• 1. Job Grades & Salary Ranges
    • 2. Compa-ratios (CR) a compa-ratio (comparative ratio) is a measure of the extent which the average salaries in a grade deviate from the target salary. it is used to compare actual averages with the target salary to indicate the extent which salary levels are high or low. the formula for calculating a compa-ratio is: Average of all salaries in the grade --------------------------------------------------------------------------------------------------------------------------------------------------------------- x 100 Midpoint of the salary range a compa-ratio of 100 indicates that the average salary is aligned to the midpoint of the salary grade and no corrective steps need to be taken.
    • 3. Compa-ratios (CR)a compa-ratio of 80 would indicate a need to investigate why average salaries were low and possibly no longer competitive. a compa-ratio of 120 would suggest either there were a lot of long-service staff or that staff were being overpaid, and that increases needed to be modified. compa-ratio analysis can reveal a situation where earnings drift has taken place.
    • 4. Competitive Posture (CP)Competitive Posture is a measure of how competitive the salary is with respect to a given market benchmark. Competitive Posture can be used to measure the competitiveness of both company’s or individual’s salary competitiveness in the market Competitive Posture for a company is computed as: CR = Average of all Salaries in a given Job Grade Market Benchmark Salary Competitive Posture for an individual is computed by: CR = Salary of the individual Employee Market Benchmark Salary
    • 5. Salary AdministrationMinimum Salary Points 1. Minimum salary for the grade 2. Minimum for Job In the market 3. Set compa-ratio at 1 .00 4. Overlap between 60% to 80% 5. Avoid leapfrogging tendencies 6. Allow for realistic minimum
    • 6. Salary AdministrationMaximum Salary Points 1. Maximum salary for the grade 2. Maximum for job in the market 3. Keep salary range short (8 - 12 years) 4. Maxmin ratio between 1.5 to 2.0 5. Set compa-ratio at 1.00 6. Allow for realistic maximum
    • 7. Salary Administration Maximum 1. Maximum salary for the grade 2. Maximum for job in the market 3. Keep salary range short (8 - 12 years) 4. Maxmin ratio between 1.5 to 2.0 5. Set compa-ratio at 1.00 6. Allow for realistic maximum Minimum 1. Minimum salary for the grade 2. Minimum for Job In the market 3. Set compa-ratio at 1 .00 4. Overlap between 60% to 80% 5. Avoid leapfrogging tendencies 6. Allow for realistic minimumMinimum And Maximum Points
    • 8. Streamlining of Salary Ranges (Executives)Effective 1 January 1995* Most typical value corresponds to the working midpoint of the range @ Derived from annual base salary # Dispersion factor of +/ - 25% around Q1 values
    • 9. Job Reference Levels The reference job description prepared to assist non-hay evaluated companies with job matching, are each evaluated and quality assured against Hay’s standards. The evaluations are then slotted into the relevant job unit range which forms the reference levels. These reference levels and corresponding job unit ranges are now standard throughout all Hay’s main remuneration surveys and are detailed below.
    • 10. Job Reference Levels
    • 11. Salary Administration Determining Entry Salary 1. Market value 2. Candidate's existing salary 3. Basic qualifications 4. Additional qualifications 5. Relevant working experience 6. Related working experience 7. Completion of national service 8. Geographical location of company 9. Nature of industry (dirty or hazardous) 10. Minimum salary for job grade 11. Salaries of existing incumbents 12. Re-grossing annual salary
    • 12. Incremental Systems Incremental systems vary from rigid procedures with fixed and predetermined movements through a scale related to age, service in the company or service in the job, to flexible systems where management exercises complete discretion over the award and size of increments without any guidelines. Between the two extremes there is a middle ground of semi-flexible systems.
    • 13. Fixed scales with automatic progression where individuals move through jobs or grades by predetermined steps related to age or service, these could be rate for age scales. Fixed scales are criticized because they do not give enough incentive to effort and the improvement of performance-promotion might only be an award in the longer term, if at all. They are defended because they can be operated with complete impartiality- many people, especially civil servants, question the possibility of determining a fair relationship between merit and reward where the only method of measurement is the subjective opinion of someone’s boss.Incremental Systems
    • 14. Fixed scales with limited flexibility where it is possible to give double or even triple increments to high flyers and withhold increments for poor performers. Semi- fixed scales which allow automatic progression to a ‘merit bar’ at which progression for some people may stop while other can advance at different rates according to performance. Fixed parallel scales which allow for the exercise of more managerial discretion by providing different patterns of incremental progression for different levels of performance, as shown in figure 10.Incremental Systems
    • 15. Variable progression with guidelines where there are no fixed incremental points, but managers are given more or less mandatory instructions on how they should exercise their discretion. The minimum guidelines in this system nay consist of the annual increments that can be awarded for different levels of performance. These may be extended in more rigid systems to give the proportion of staff who should receive a given increment. Variable progression in range without guidelines where management discretion in the award of increments and the determination of their size tends to be restricted only by the maximum of the salary range and the budget they are allowed for salary increases.Incremental Systems
    • 16. Annual IncrementFixed increment system - Fixed $ - Fixed % Variable increment system - Fixed variable - Fixed Plus (merit increment) Flexible increment system - Fixed component + flexible component Matrix system - Salary quadrant vs. performance matrix
    • 17. Salary Progression Curve
    • 18. Increment vs Performance Matrix
    • 19. Market Value Computation
    • 20. Salary Review GuidelinesOverall cost guidelines  in which a budget of x% of payroll is imposed for merit reviews. This is the essential guideline, and managers may be left to distribute the pool as they please, or subject to various degrees of control. Guidelines maximum and minimum increases  managers are told that they cannot give an increase of more than x% or less, on the grounds that too high an increase could produce inequities and too low of an increase is meaningless.
    • 21. Salary Review GuidelinesGuidelines on the relationship between performance and reward  the awards should be related to an overall assessment of performance on a scale such as: Assessment Increment (%) A – Outstanding 9 – 10 B – Good 7 – 8 C – Satisfactory 4 – 6 D – Needs improvement 0% plus counseling* E – Unsatisfactory Termination *only if there is hope of improvement & individual needs encouragement