Hourly Pay Grade Schedule

Julia

For those of you who have hourly workers, manufacturing, do you have a pay grade schedule and if so, how do you manage the pay levels each year to keep up with inflation. We haven't made changes to the pay levels in a few years, which means that employees are now exceeding the maximum in their grade level. And because they are high in their pay level, it affects the amount of their merit increase. Advice? Thanks, Julia

Pork

Julia: When your majority of the work force per grade level begins to get to a designed CAP; the company should make a decision for a % by grade increase to the scale. I have also used the opportunity to give evaluations and provide a LUMP SUM increase for a whole year devided into 4 equal parts or two equal parts. The first LUMP SUM increase portion would be paid out on the last day of the divided quarter; given the ee is still around then the amount of lup sum increase would be given out, accordingly. When you do this the base remains the same. O/T is a hassal, but must be considered for a calculation on time and a half. Giving the published wage scale an increase is the best and easiest method; but you would not want to do this if your budgetted amount will not take care of your companies need to be wage competitive.

We figured out what we were willing to pay each position and like position, and that is what we pay for that position to start and then we look over time to see where the majority of each level of position is and we decide to raise the level of pay for those like positions. Over time we move the individual based on "performance and meeting a list of individual expectations" to the next level. The most exciting person in a like group of positions based on a work unit, a complex of like work units, and a group of work units over the whole company of 18 work units will be the highest paid and the shining star for others to achieve. We compare ee performance and what we are willing to pay for a particular position based on performance to other individuals. One of my responsibilities as HR is to keep the wage creep under control and never to let there be an individual increase in pay which is out of the recognized wage scale for the position and time of service in that position.

When one starts to get to the top level of a particular group we the company should be looking at that person for a promotion to the next level or we are telling the individual that his/her skills must be improved to the next level or decide to stay at a level and max out on personal wage increases.

It works for us and we very seldom have a wage conflict, everyone knows they must excel to the next level or be prepared to make it at a certain level of pay.

Hope this helps!

PORK

Julia

[font size="1" color="#FF0000"]LAST EDITED ON 05-11-04 AT 01:41PM (CST)[/font][br][br] Pork and Ray: Thanks for the quick response. The information you shared provides me with a starting place. I really like the idea of using the shining star performer as a baseline, because you are right, they are usually up there on the pay scale because of their excellent work performance. I can't thank you enough for your shared experiences and great advice.

ray a

We are in manufacturing and use a pay scale for all ee's, exempt and non-exempt. The scales are reviewed every 2 years at the beginning of the year. Typically, we adjust them by about 4%, but that can vary. We try to make sure everyone is at least just below the max. And as Pork said, those who hit the ceiling are evaluated for promotion to the next level with reasons why or why not.

Don D

Each of our locations conducts a comprehensive wage/benefit survey each July and compiles a major "Review and Recommendation" document that's submitted to corporate. The Review contains all of the survey data, current ranges/benefits and recommendations for wage and benefit adjustments. Typically every range shifts upward annually, based on those recommendations, meaning every range-cap adjusts out by anywhere from 2 to 6 percent. Theoretically, if the trend continues, nobody is ever capped.

Julia

Don: Thanks for the info. We are a French company operating separately from our headquarters which is in Belgium. So we are on our own as far as reviewing local salary surveys, etc. I like the idea of increasing the levels 2-4% every year or two to prevent someone from capping out. It would allow employees to benefit from a better merit increase if there ratio in the pay scale was lower. Thanks again, Julia

Don D

But, the only reason to raise the upper end of a pay grade is to stay with the market for similar jobs in the same labor market area, not to keep people from topping out. If our survey should ever show that other companies in the area are paying lower than us across the board, we would not raise our end steps and people would top out that year. We want to stay competitive so other companies won't 'attract' our employees by paying them more. The state department of labor in your state will provide you with free labor market information, including the prevailing wages for jobs comparable to those in your company. There are also many other sources for such information. Another company in the area is a starting point, or the chamber of commerce or a personnel group in the community.

Julia

You are so helpful. I will check with our state DOL to request labor market info. We are an unusual location as over 85% of our employees are 50+ which puts most of them have 20+ years with this company. With only 6 pay levels that explains why they top out.

ritaanz

In order to keep our compensation system current, we raise the grade rates across the board by the CPI percentage.

This is done in March from the information I get from the Bureau of Labor Statistics for the previous year. They have their information broken down to different areas of the country, so you can get pertinent info for any particular area of interest.