Compensation Ted Mock

Compensation Project Two

Design and Administration of Compensation Plans

HRM831 NZU

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1. What is an outlier and how you would deal with outliers?
An outlier is a data point that is situated or distinctly different from rest of the
data points or main body. In organization or HR management prospective, an
outlier is a person who does not match with job expectation or rest employees’
activities. The outlier is considers as not fit for the organization or point of
elimination.
Various methods to deal with outliers:
- Remove or change outlier with new one or we can say eliminate outlier and hire
new.
- Change the values of outlier or modification in outlier
- Focus on the reason of outlier and compare with other’s patterns

2. Discuss what is meant by job matching. Use the following criteria for job
matches: Benchmark Jobs 1, 2 and 3 must match at 80%; Benchmark Jobs 4 and
5 must match at 70%. Eliminate data that does not meet the criteria. Indicate
what data has been eliminated.
Job matching is the way to determine superior performance in each role by using
objective criteria to match someone with the correct job characteristics.
Benchmarking is comparison of various job rates of our organization with our
planned job rate.
As per this survey benchmarks are (below that are eliminated):
For Job 1,2,3= 80%
Job 4,5 = 70%
Job Eliminated Companies
1 F
2 B, C, I, J
3 A, B, C, H
4 NONE
5 E, F, G
 3. Describe “aging the data” and then age the remaining data. Use an annual
inflation rate of 1.8%. The effective date of your new wage schedule will be
January 1, 2021. Present the aged job rates.
Aging data is a process of taking various survey data, which can be reliable at
different points in time, and adjusting the data to some common point in time, is
time adjusting or aging. Organization need to age the data to make the data
sources compatible with one another. We need an annual inflation rate based on
the region's data from Stats Canada for this.

Aged job rates for Job 1:

Company Job Last Age Inflation Aged

rates Inc. (as per Job
($/hr.) Date Rates
A 15 4/20 Factor
9 01/01/2021)
1.35 15.20
B 15.50 5/20 8 1.2 15.70
C 16 6/20 7 1.05 16.17
D 15.25 7/20 6 .9 15.38
E 16.25 8/20 5 .75 16.37
G 15 10/20 3 .45 15.06
H 14.50 11/20 2 .3 14.54
I 14.25 12/19 13 1.95 14.53
J 16.50 01/20 12 1.8 16.80

Aged job rates for Job 2:

Company Job rates Last Inc. Age Inflation Aged Job

($/hr.) Date (as per Factor Rates
 01/01/2021) (1.8%)
A 17.50 04/20 9 1.35 17.73
D 18.50 07/20 6 .75 18.67
E 16.75 08/20 5 .6 16.87
F 17.25 09/20 4 .45 17.35
G 17.70 10/20 3 .9 17.77
H 17.70 9/20 2 .3 16.95

Aged job rates for Job 3:

Company Job Last Age Inflation Aged

rates Inc. (as per Job
($/hr.) Date Rates
D 19.50 07/20 Factor
6 01/01/2021)
.9 19.67
E 19.80 08/20 5 .75 19.94
F 17.50 07/20 4 .6 17.60
G 18.80 10/20 3 .45 18.88
I 17.90 12/19 13 1.95 18.25
J 19 01/20 12 1.8 19.34

Aged job rates for Job 4:

Company Job Last Age Inflation Aged

rates Inc. (as per Job
($/hr.) Date Rates
A 22 04/20 Factor 01/01/2021)
9 1.35 22.30
B 19 05/20 8 1.2 19.23
C 20 06/20 7 1.05 20.21
D 20 07/20 6 .9 20.18
E 24 08/20 5 .75 24.18
F 19 08/20 4 .6 19.11
G 19.75 10/20 3 .45 19.84
H 23 11/20 2 .3 23.07
I 21 12/19 13 1.95 21.40
J 19.75 01/20 12 1.8 20.10

Aged job rates for Job 5:

Company Job Last Age Inflation Aged

rates Inc. (as per Job
($/hr.) Date Rates
A 25 04/20 Factor 01/01/2021)
9 1.35 25.34
B 22 05/20 8 1.2 23.30
C 24 06/20 7 1.05 24.25
D 25 07/20 6 .9 25.23
H 26 11/20 2 .3 26.08
I 25 12/20 13 1.95 25.50
J 25.50 01/20 12 1.8 25.96

4. Average the data for each benchmark job using the weighted mean. Show
your work and show the weighted mean for each benchmark job.

