Are you paying fair wages to your employees? Do the wages motivate your employees? Find out by classifying or ranking the job positions in your workplace.
1. You can use several ranking plans:
A. Rank by market. You compare each worker's position to a similar position within the job market. Be careful. Compare job duties, not job titles.
Example: Is the position of customer service representative in your organization worth more or less than what the average customer service representative makes at other organizations?
B. Rank by evaluation. You give a title to each position and rate one position against the others.
Example: Is a customer service representative more important than an administrative assistant, a supervisor, a bookkeeper?
C. Rank by job duties. You break down each job into a cluster of job skills and duties, then award points to these different skills. Add them up, figure out which positions have the most points and deserve the most pay. This method works best for smaller and newer businesses or organizations where each employee will likely wear several different "hats."
Example: A customer service representative in your organization not only answers customer requests. He or she also checks on orders and makes suggestions on inventory. This person comes in on Saturdays and prepares reports for accounting’s use. How do these skills compare with those of other positions?
2. Involve employees in your ranking plan:
Make sure your employees understand that a wage and salary ranking plan will make fair and equitable wages. Answer their questions early.
Will you immediately raise the wages of your customer service representatives if your ranking plan shows they are underpaid? What will happen if your bookkeeper makes too much money? Will you cut their pay, or freeze their income? Answer these questions before you even begin your study. You will have fewer headaches if you find your current compensation is out of line with the market.
3. Problems with ranking plans:
Don't over-emphasize market factors. You could bid up salaries if you pay too much attention to competition. You might pay unfair wages and salaries because of inequities in the job market.
Don't give unfair advantage to some workers. Because your customer service manager happens to be a likable person, don't assume the position is worth more money than the position of operations manager. Emphasizing certain job skills may create pay inequities among employees.
Example: Emphasizing physical strength in your job analysis could favor men. And academic education may or may not be more important than vocational training.
A major challenge in compensating employees is paying those with highly specialized skills. You may not feel such skills deserve the going rates, but the job market conditions may dictate what you pay.
Example: You decide to provide data analytics to your customers through your customer service team. You need to hire someone with data analytics experience. Such a specialized skill as this will probably cost you more than regular customer service representatives.
What to do: Decide what your compensation philosophy will look like and carefully weigh out the various ranking options. For assistance determining the best course of action for your organization and employees, contact VonLehman’s HR Consulting team at email@example.com or 800.887.0437.