Salary compensation policies and procedures

by on June 25, 2009 · 0 Comment POSTED IN: HR Info Center

Ideas to Think About For Maintaining A Salary Compensation Plan

We live in a litigious society and it’s becoming more and more litigious. I’ve heard a number of reports lately on the news about the number of speeding tickets that are being given out because cities aren’t hitting their budgets and they’re trying to increase revenue.

We’re seeing an uptick in that and there’s a direct inverse correlation to the economy. In other words, as the economy heads south more people are suing each other.

We also want to treat everybody equally. That doesn’t mean we can get by the same salary compensation. But from an HR procedures and policies perspective, we want to make sure that we’re consistent in our application, so on and so forth.

Policies and procedures typically associated with a market-based salary compensation system.

Pay for promotions and demotions.

A lot of employers do not have these policies or they’re not specific enough. Smaller organizations may not even have a promotion policy. But a lot of midsize and larger ones do. They may say we’re going to pay the higher of a 10% increase or the minimum of the new range.

From a demotion perspective, and this needs to be spelled up much more clearly. Did the employee request this demotion? If so, the policy read that their pay will be cut.

On the other hand, if it’s an organization, we go through reorganization. And so, we need to move people around. And as a result, somebody gets demoted. Oftentimes, we will do everything in our power to keep compensation whole. It’s not the employee’s fault or the employee’s request that causing this change. It’s an internal change. And so, we’re going to try to keep people whole.

The alternative is senior management could ask for the receptionist’s job. There’s a lot less stress and responsibility if I can keep my salary compensation whole, why would I not choose to do that?

Edited Remarks from “How to Set Pay Ranges That Are Fair and Effective” by Ed Rataj

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