Designing a Pay Structure
The analysis process will be crucial in helping the organization adopt a fair pay policy that will enhance competitive advantage in local markets and attract more employees and candidates.
Calculation of Weighted Means
Weighted means represent market information, hence they are adequate. Calculating a simple mean entails adding all the average base pay rates and then finally dividing them by the total number of firms, but that means that big and small firms will be given similar weight if simple means are used (Daoud, 2017). Weighted mean assigns equal weight to every job rate and hence gives data that is more representative.
Administrative Assistant
| Company | Job incumbents | Average base pay ($) |
| A | 4 | 37,500 |
| B | 4 | 32,000 |
| C | 3 | 33,000 |
| D | 5 | 39,000 |
| E | 4 | 36,500 |
| F | 4 | 35,000 |
Weighted average = {(4/24*37,500) + (4/24*32,000) + (3/24*33,000) + (5/24*39,000) + 4/24*36,500) +(4/24*35,000)} = $35,749.99
Operations Analyst
| Company | Job incumbents | Base pay ($) |
| A | 2 | 63,500 |
| B | 4 | 59,000 |
| C | 3 | 61,000 |
| D | 5 | 67,000 |
| E | 3 | 63,500 |
| F | 3 | 65,000 |
Weighted mean = {(2/17*63,500) + (4/17*59,000) + (3/17*61,000) + (5/17*67,000) + (3/17*63500) + (3/17*65,000) = $74,500
Productive Worker
| Company | Job incumbents | Base pay ($) |
| A | 9 | 27,500 |
| B | 12 | 25,000 |
| C | 11 | 31,000 |
| D | 13 | 33,000 |
| E | 8 | 29,000 |
| F | 10 | 28,500 |
Weighted mean= {(9/63*27,500) + (12/63*25,000) + (11/63*31,000) + (13/63*33,000) + (8/63*29,000) + (10/63*28,500) = $29,119
Benefits Manager
| Company | Job incumbents | Base pay ($) |
| A | 1 | 62,000 |
| B | 2 | 57,500 |
| C | 1 | 63,000 |
| D | 1 | 67,000 |
| E | 2 | 62,000 |
| F | 1 | 65,000 |
Weighted mean = {(1/8*62,000) + (2/8*57,500) + (1/8*63,000) + (1/8*67,000) + (2/8*62,000 + 1/8*65,000) = 62,000
Administrative assistant $35,749.99
Operations analyst $74,500
Productive worker $29,119
Benefits manager $62,000
Predicted Base Pay
Predicted base pay is calculated using Microsoft Excel. We can find predicted base pay and use it in constructing a market pay line, allowing the company to comprehend the data as helpful information for setting pay structures. In the Excel worksheet, we create columns with the job evaluation points derived in the first milestone and another column for the weighted average base pay rates that we derived above. We will then use it to generate the regression results.
We can determine the market pay line with the job evaluation point and weighted means by completing the regression analysis. We plug the data into Excel, with the market pay line being represented as Y= a + b(x). Regression analyses are crucial as they enable the compensation personnel to establish the pay rates for given jobs consistent with those paid in the market.
Administrative Assistant:
Y = -13345.43 + 220.56(240)
= 39,588.97
Operations Analyst
Y = -13345.43 + 220.56(370)
= 68,261.77
Productions Manager
Y = -13345.43 + 220.56(180)
= 26,355.37
Benefits Manager
Y = -13345.43 + 220.56(365)
= 67,158.97.
The primary role of the benefits manager is planning, directing, and coordinating health insurance and retirement plans that are offered to the employees. They survey the industry to determine a firm’s competitive position in terms of employee benefits. The personnel develops, installs, and recommends plans and other employee benefits and supervises the existing administration plans (Mahmood & Vulkan, 2018). In this position, cost control procedures are developed to promote maximum development at minimum costs. According to Appendix A, the general job summary listed shows that the personnel oversees all the locations. The candidate must possess good verbal and written skills to enable the employees to communicate appropriately (Blanco-Mesa et al., 2019). Labour laws, math, and logic will enable the personnel to get the best benefits for all employees regardless of their geographical location.
