Designing a Pay StructureName: Andrew GambinoDate: 01/30/2013

A: Create a job description for the Benefits Manager position using O*NETJob Summary: Plan, direct, or coordinate benefit activities of an organization.

Essential Job Tasks* Design, evaluate and modify benefits policies to ensure that programs are current, competitive and in compliance with legal requirements.* Fulfill all reporting requirements of all relevant government rules and regulations, including the Employee Retirement Income Security Act (ERISA).* Direct preparation and distribution of written and verbal information to inform employees of benefits and personnel policies.* Administer, direct, and review employee benefit programs, including the integration of benefit programs following mergers and acquisitions.* Identify and implement benefits to increase the quality of life for employees, by working with brokers and researching benefits issues.

Job Context:Be able to communicate effectively and efficiently via e-mail, telephone, or one-on-one discussions.Also will be organizing, planning, and analyzing work as well as evaluating information.Knowledge, Skills and Abilities* Critical Thinking — Using logic and reasoning to identify the strengths and weaknesses of alternative solutions, conclusions or approaches to problems.* Management of Personnel Resources — Motivating, developing, and directing people as they work, identifying the best people for the job.* Written Expression — The ability to read, communicate, and understand information and ideas while communicating in writing so others will understand.* Problem Sensitivity — The ability to tell when something is wrong or is likely to go wrong. It does not involve solving the problem, only recognizing there is a problem.* Deductive Reasoning — The ability to apply rules to specific problems to produce answers that make sense.* Speech Clarity — The ability to speak clearly so others can understand you and the ability to identify and understand the speech of another person.

B: Calculate the job evaluation points; provide a rationaleJob Evaluation for Front Desk Receptionist

Degree Weight PointsSkill (50%) -Education level 1 25% 25 -Technical skills 1 25% 25Responsibility (30%) -Scope of Control 1 10% 10 -Impact of Job 2 20% 40Effort (20%)

1 10% 10 -Task complexity 1 10% 10Total Points 120Additional Rational:

Job Evaluation for Administrative AssistantDegree Weight Points

Skill (50%) -Education level 1 25% 25 -Technical skills 2 25% 50Responsibility (30%) -Scope of Control 1 10% 10 -Impact of Job 1 20% 20Effort (20%)

2 10% 20 -Task complexity 1 10% 10Total points 135Additional Rationale

Job Evaluation for Payroll AssistantDegree Weight Points

Skill (50%) -Education level 1 25% 25 -Technical skills 2 25% 50Responsibility (30%) -Scope of Control 2 10% 20 -Impact of Job 2 20% 40Effort (20%)

2 10% 20 -Task complexity 2 10% 20Total Points 175Additional Rationale

-Degree of Problem Solving

-Degree of Problem Solving

-Degree of Problem Solving

Job Evaluation for Operational AnalystDegree Weight Points

Skill (50%) -Education level 2 25% 50 -Technical skills 3 25% 75Responsibility (30%) -Scope of Control 2 10% 20 -Impact of Job 3 20% 60Effort (20%)

3 10% 30 -Task complexity 3 10% 30Total Points 265Additional Rationale

Job Evaluation for Benefits ManagerDegree Weight Points

Skill (50%) -Education level 3 25% 75 -Technical skills 2 25% 50Responsibility (30%) -Scope of Control 3 10% 30 -Impact of Job 3 20% 60Effort (20%)

4 10% 40 -Task complexity 3 10% 30Total Points 285Additional Rationale

-Degree of Problem Solving

-Degree of Problem Solving

C1: If there were any outliers, what would you do?I would most liekly ignore any outliers but check if any one company dominates.I would also check if all employers show similar patterns and observe if any employees show above or below average performance.

C2: Calculate the weighted means (for base pay) for each benchmark job.Receptionist # incumbents Total incumb. Average Base Weighted AvgA 1 9 $ 21,000.00 $ 2,333.33 B 2 9 $ 22,000.00 $ 4,888.89 C 1 9 $ 18,000.00 $ 2,000.00 D 2 9 $ 21,000.00 $ 4,666.67 E 2 9 $ 18,500.00 $ 4,111.11 F 1 9 $ 17,500.00 $ 1,944.44

9 $ 19,944.44 Admin. AssistantA 4 24 $ 25,000.00 $ 4,166.67 B 4 24 $ 31,000.00 $ 5,166.67 C 3 24 $ 30,000.00 $ 3,750.00 D 5 24 $ 33,000.00 $ 6,875.00 E 4 24 $ 29,000.00 $ 4,833.33 F 4 24 $ 28,000.00 $ 4,666.67

24 $ 29,458.33 Payroll AssistantA 2 13 $ 35,000.00 $ 5,384.62 B 3 13 $ 34,000.00 $ 7,846.15 C 1 13 $ 35,000.00 $ 2,692.31 D 3 13 $ 35,000.00 $ 8,076.92 E 2 13 $ 36,000.00 $ 5,538.46 F 2 13 $ 29,000.00 $ 4,461.54

13 $ 34,000.00 Ops AnalystA 2 20 $ 55,000.00 $ 5,500.00 B 4 20 $ 57,000.00 $ 11,400.00 C 3 20 $ 56,000.00 $ 8,400.00 D 5 20 $ 58,500.00 $ 14,625.00 E 3 20 $ 59,000.00 $ 8,850.00 F 3 20 $ 54,000.00 $ 8,100.00

