8.4: Illustrate the compensation structure Flashcards
Do job evaluation systems directly determine wage rates?
No. They provide internal equity and a starting point, but salary surveys are needed to express value in dollar terms.
What is used to convert job evaluation results into actual wage rates?
Salary surveys.
What is a salary survey?
A survey of wages paid to employees in other relevant, comparable organizations.
What is the purpose of salary surveys?
To maintain external equity by ensuring wages are comparable to similar jobs in other workplaces.
How is salary survey data typically collected?
Through third-party firms like Willis Towers Watson, Aon, Mercer, and Hay Group, or by organizations themselves.
What is an important caution when using salary survey data?
Ensure that truly comparable jobs are being analyzed—not just job titles.
What are some reasons to use a job evaluation system?
Reduces complexity by using a few salary ranges.
Ensures internal equity.
Informs employees about career requirements.
Supports pay equity under law.
Provides valid market data.
What does a wage curve show?
The current pay rates for various jobs in a pay grade in relation to their ranking.
Why are wage curves useful?
They ensure fair compensation based on skill and education, and can be compared to industry benchmarks.
What are pay grades?
Steps in a compensation system grouping jobs of equal or similar value.
What is a pay range?
A span of wages assigned to a pay grade, allowing progression through the range based on experience or performance.
What is broadbanding?
A compensation approach that collapses many salary grades into fewer, broader bands.
What are benefits of broadbanding?
Encourages lateral skill development.
Reduces focus on narrow pay grades.
Increases flexibility for career development and internal movement.
What is competency-based pay?
Compensation based on an employee’s skills, knowledge, or the number of jobs they can perform—regardless of their job description.
What are other names for competency-based pay?
Knowledge-based pay, skill-based pay, pay for knowledge, multi-skill-based pay.
Why do organizations implement competency-based pay?
To reward employees for expanding skills, promote flexibility, and encourage continuous learning and contribution beyond job descriptions.
What are the benefits of competency-based pay for employers?
Differentiates employee performance
Increases job flexibility
Attracts and retains a more adaptable workforce
Encourages knowledge growth and continuous development
Supports maintaining a competent, skilled workforce
What is an example of how competency-based pay works?
In industrial settings, employees performing more complex tasks (e.g., higher-level welding) receive higher base salaries.
What factors should be considered when introducing competency-based pay?
Link competencies to business objectives
Identify jobs that benefit from the system
Identify impactful competencies
Develop methods to measure achievements
Determine appropriate pay for each competency
Create review mechanisms for effectiveness
How does the Government of Canada define “competency”?
Measurable and observable skills, abilities, or knowledge that enable satisfactory job performance.
