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Table 3
| Job |
Job Points |
Current Salary |
Compa-ratio(%)
| Proposed Salary:
(Job Points x $150.38c
plus $10,918)
x Compa-ratio |
Salary
Increase/Decrease
(Proposed minus Current) |
| A |
1,200 |
170,000 |
98 |
187,547 |
17,547 |
| B |
900 |
150,000 |
111 |
162,349 |
12,349 |
| C |
750 |
100,000 |
87 |
107,622 |
7,622 |
| D |
500 |
85,000 |
103 |
88,691 |
3,691 |
| E |
300 |
60,000 |
107 |
59,954 |
-46 |
| F |
200 |
40,000 |
93 |
38,124 |
-1,876 |
| Totals |
|
605,000 |
|
644,287 |
39,287 |
These calculations can readily be done in a spreadsheet.
From the totals columns we see that to achieve the objective will require an increase in total payroll from the current $605,000 to $644,287. An increase of 6.5%
However, because the company's practice line is above the market median at the lower end, salaries at the lower end will need to be reduced if the company's practice is to align with the market median. The sizes of these reductions are shown in the right hand column for Jobs E and F.
It would be unusual for salaries to be reduced, so the more practical approach would be to at best hold the salaries for Jobs E and F at their current level. Eventually the market will move forward, carrying the company's practice line with it so long as the company maintains its position at the median of the market. The upward drift of the market will eventually absorb the negative differential for jobs such as E and F.
Consider now the case where the company wanted to adopt a more aggressive stance in the market, aligning its policy with the third quartile of the market. Here the company's practice line would become Salary = Job Points x $164.45 + $11,954 (the market third quartile formula).
Copyright (c) 2006 National Remuneration Centre