New Salary Structure Guidelines

Tracie

We are getting ready to implement a new salary structure for our non-exempt and exempt employees. The VP has asked me to put together some implementation guidelines for the managers. In those guidelines he has asked me to come up with some ideas on how to handle those employees who are green circled (compensated below the minimum of the newly assigned range) and in particular those red circled (compensated above the maximum of the newly assigned range). There are not alot in either catagory but still their situations need to be addressed when it comes to annual review time. The concern is that those who are red circled would be frozen until market value catches up. The VP wonders if we could establish some monetary reward for another year of service without severely jeapardizing the integrity of the structure. For instance, if an employee is 20% above the maximum, they would get nothing but under that maybe a 1-2% increase. Or maybe we need to look at some way of tying the reward to performance score and/or longevity. We use a 1-10 scale. And by the same token how do you handle the green circled ones? I am open to any suggestions no matter how crazy they may seem. We want to implement the new structure and maintain some integrity but also do no think it is fair to just freeze employees because of it especially when they perform satisfactorily or above. And finally, what kind of % of increase do you give to those who are not circled at all. I would be interested in hearing what you all are doing when it comes to rewarding performance. Would you share the pay structure with all employees affected or simply give it to the managers to use as a tool when they do performance and salary reviews? I see salary personnel very different from hourly (the pay scale for hourly is posted) and think that it should be kept private. What do you think? What advice should I include in the guidelines for the managers when they meet with their staffs the first time. The VP wants consistency on what is said and how it is said, how performance is rewarded, and how they manage their group.

Margaret Morford

For the green circled, I would not wait until the review time to address.I would give them an substantial increase and tell them you are going to review them in another 6 months. Review them every 6 mos. until they are at the min. Tell theemployee that you believe that based on the current marketplace and their current job duties,they are not where you believe their compensation should be and that you are going to address it over time. Remember the marketplace moves all the time.

For the red circled, think about giving a lump sum increase. For instance,if the average raise or corporate guideline is 3%, give them a lump sum bonus of 3% of their current base salary. Continue to do thisuntil the range catches up to them. The only downside is that if they leave,you are out the money. However, if they are being paid above market, they are unlikely to find another job paying as much as their current salary.


Margaret Morford
theHRedge
615-371-8200
[email]mmorford@mleesmith.com[/email]
[url]http://www.thehredge.net[/url]