Market Pay Line
After calculating the market pay rate, we can easily construct a market pay line. It helps connect a firm’s job evaluation points with those of the market rates that its other competitors pay. First, we place the positions in descending order, based on the evaluation points. We then create an Excel line graph, with the job evaluation points put on the x-axis and the salaries along the y-axis.
Adjusted Pay Rates
With the market pay line and predicted market rates, it is necessary to adjust it based on its lead pay level strategy. Since the organization intends to lead by three per cent against its competitors, we must adjust the market pay line appropriately. Each predicted pay rate will be multiplied by 1.03 to lead in the market by an extra three per cent.
| Job title | Market pay | Adjusted pay rates |
| Administrative assistant | 39,588.97 | 40,776.64 |
| Operations Analyst | 68,261.77 | 70,309.62 |
| Productions worker | 26,355.37 | 27,146.03 |
| Benefits manager | 67,158.97 | 69,173.74 |
Pay Grades
After constructing the pay rates, we can create pay grades for our pay structure. They characterize the pay groups of jobs that are comparable for payments. Job pay grades ought to share similar pay ranges.
Pay grade A – Productions worker
Pay grade B – Administrative assistant
Pay grade C – Operations analyst and Benefits manager
The basis of a combination of the adjusted pay rates was on the amounts or the adjusted pay rates in the same category. Additionally, the proposed pay grades support the organization’s strategy, which is hiring top talent. The organization chose to add three per cent to ensure the employees are in satisfaction with their pay level. As such, the organization will need to communicate to ensure the changes help retain the top talent.
Pay Range
Pay ranges help create the lower and upper values for all the jobs in the pay grade. Every job will have a lower and upper pay range, which the employer uses to set the pay limits. We use per cent guidelines in determining how far below or above the midpoint the pay range should reach. For instance, we may set the maximum to be 10% more than the midpoint and the minimum to be 10% less than the midpoint.
| Pay grade | Minimum (-10%) | Mid-point | Maximum (+10%) |
| A | 24,431.43 | 27,146.03 | 29,860.63 |
| B | 36,698.98 | 40,776.64 | 44,854.30 |
| C | 62,767.51 | 69,741.68 | 76,715.85 |
References
Blanco‐Mesa, F., León‐Castro, E., Merigó, J. M., & Xu, Z. (2019). Bonferroni means with induced ordered weighted average operators. International Journal of Intelligent Systems, 34(1), 3-23.
Daoud, J. I. (2017, December). Multicollinearity and regression analysis. In Journal of Physics: Conference Series (Vol. 949, No. 1, p. 012009). IOP Publishing.
Mahmood, A., & Vulkan, N. (2018). Do Small Firms Pay to Stay? An Experimental Investigation. Journal of Marketing Behavior, 3(2), 121-152.
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Question 
In this assignment, you will address the external competitiveness component of a pay structure using the specifically designed case scenario. Read the Final
Project Case Study (linked to in your course) for detailed information on the requirements for this project.
Specifically, you must address the critical elements listed below.
Designing a Pay Structure
External Competitiveness:
A. Calculate the weighted means of base pay for each of the following benchmark jobs: administrative assistant, operations analyst, production worker,
and benefits managers from the six companies listed in Appendix B of the final project case study.
B. Calculate the predicted base pay for each of the following benchmark jobs: administrative assistant, operations analyst, production worker, and
benefits manager.
C. Create a market pay line using the following benchmark jobs: administrative assistant, operations analyst, production worker, and benefits manager.
Clearly label your job evaluation points and salaries.
D. Calculate the adjusted pay rates for each benchmark job based on your company’s decision to lead in base pay by 3%.
E. Create pay grades by combining benchmark jobs that are substantially comparable for pay purposes. Clearly label your pay grades and explain why
you combined any benchmark jobs to form a grade.