Designing a Pay Structure Case Study Worksheet

There is one individual task – worth 50 points – due on Friday, February 21st.

Task A: Create a complete job description for the Benefits Manager position using O*NET. 

  1. Visit onetonline.org
  2. Find the Benefits and Compensation Manager job description
  3. Using the model job description that I gave you in class (not the ones included in this case study), create a Benefits Manager job description.
  4. Helpful hints:
    1. There’s not Benefits Manager job description on O*Net. Use the Benefits and Compensation Manager job description and remove any references to compensation.
    2. There may be information required that is not in the O*Net description – you can either find another Benefits Manager job description online to use for additional information, or you can simply make things up.
  5. A printed copy of your Benefits Manager job description (Word doc) is due in class on Thursday, September 18th (not, Sept 18th as stated in your syllabus).

……………………………………………………………………………………………………………………………………………………………

The rest of the case study tasks can be completed by a team of no more than 2 students (or you may work alone).  Together this is worth 100 points of your class grade.   This worksheet must be completed and submitted in class on Friday, February 28th.

Task B: Calculate the job evaluation points for the administrative assistant, payroll assistant, operational analyst, and benefits manager jobs (benchmark jobs).  Provide a rationale for assigning specific degrees to the various jobs.

Four degrees should be sufficient for rating the various jobs. For example, the four degrees for education level are identified as:

1 = High School/GED

2 = Associates

3 = Bachelors

4 = Masters/Graduate

 

Create the rationale for assigning the other five (5) degrees.

Degree of Technical Skills

1 = General Workers

2 = limited practical knowledge

3 = Practical work knowledge

4 = Skilled Labor

Scope of Control

1 = Control over research and development

2 = Control Over Expenditure

3 = Control over salaries Control

4 = Control over policies

Impact of Job

1 = None

2 = Low

3 = Average

4 = High

Degree of Problem Solving

1 = None

2 = Low

3 = Average

4 = High

Task Complexity

1 = None

2 = Low

3 = Average

4 = High

Calculate the job evaluation points for the administrative assistant, payroll assistant, operational analyst, and benefits manager jobs (benchmark jobs).

Administrative Assistant

Compensable Factor Degree (1, 2, 3, 4) Weight Points
Skill (50%)
–          Educational Level 1 25% 25
–          Degree of Technical Skills 1 25% 25
Responsibility (30%)
–          Scope of Control 1 10% 10
–          Impact of Job 2 20% 40
Effort (20%)
–          Degree of Problem Solving 2 10% 20
–          Task Complexity 2 10% 20
TOTAL POINTS 140

 

Payroll Assistant

Compensable Factor Degree (1, 2, 3, 4) Weight Points
Skill (50%)
–          Educational Level 2 25% 50
–          Degree of Technical Skills 2 25% 50
Responsibility (30%)
–          Scope of Control 2 10% 20
–          Impact of Job 1 20% 20
Effort (20%)
–          Degree of Problem Solving 3 10% 30
–          Task Complexity 3 10% 30
TOTAL POINTS 200

 

Operations Analyst

Compensable Factor Degree (1, 2, 3, 4) Weight Points
Skill (50%)
–          Educational Level 3 25% 75
–          Degree of Technical Skills 3 25% 75
Responsibility (30%)
–          Scope of Control 3 10% 30
–          Impact of Job 3 20% 60
Effort (20%)
–          Degree of Problem Solving 3 10% 30
–          Task Complexity 3 10% 30
TOTAL POINTS 300

 

Benefits Manager

Compensable Factor Degree (1, 2, 3, 4) Weight Points
Skill (50%)
–          Educational Level 4 25% 100
–          Degree of Technical Skills 4 25% 100
Responsibility (30%)
–          Scope of Control 3 10% 30
–          Impact of Job 3 20% 60
Effort (20%)
–          Degree of Problem Solving 3 10% 30
–          Task Complexity 3 10% 30
TOTAL POINTS 350

 

 

 

Task C:  Calculate the weighted means (for base pay) for each benchmark job.

Front Desk Receptionist # of Incumbents Average Base Pay Formula
1 $ 21,000.00 =(1/9)*21,000 $  2,333.33
2 $ 22,000.00 =(2/9)*22,000 $  4,888.89
1 $ 18,000.00 =(1/9)*18,000 $  2,000.00
2 $ 21,000.00 =(2/9)*21,000 $  4,666.67
2 $ 18,500.00 =(2/9)*18,500 $  4,111.11
1 $ 17,500.00 =(1/9)*17,500 $  1,944.44
TOTAL 9   $  19,944.44

 

Administrative Assistant # of Incumbents Average Base Pay Formula
4 $ 25,000.00 =(4/24)*25,000  $   4,166.67
4 $ 31,000.00 =(4/24)*31,000  $   5,166.67
3 $ 30,000.00 =(3/24)*30,000  $   3,750.00
5 $ 33,000.00 =(5/24)*33,000  $   6,875.00
4 $ 29,000.00 =(4/24)*29,000  $   4,833.33
4 $ 28,000.00 =(4/24)*28,000  $   4,666.67
TOTAL 24   $     29,458.33

