Alternatives to Job-Based Pay Structure and Actual Pay


The traditional and most widely used approach to developing a pay structure focuses on setting pay for jobs or groups of jobs. This precise definition of a job's responsibilities can contribute to an attitude that some activities “are not in my job description,” at the expense of flexibility, innovation, quality, and customer service.

Organizations have responded to these problems with a number of alternatives to traditional job-based pay structures. Some organizations have found greater flexibility through delayering, or reducing the number of layers in the organization's job structure, sometimes using broader groupings called broad bands. Another way organizations have responded is toward pay structures that reward employees on their knowledge and skills. Skill-based pay systems are pay structures that set pay according to the employees' levels of skill or knowledge and what they are capable of doing. The human resource department often uses a compa-ratio to compare actual pay to the pay structure, to ensure that policies and practices match.

Read the case below and answer the questions that follow.

Ray Wilson is quality manager of the Tiffin, Ohio plant of North-West Electric, a manufacturer of electrical components. Some North-West locations have implemented various forms of delayering and use of broad bands, something he heard about from the experiences of Tiffin's sister plant in Kinston, North Carolina, at a recent quality conference. This made Ray consider his own situation. His staff is generally effective, but they do not always do well in the highly ambiguous environment of the plant because their defined responsibilities do not incorporate a great deal of flexibility. Additionally, many of them are reluctant to step outside their roles. Due to four levels of employees between his hourly staff and him, Ray sometimes feels overly insulated from the happenings on the shop floor. Now, Ray has to decide whether or not to try this approach with his own staff, and what specifically to do if he does make changes. Using your knowledge about what the advantages and disadvantages of this approach are likely to be, answer these questions about Ray's situation.

1- Having broad bands will help Ray attract better talent because _________

A-good applicants feel comfortable in a hierarchical structure

B-it will encourage employees to make lateral organizational moves

C-increased emphasis on promotions will attract ambitious applicants

D-more detailed job descriptions are available for job applicants

E-he will have more flexibility to combine more assignments into a single layer

2- How will using broad bands help Ray with the fact that his employees are reluctant to step outside their role?

A-Having fewer, broader job descriptions and less emphasis on jobs make the roles more flexible

B-Implementing the broad bands will make the employees feel more comfortable

C-Employees won't seek to gain more experience through lateral moves

D-Getting paid more makes workers happier and more productive

E- be a more “hands-on” manager

3.If Ray decides to use broad bands, what challenge will he have to manage carefully with regard to performance evaluation?

A-He may lose more employees through the increased promotion opportunities

B-He will need to handle more paperwork for more complex evaluations

C-A more informal culture will make evaluation more difficult

D-With less defined responsibilities, he will have to make sure that everyone understands what's expected of them

E-Having fewer managers will make that process more difficult

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