New Compensation Program

Red

We have never had a standardized compensation program. We hire someone at a reasonable wage, they get yearly increases but currently there is no "cap." Pretty soon we'll have a $50,00 per year receptionist. We don't want to be tied down to a published "schedule" of compensation but recognize the need to have some structure.If we come up with a comprehensive plan can we get into trouble (legal or otherwise) if we start people in similar jobs at different rates? What are the implications of having a published compensation plan?

Rockie

I take it that you are a rather small company and have not yet run into issues and problems with people comparing salaries, compression and marketplace differences.

You have run into a common problem where there are no caps on salaries - that a janitor could conceivably make more than the CEO of a corporation!

First, you need to have specific job descriptions for all of your positions and then price the positions according to your marketplace. Every job should have a range of minimum, midpoint and maximum. Yes, every job should have a cap.

As far as the inequities in the present "non'system" you have, I would suggest that individuals over the limit of the ranges should be red circled, which means their salaries are frozen until the scale catches up. In the case of the $50,000/year receptionist, this may never happen. Yes, they will be upset and no, they will not understand the concept that every job has a price tag.

If you don't do this,your salary costs will continue to escalate unnecessarily and those individuals who hold highly responsible jobs making considerably less than the receptionist, will start to rebel and leave the company.

System

If you have different pay for the same work, you could run afoul of the Equal Pay Act. Here's a good article on the subject:
[url]http://www.hrhero.com/q&a/q&a.shtml[/url]
(click on "How do I ensure I'm in compliance with the Equal Pay Act?"

James Sokolowski
Senior Editor
M. Lee Smith Publishers