The weighted mean for benchmark Job 1: Product/No. of Employees

=2334.5/149 =15.67

Company Aged Job rates Number Total product

of
(Aged Job
employe
rate *
A 15.20 es
20 304
B 15.70 25 392.5
C 16.17 5 80.83
D 15.38 2 30.76
E 16.37 15 245.55
G 15.06 20 301.8
H 14.54 11 160
I 14.53 21 305.13
J 16.80 30 504
Total 149 2334.5

The weighted mean for benchmark Job 2: Product/No. of Employees

=1081.78/60 = 17.45
=Company Aged Job rates Number Total product
of (Aged Job
Employe rate *
A 17.73 8 141.84
D 18.67 5 93.35
E 16.87 3 50.61
F 17.35 12 208.2
G 17.77 14 248.78
H 16.95 20 339
Total 62 1081.78

The weighted mean for benchmark Job 3: Product/No. of Employees

=1089.84/58 = 18.80
Company Aged Job rates Number Total product
of (Aged Job
Employe rate *
D 19.67 7 137.69
E 19.94 6 119.64
F 17.60 15 264
G 18.88 9 169.92
I 18.25 7 127.75
J 19.34 14 270.76
Total 58 1089.84

The weighted mean for benchmark Job 4: Product/No. of Employees

=1035.11/49 = 21.12

Company Aged Job rates Number of Total product

Employees (Aged Job rate * Employees)
A 22.30 1 22.30
B 19.23 3 57.69
C 20.21 2 40.42
D 20.18 5 100.9
E 24.18 6 145.08
F 19.11 4 76.44
G 19.84 3 59.52
H 23.07 8 184.56
I 21.40 5 107
J 20.10 12 241.2
Total 49 1035.11

The weighted mean for benchmark Job 5: Product/No. of Employees

=421.45/17= 24.80
Company Aged Job rates Number Total product
of (Aged Job
Employe rate *
A 25.34 1 25.34
B 23.30 3 69.9
C 24.25 5 121.25
D 25.23 2 50.46
H 26.08 1 26.08
I 25.50 3 76.5
J 25.96 2 51.92
Total 17 421.45

5. For the Market Line, indicate the labels and values on the Y -axis and the labels
and values on the X-axis.
 6. You have decided to use the “Match” pay policy. For Pay Line One, indicate the
labels and values on the Y-axis and X-axis. What are the values of the y-
intercept and the slope of the regression line?

Overall, the value of Slope is 0.013322 and value of Y intercept= 12.28

7. For Pay Line Two, using the values in the Job Evaluation System Table below,
indicate the labels and values on the Y-axis and the X-axis.
 8. Using the “regression equation” and data from the Pay Line Two, calculate the
Job Rate for each of the five pay grades.
The regression equation to calculate new job rate is Y= a+bx
a= 12.28
b= 0.01332
JOBS NEW JOB RATES
1 15.54
2 17.27
3 19.61
4 21.60
5 24.27

9. Create the Wage Schedule for the Job Family clearly indicating five specific
wage ranges and overlaps. You determine the spread within each Pay Grade.
The effective date will be January 1, 2021.

Wage Schedule
Effective from January 1, 2021
 PAY MINIMUM 6 12 18 24 30 36
GRADE WAGE
5 21.40 21.88 22.36 22.84 23.32 23.80 24.27
4 19.45 19.88 20.31 20.74 21.17 21.60
3 17.10 17.73 18.36 18.99 19.61
2 15.40 16.02 16.65 17.27
1 15 15.30 15.54

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