 

 

Payroll Assistant # of Incumbents Average Base Pay Formula
2 $ 35,000.00 =(2/13)*35,000  $   5,384.62
3 $ 34,000.00 =(3/13)*34,000  $   7,846.15
1 $ 35,000.00 =(1/13)*35,000  $   2,692.31
3 $ 35,000.00 =(3/13)*35,000  $   8,076.92
2 $ 36,000.00 =(2/13)*36,500  $   5,615.38
2 $ 29,000.00 =(2/13)*29,000  $   4,461.54
TOTAL 13    $     34,076.92

 

Operations Analyst # of Incumbents Average Base Pay Formula
2 $ 55,000.00 =(2/20)*21,000  $   2,100.00
4 $ 57,000.00 =(4/20)*22,000  $   4,400.00
3 $ 56,000.00 =(3/20)*18,000  $   2,700.00
5 $ 58,500.00 =(5/20)*21,000  $   5,250.00
3 $ 59,000.00 =(3/20)*18,500  $   2,775.00
3 $ 54,000.00 =(3/20)*17,500  $   2,625.00
TOTAL 20    $     19,850.00

 

Benefits Manager # of Incumbents Average Base Pay Formula
1 $ 62,000.00 =(1/10)*21,000  $   2,100.00
2 $ 61,500.00 =(2/10)*22,000  $   4,400.00
1 $ 60,000.00 =(1/10)*18,000  $   1,800.00
3 $ 64,000.00 =(3/10)*21,000  $   6,300.00
2 $ 63,000.00 =(2/10)*18,500  $   3,700.00
1 $ 66,000.00 =(1/10)*17,500  $   1,750.00
TOTAL 10    $     20,050.00

 


 

Task F: Calculate the predicted base pay for each benchmark job.

  Coefficients
Intercept  (a) -23699.88404
X Variable 1  (b) 357.4191052

 

Regression Formula:  Y= a + bX

 

Job a b Job Eval Points (X) Predicted Base Pay (Y)
Front Desk Receptionist -23699.89 357.42 120  $    19,190.51
Admin Assistant -23699.89 357.42 140  $    26,338.91
Operations Analyst -23699.89 357.42 200  $    47,784.11
Payroll Assistant -23699.89 357.42 300  $    83,526.11
Benefits Manager -23699.89 357.42 350  $  101,397.11

 

 

 

Task G: Because your company wants to lead in base pay by 3 percent, adjust the predicted pay rates to determine the base pay rate you will offer for each benchmark job.

Job Predicted

Base Pay

Market Leading Rate
Front Desk Receptionist  $    19,190.51  $                 19,766.23
Admin Assistant  $    26,338.91  $                 27,129.08
Operations Analyst  $    47,784.11  $                 49,217.63
Payroll Assistant  $    83,526.11  $                 86,031.89
Benefits Manager  $  101,397.11  $              104,439.02

 


 

Task H: Create pay grades by combining any benchmark jobs that are substantially comparable for pay purposes. Clearly label your pay grades. 

Job Points Predicted Salary Grade
Front Desk Receptionist 120  $                 19,766.23 3
Admin Assistant 140  $                 27,129.08 3
Operations Analyst 200  $                 49,217.63 2
Payroll Assistant 300  $                 86,031.89 1
Benefits Manager 350  $              104,439.02 1

 

Explain why you combined any benchmark jobs to form a grade.

I combined jobs based on the point range and salary. For example the front desk receptionists and admin assistant have a point range between 100 and 150 and salary range between $15,000 and $30,000. For payroll assistant and benefit manager, point range is between 300 and 350 and salary range is above $50,000.

Task I: Use your answer to Task H to determine the pay range (i.e., minimum and maximum) for each pay grade.

NOTE: 10%  Pay Grade spread for Office/Clerical
30%  Pay Grade spread for Professional Mid-Level and Managers

 

For grades with more than one job, the midpoint is the average of the predicted midpoint (with the 3% increase) of all of the jobs in the grade.

Pay Grades
Jobs in Grade Minimum Midpoint Maximum
Grade 1 $66,664.82 $ 95235.455 $123,806.09
       
Grade 2 $34,452.34 $ 49,217.63 $63,982.92
       
Grade 3 $25,791.70 $ 23447 $21,102.30
       

 


 

Task J: Given the pay structure you have generated, consider the following:

  • Does this pay structure make good business sense? Do you think it is consistent with the organization’s business strategy?

I was not expecting the pay structure to be in the shape that it is in. I mean the pay structure has a good range of salaries for different grades. The firm creates customized and technically proficient electrical engineering plans for regional clients according to the description of the case study. I think that the services of the company are very technical and the gap between the different pay grades is justifiable.

  • What are the implications of this pay structure for other HR systems, such as retention and recruiting?

The most important jobs in the company are predicted to have a good some of salary. This will help in the retention and recruiting of these job titles. These are the personnel who may be on a high demand in the job market, therefore, their retention is more important than the lower grade jobs.