AG 2017 05 15 - Laserfiche WebLink

Home Browse Search

organization defines the minimum, mid-point, and the maximum of the range. Any one employee may be paid anywhere within this defined range. The function of the midpoint, as in the second type of step system, is that the average performer would be paid at this rate. Also, as in the second step system, new employees would start at the bottom and move to the midpoint as they learned the job and became average performers. Payment above the midpoint can be reserved for above-average performance. Unlike the second step system, the person's wage is not automatically adjusted when the wage structure is adjusted. At this point, the person's performance is reviewed and adjustment is made in relation to that performance. With the increased emphasis on performance in organizations, open-range systems are becoming more popular. They provide more flexibility than a step system in granting pay increases and are more resistant to automatic increases. Finally, open ranges not only may make it easier to reward performance but are also useful when criteria other than performance are to be used. Dimensions of Ranges Ordinarily a wage structure would have a number of pay grades with accompanying rate ranges. This number can be a matter of the policy of the organization. Small organizations tend to have a small number of pay grades accompanied by wide pay ranges, broad definition of job titles, a great deal of movement within pay grades, little overlap between grades and limited promotion to higher grades. Some organizations have many grades,which tends to create an opposite set of characteristics. When examining pay ranges, we determine the total wage structure with the help of three characteristics: the breadth of the rate range, the number of pay grades and the overlap. If one knows the bottom and top of the wage structure,the slope of the pay line,and any two of the three characteristics just cited,the third will be determined. Range Spread. The width of a rate range is the distance from the bottom to the maximum of the ranges. It is the vertical dimension of the range. This spread may be stated in dollar amounts or in percentages. The latter is more common and is used in Springsted studies. The range spread should vary with the criteria for movement within the range. Assuming that performance is the criterion, the spread would represent the opportunity for performance differences in the job. Where ranges are narrow, the assumption is that performance differences are narrow and vice versa. Factors other than potential performance differences may also affect range spread. Organizations that promote intentionally fast encourage narrow ranges, since people do not stay within one grade very long. A wide range is encouraged if adjustments need to be large to be noticed by employees. Higher grade levels tend to have broader ranges for this reason. Broad ranges can accommodate a wide variety of jobs, as well as variable starting rates among jobs. These broad ranges indicate that the process of determining the market rate is not a precise one. Establishing range maximums is particularly difficult. There is some logical maximum value for any job, regardless of how well it is performed. Ideally when this point is reached the person is promoted, either to a new job or by upgrading the tasks of the present job or informed that they have reached the maximum of their assigned range. Unfortunately, promotions may not be possible at the appropriate time and in these cases employees are informed that they have reached the maximum of their assigned salary grade and further salary adjustments will come from general increases if given. Because of the flexibility provided local governments in providing compensation increases whether they be fixed amounts or on a sliding scale performance based increase basis Springsted typically recommends that local government move to an open range system. Page 2 Attachment number 2\n F-5 Page 94