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Applying this formula in calculations similar to those in Table 3 gives:
Table 4
| Job |
Job Points |
Current Salary |
Compa-ratio(%)
| Proposed Salary:
(Job Points x $164.45c
plus $11,954)
x Compa-ratio |
Salary
Increase/Decrease
(Proposed minus Current) |
| A |
1,200 |
170,000 |
98 |
205,108 |
35,108 |
| B |
900 |
150,000 |
111 |
177,554 |
27,564 |
| C |
750 |
100,000 |
87 |
117,704 |
17,704 |
| D |
500 |
85,000 |
103 |
97,004 |
12,004 |
| E |
300 |
60,000 |
107 |
65,579 |
5,579 |
| F |
200 |
40,000 |
93 |
41,705 |
1,705 |
| Totals |
|
605,000 |
|
704,654 |
99,654 |
This objective will require an increase in total payroll of 16.5%. Budgetary constrains may prevent the organisation from achieving this high objective.
Another scenario to consider is where the organisation has a predetermined budget allocation. The budget may or may not be sufficient to achieve the desired market position. For example suppose that our sample organisation has a preset budget of 5% of the present payroll to allocate. Five percent of the payroll is $30,250 ($605,000 X 0.05). This not enough to reach the median of the market (that requires $39,287, per Table 3). In this case, various policy positions, somewhere between the company's current practice position and the market median will need to be tested until a position is reached that absorbs the allocated budget increase.
5.2 Aligning policy incorporating a performance-based salary review.
Utilisation of this methodology requires that some quantifiable measure of performance in the job be used to determine an individual's level of pay.
A brief review of a quantifiable performance appraisal system is as follows:
A quantifiable performance appraisal system links a person's performance to a position in the salary range for their job. This then determines their pay.
This requires that:
A salary range exists for the job.
Movement through the salary range is performance based.
A system for measuring the performance exits.
The performance measurement system is quantitative.
The outcome of the performance measurement determines the position in the salary range.
Copyright (c) 2006 National Remuneration Centre