay system is in affect where lower ranking employees receive a lower wage
than, let’s say, managers. It is important that each employee is being
compensated according to the pay structure assigned to his/her duties based on
responsibility and position. After designing a pay tiered pay scale, we can
then move to the web, sites like salary.com can help us identify what the fair
wage for specific jobs is.
Several factors determine the design of any pay plan which
helps us define fair compensation: company strategy and policy, equity, legal,
and union. There are other items to consider, Direct Financial Payments (wages,
salaries, incentives, commissions, and bonuses) and Indirect Financial Payment
(financial benefits like employer-paid insurance and vacations) (Dressler,
p352). The impression across the workforce has to be seen as fair pay for fair
work, otherwise employees will become disgruntled and, at the very least, display
behaviors that are not in line with our strategic aims (known as equity
theory).
We should also try and simplify the process, don’t make it
difficult. Consider these three steps: pay a fair wage but normally never pay
more than a 15 percent salary markup over companies with the same work; pay
benefits in proportion to what they are getting paid in the first place;
finally provide incentives for people who do more than what is expected of them
or bring in new business as soon as possible, reward what you want to reinforce
said the President of HRthatWorks, Don Finn.
To test my procedures I would recommend to use salary
surveys, job analysis and comparison of each job to maintain internal equity,
performance appraisals and incentive pay to maintain individual equity, we can
administer surveys to see how employees feel about their wage, are they feeling
that their wage is fair or not (Dressler, p. 353)”? Another option would
be to just ask the employee during their reviews.