20 $ 56,875.00 Benefits ManagerA 1 10 $ 62,000.00 $ 6,200.00 B 2 10 $ 61,500.00 $ 12,300.00 C 1 10 $ 60,000.00 $ 6,000.00 D 3 10 $ 64,000.00 $ 19,200.00 E 2 10 $ 63,000.00 $ 12,600.00 F 1 10 $ 66,000.00 $ 6,600.00

10 $ 62,900.00

D1: Conduct simple regression to create a market line by enteringthe job evaluation points (on the X axis)and the respective weighted average market base pay (on the Y axis) for each benchmark job

x yReceptionist 120 19944.44Admin. Assistant 135 29458.33Payroll Assistant 175 34000.00Ops Analyst 265 56875.00Benefits Manager 285 62900.00

Chart of Market Pay Line

Slope: 238.47Intercept: -6471.5Equation of the line: y= 238.47x-6471.5

E1: What is your R-squared (variance explained)?0.986

E2: Is it sufficient to proceed? Why is a high R-squared a good thing?

Job Evaluation points

Weighted average $

100 120 140 160 180 200 220 240 260 280 3000.00

10000.00

20000.00

30000.00

40000.00

50000.00

60000.00

70000.00

f(x) = 242.959302829355 x − 6984.46935455348R² = 0.984322061403515

Market Pay Line

Market Pay LineLinear (Market Pay Line)

Job Evaluation Points

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It is sufficient to proceed because having a high R- squared means that the job evaluation points were distributed correctly and that more variance is covered by the line.F: Calculate the predicted base pay for each benchmark job

Slope J.E. Points Intercept Predicted=(slope*JE)+InterceptReceptionist 238.47 120 -6471.50 22144.90Admin. Assistant 238.47 135 -6471.50 25721.95Payroll Assistant 238.47 175 -6471.50 35260.75Ops Analyst 238.47 265 -6471.50 56723.05Benefits Manager 238.47 285 -6471.50 61492.45

G: Adjust the predicted pay rates (3%) to determine the base pay rate you will offer for each benchmark jobPredicted 1.03

Receptionist $ 22,144.90 $ 22,809.25 Admin. Assistant $ 25,721.95 $ 26,493.61 Payroll Assistant $ 35,260.75 $ 36,318.57 Ops Analyst $ 56,723.05 $ 58,424.74 Benefits Manager $ 61,492.45 $ 63,337.22

H: Create pay grades by combining any benchmark jobs that are substantially comparable for pay purposes.Clearly label your pay grades and explain why you combined any benchmark jobs to form a grade.Grade A 100-145Grade B 146-185 I combined the receptionist and the administrative assistant because I Grade C 186-265 felt their jobs were worth an equal amount to the company and Grade D 266-300 therefore should be on the same pay grade.Grade E?Grade F?I: Use your answers to Task H to determine the pay range (i.e., minimum and maximum) for each pay grade.

Adjusted pay Average (mid) Minimum MaximumGrade A $ 22,809.25 $ 24,651.43 $ 22,186.28 $27,116.57

$ 26,493.61

Grade B $ 36,318.57 $ 36,318.57 $ 25,423.00 $47,214.14

Grade C $ 58,424.74 $ 58,424.74 $ 40,897.32 $75,952.16

Grade D $ 63,337.22 $ 63,337.22 $ 44,336.06 $82,338.39

Grade E?

Grade F?

Chart of Market Line with Grades and Ranges

127.5 24,651.43 175 36,318.57 265 58,424.74 285 63,337.22

100 120 140 160 180 200 220 240 260 280 300 -

10,000.00

20,000.00

30,000.00

40,000.00

50,000.00

60,000.00

70,000.00

80,000.00

f(x) = 245.624074359215 x − 6665.64084780771R² = 0.999999999999992

Column CLinear (Column C)

Job Evaluation Points

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J: Given the pay structure you have generated, consider the following:J1: Explain the process for putting non-benchmark jobs into the pay structure.

J2: Does this pay structure make good business sense? Is it consistent with the firm's mission?

J3: What are the implications of this pay structure for other HR systems, such as retention and recruiting?

The process for putting non-benchmark jobs into a pay structure is relatively easy and can follow a few steps. Firstly, a task description needs to be created. The purpose of the task description is to compare the job to other previously described and benchmarked jobs. Secondly, job evaluation points can be assigned. Lastly, the job evaluation points can be used to designate a spot for this non-benchmark job on the market pay line and then can be placed to scale.

This pay structure makes excellent sense because it is a scientific methodical way to determine a jobs worth to the company. Each pay grade is overlapping which shows that even if a promotion is awarded to an employee, his or her pay may not necessarily jump but may remain around the same number that they were receiving before. This structure also makes sense becuase employees are being valued fairly and recieve what they deserve/ what their job is worth.

The implications of this pay structure are mostly positive. The fact that this company pays three percent above market pay rate makes this a very attractive company to work for. Employees will value their jobs higher then the jobs of other companies and will strive to keep their jobs by performing up to our standards. Also knowing that our company pays three percent above market rate will solicit our vacant positions, if any do arise, to everyone and the best. Our application pool will be filled with greater talent that would like to work for the company.