6. salary adjustment Flashcards
when do we do salary adjustments?
- when we raise the entry salaries
- when you raise the minimum for a salary range
what is the principle of equity when doing salary adjustment?
- maintain internal equity
- preserve salary order
- you can change the gap but you should keep the order
what are the thought process for the 4 common method to do salary adjustment?
- company’s affordability
- whether it will cause major salary anomalies, or whethe anomalies are minor, and can be managed of defended
- the method to be chosen will depend very much on the actual salary profile of the incumbent staff at the time of salary intervention
what are the 4 common methods to do salary adjustment?
- same salary adjustment for all
- compa-ratio approach
- ripple effect
- waterall
what is the same salary adjustment for all method?
all/every employee in the same job grade of same category will get the same money adjustment
what is the objective of compa-ratio approach?
maintain the same position for every staff on the salary range
what is the ripple effect?
how expensive will depend on how many ripples allowed and those nearerr to the centre of change will receive the biggest salary adjustment, those further away will receive smaller until zero
what is the waterfall?
an abrupt approach that can use arbitrary cut-off
what is the purpose of doing the salary adjustment?
attract, retain, motivate and control cost
what does human resource needs to be updated about?
competitive market pressures, cost of living adjustments and organizational factors
what does compensation drives?
future revenues
what do companies analyze?
the value added of pay decision and influence on revenues
what should employers do to stay competitive?
keep compensation current and competitive
