Reaction Paper - 10

SUMMARY OF THE TOPIC:
Pay is important both in its effects on employees and on account of its costs,
organizations need to plan what they will pay employees in each job. Organizations therefore
make decisions about two aspects of pay structure which is the relative pay for different jobs
within the organization. Pay level is the average amount (including wages, salaries and
bonuses) the organization pays for a particular job. Together, job structure and pay levels
establish a pay structure that helps the organization achieves goals related to employee
motivation, cost control, and the ability to attract and retain talented human resources.
Government regulation affects pay structure in the areas of equal employment

opportunity, minimum wages, pay for overtime, and prevailing wages for federal contractors. All
of an organization’s decisions about pay should comply whit the applicable laws. Minimum wage
is the lowest amount that employers may pay under federal or state law, stated as an amount of
pay per hour. Employers must pay higher wages for overtimes, defined as hours worked beyond
40 hours per week.
An organization cannot make spending decisions independent of the economy.

Organizations must keep costs low enough that they can sell their products profitably, yet they
must be able to attract workers in a competitive labor market. Decisions about how to respond
to the economic forces of product markets and labor markets limit an organization’s choices
about pay structures. To compete for talent, organizations use benchmarking, a procedure in
which an organization compares its own practices against those of successful competition.
In developing a pay structure, it is important to keep in mind employees’ opinions about

fairness. Employees evaluate they pay relative to the pay of other employees. Equity theory tells
organizations that employees care about their pay relative to what others are earning and that
these feelings are based on what the employees perceive, what they notice and form judgment
about.
Job evaluation is an administrative procedure for measuring the relative internal worth of
the organization’s jobs. The organization’s pay structure should reflect what the organization
knows about market forces, as well as its own unique goals and the relative contribution of each
job to achieving its goals. Within this structure, they may stat the pay in terms of a rate per hour,
commonly called an hourly wage; a rate to pay for each unit produced, known as a piecework
rate; or a rate of pay per month or year, called a salary.
Pay policy line is a graphed line showing the mathematical relationship between job
evaluation points and pay rate. Pay grades are a set of jobs having similar worth or content,
grouped together to establish rates of pay. Pay range is a set of possible pay rates defined by a
minimum, maximum, and midpoint of pay for employees holding a particular job or a job within a
particular pay grade. Pay differential is an adjustment to a pay rate to reflect differences in
working conditions or labor markets.
REACTION/COMMENTS:
Pay structureshelp companies offer equitable, competitive salaries and map out
employees’ path to growth and higher pay. They enable companies to attract and retain talented
people. It also is an encouragement for employees to improve their performance to have a
higher salary.
Employees may stay working for an employer because the pay is good. But more often,
people look for other jobs because their salaries are not enough and do not reflect the work they
do. If employees believe they are underpaid, sooner or later, they will walk away from the
company.
Salaries reflect the level of skills, experience, qualifications and responsibilities required
for a given position. If an employer does not have a clear idea what an employee is supposed to
do, then the employer will have a hard time determining a fair wage. Determining a fair wage is
not an easy task. There are factor like job requirements, pay standards, the size of the
company, and the geographic location of the organization to consider. The amount an employer
decides to pay his employees should have space for future increases to retain them.
REFLECTION/LEARNING:
The salaries of government employees are transparent. If you look at a certain position
of the employee, you can immediately trace its salary grade. The salary grade tranches are also
a good motivation for the employee to work as best as they can to reach that certain level to get
the salary they want.

Reaction Paper - 10

Uploaded by

Copyright:

Available Formats

Reaction Paper - 10

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Reaction Paper - 10

Uploaded by

Copyright:

Available Formats

SUMMARY OF THE TOPIC:

Government regulation affects pay structure in the areas of equal employment

An organization cannot make spending decisions independent of the economy.

In developing a pay structure, it is important to keep in mind employees’ opinions about

You might also like