Subject: Sample Wage and Salary Administration Policy

Organization: Anonymous
Example of: Standard Policy

Statement of Scope and Purpose

In order to attract and retain highly qualified employees with the
potential to assume responsible positions within the organization
and to fill openings at all levels, it is [Organization Name]’s policy
to maintain consistent and competitive salary ranges based on our
financial position and our organization’s goals. [Organization Name]
seeks to recognize and reward its employees for their talent, skills,
and performance. We are committed to maintaining a work
environment free of discrimination and encourage all employees to
strive to reach their potential.
It is the purpose of the [Organization Name]’s wage and salary
administration policy to define the basic elements of the
compensation program and to detail the standards that must be
observed in fulfilling the program’s requirements. The
compensation program consists of the following basic elements:
1. Written job descriptions
2. Formal job evaluation system
3. Wage and salary structures
4. Compensation surveys
5. Performance evaluation program
6. Written administrative policies and procedures
The compensation program has been designed to provide as
much guidance as possible for supervisors, managers, and other
employees with compensation-related responsibilities. It is the aim
of this policy to encourage these individuals to adhere to the
guidelines that follow while at the same time using their own
judgment and authority to achieve the most effective results.
Following is a brief description of some of the major elements of
the organization’s compensation program.
Job Evaluation
Job evaluation is a mean of determining how jobs should be
ranked on the basis of the training required, the complexity of the
work involved, and the responsibility the employee must bear for
the results of the work. The purpose of our job evaluation plan is
to:
1. Clearly identify each position by job title and description.
2. Establish a series of salary grades; and with the help of salary
surveys, establish salary ranges for each of these grades.
3. Through a careful job analysis, determine the training, initiative,
responsibility, job conditions, and supervision qualifications
necessary for the performance of each job in our organization.
4. Periodically audit changes in job content, and adjust salary
ranges in accordance with area and industry practice.
The Human Resources department is in charge of administering
the job evaluation plan, with the guidance and approval of senior
management. The evaluation committee consists of a
representative from each functional area of the organization. This
committee is responsible for the correct and current evaluation of
all salaried positions covered by the plan.
Occasionally a supervisor may determine that a position that he
or she supervises is either improperly evaluated or has changed
substantially since the time of the initial job evaluation. The
following procedure should be followed when this occurs:
1. The supervisor should notify the Human Resources department
and request a meeting to discuss the position and what action is
required.
2. If the supervisor and the Human Resources department
representative jointly determine that the job has been improperly
evaluated or has changed substantially, the employee who
currently holds the job in question and the supervisor should work
together to fill out a job analysis questionnaire that they feel
portrays the job accurately. A log of activities performed may also
be prepared.
3. The Human Resources department will study the completed job
analysis questionnaire and prepare a new job description covering
all aspects of the position under review.
4. The Human Resources department will evaluate the position
with the help of the supervisor and the evaluation committee. Once
agreement has been reached, the Human Resources department
should change all the necessary records and make any required
salary adjustments.
Salary Review
A salary review procedure has been established for the purpose
of rewarding good performance, for eliminating internal salary
inequities, and for keeping pace with community and industry
norms. All decisions affecting wages, benefits, or other
compensation must be reviewed and approved by the Human
Resources department to make sure compensation is administered
in a fair and consistent manner.
Two types of salary reviews will be held:
1. Orientation reviews. These will be held at the end of the
orientation period, which is 3 months for hourly and nonexempt
employees and 6 months for exempt employees.
2. Annual reviews. These will be held on each employee’s
anniversary date of hire to evaluate his or her performance and to
make any required salary adjustments.
A newly promoted employee may be granted a pay increase if
the supervisor and the Human Resources department feel it is
necessary to reflect the employee’s qualifications and increased
responsibilities. The next increase will be scheduled on the annual
review date.
When an employee’s grade is increased or decreased due to a
reevaluation without change in job content, a change in pay rate
should be considered. If the employee’s position is evaluated to a
higher grade, the rate will be increased to reflect the same level in
the new grade range as the current rate was in the former grade
range. If the employee’s position is evaluated to a lower grade, the
rate will be held unless it is above the maximum of the new grade
range, in which case, it will be adjusted to the maximum.
When an employee is demoted, his or her rate will be continued,
provided it does not exceed the maximum of the salary range of
the classification to which he or she has been demoted. If the rate
does exceed the maximum of this classification, it will be adjusted
downward to the new maximum.
Definitions
The following definitions are used to establish a common
understanding of the various steps that may be taken in carrying
out the compensation program:
1. New hire: The employment of an individual who has not
previously been employed by the organization or a former employee
whose rights to active employment have expired.
2. Regular employee: A new employee who has completed the
orientation period.
3. Promotion: The changing of an employee from a job
classification in one salary grade to a job classification in a higher
salary grade.
4. Reevaluation: The changing of an employee from a job
classification in one salary grade to a job classification in a higher
salary grade due to improper evaluation without change in job
content.
5. Demotion: The changing of an employee from a job
classification in one salary grade to a job classification in a lower
salary grade.
6. Lateral change in classification: The changing of an employee
from a job classification in one salary grade to another job
classification in the same salary grade.
 7. Transfer: The changing of an employee from one department or
work group to another where the individual reports to a new
supervisor.
8. Merit increase: A salary increase granted to an employee on the
basis of improved performance.
9. Structure increase: The increasing of all salary ranges to reflect
changes in the marketplace.
10. Salary surveys: An analysis of overall rates of pay in relation to
what others in the community and industry are paying.
Employee Change Notice (ECN)
A formal procedure has been established for recording
temporary or permanent changes in an employee’s rate,
classification, and/or organizational segment. The ECN is the only
official method by which supervisors can be assured that their
recommendations for changes will be recorded on all pertinent
records.
1. New hires: At the time of hire, an ECN is prepared in duplicate
by the Human Resources department and forwarded to the
supervisor for necessary signatures. The signed forms are returned
to the Human Resources department and then forwarded to the
Payroll department, where the information is recorded. The original
of the form is permanently filed in the employee’s personnel file
and the copy is returned to the supervisor as confirmation of the
hire.
2. Status changes: All changes in the status of an employee
occurring within or between departments will be recorded on an
ECN prepared in duplicate by the appropriate department. The
signed forms are returned to the Human Resources department and
the
procedure is then the same as that for a new hire.
Any contemplated changes in an employee’s status should first
be reviewed with the Human Resources department before such
changes are discussed with the affected employee. Advance
discussion and agreement on the action to be taken can head off
confusion and morale problems.