To determine a salary for an employee or a new hire, an organization would consider multiple organizational factors. Additionally, external equity (market pricing) and internal equity (job analysis) would determine the salary range of a position that is appropriate for a position.
JER HR Group for the past 25 years has been conducting Staff Compensation nationwide for its clients, through a structured process.
- We generally review a staff position in the organization based on their work and their job description. We will review the job description and if one is not available, will prepare job descriptions that define a position’s role, key responsibilities, qualifications and job factors that support successful performance.
- Conduct job analyses to assess if job content and titles are used consistently; identify factors across an organization that can be used to determine appropriate groupings of jobs.
- Design and implement job evaluation systems that provide a clear, rational basis for determining the relative internal value of jobs and creating salary grades or bands.
- Conduct market pricing analyses to determine current salaries in the external labor market for comparable jobs. If needed, design and administer custom compensation surveys to obtain data on current salary, benefits, and compensation and benefits practices from peer organizations.
- Design salary structures (salary grades/bands and ranges) that establish an array of pay opportunities that are consistent with the market value for groups of jobs and reflect internal organization value.
- Develop salary administration procedures that support consistent and equitable decisions regarding staff compensation, including guidelines for merit increases, promotion increases and in-range adjustments.
- Develop staff communications to explain the compensation plan and its various components, and steps to be taken in plan implementation. Lead or facilitate staff and/or supervisory orientation sessions.
- We will create a strategic plan and will also develop implementation plan.
- We develop compensation plan implementation to implement strategic efforts.
- Develop a model for employee talent profile - we develop a model that can be used to assess the talents and competencies of individual employees against job profiles. This will help in developing both S/T and L/T career path.
Staff Compensation - Job Evaluation
Job Evaluation is a systematic approach to determine the internal value of a job in relation to other jobs within an organization. The focus is on the job and not the person in the job. Using our tested methodology that includes “job factors” common to all jobs in an organization, our consultants conduct a systematic comparison between jobs to assess each job’s relative internal value. This results in the grouping of similar jobs and eventual placement of all jobs into job grades or bands based on the “internal equity” of each job.
In creating and applying a formal job evaluation methodology to determine the relative internal value of each job, JER HR Group follows a process to conduct a job evaluation of all jobs in a client organization. Our method to job evaluation is based on a point factor system, which is based on multiple factors fine-tuned by us for the past 20 years and customized to each client, as needed. Our process steps include
- Review job descriptions to understand job content and qualifications
- Identify job factors that allow an organization to differentiate between levels of staff
- Compare the job factors in each job description against JER HR’s proprietary job factors and levels to determine points for each of five factors for each job
- Analyze job evaluation results and recommend groups of jobs with comparable internal value
- Review results with client and modify if needed
We produce a detailed report upon completion of the job evaluation which is used to:
- Create a new job hierarchy or modify the current hierarchy in an organization
- Compare the internal hierarchy with the results of the market analysis of each position
- Establish salary grades or bands and salary ranges for all jobs
Staff Compensation - Market Pricing
To assess how an organization’s salaries compare to those in the external labor market, using published surveys, JER HR database and other sources of data and databases. This will help to determine the overall competitiveness of salary levels in an organization.
JER HR Group is a specialist in market pricing of jobs in both for-profit and non-profit organizations. We have conducted thousands of market pricing analyses of positions nationwide covering a broad range of organizations: foundations, educational institutions, health and human services agencies, public institutions, international organizations and NGOs, associations and publicly traded/privately held for-profit entities.
When conducting an analysis, JER HR Group utilizes multiple data sources across industries and geographical regions. The compensation surveys for each client position are matched to similar positions based on criteria that may include financials, type of industry, and geographical scope of client organization. Additionally, our analysis addresses the following questions in defining the competitive market:
- From which markets do clients hire employees?
- To what markets [organizations] do clients lose employees?
As part of our analysis, in partnership with our clients, we identify peer organizations that matches the client in multiple criteria including but not limited to revenue and growth, size of the organization, geographic range and scope of operations. We obtain market data from published sources, our client database, other related surveys and government filings (IRS 990s, proxy statements, 10-Ks). Data for positions at the director level and above often include regional and national sources, depending on the scope of an organization.
Our approach is as follows:
- Identify criteria for determining appropriate market comparators to conduct the market analysis
- Select a representative sample of benchmark job titles to market price
- Research and analyze market rates for selected job titles (base salary and/or total cash compensation “TCC”)
- Compare current salaries and/or TCC to market and identify degree of variance
- Produce a comparative analysis of each client position to the market
Developing Pay Structure
- JER HR Group breaks the organization’s jobs into job groups.
- Market data for benchmark positions in each proposed level are used to establish salary range midpoints to reflect the organization’s desired level of competitiveness in relation to the market.
- Range widths from minimum to maximum provide the flexibility to pay staff based on their qualifications at hire and to reward performance and recognize professional development throughout their service.
Salary Structure Design
JER HR Group during the compensation consulting study can work with clients in designing their salary ranges for each grade.
- Using the results of Job Evaluation and Market Analysis, create salary grades or bands and salary ranges that reflect a client’s targeted position relative to the market
- Determine optimal approach to manage salary growth in the context of an organization’s culture and hierarchy
- We can help in establishing a salary range per grade. This range will set the minimum and maximum for each grade. We will also design a pay grade chart
- Analyze current incumbent salaries in relation to ranges to determine appropriate adjustments or positioning within the range based on tenure and performance
Salary Administration Procedures
The purpose of Salary Administration procedures is to
- Provide guidelines for managing staff compensation in a consistent and equitable manner
- Describe authority for managing compensation and making compensation decisions
- Reflect organization’s compensation philosophy and applicable components of the compensation plan
- Promote and ensure compliance with best practices
JER HR Group helps clients in designing their Salary Administration guidelines, policies and programs.
- Define general policy development – we help clients in defining their overall salary administration policies and procedures
- Compensation Principles – areas covered include:
- Attracting and Retaining Staff
- Investing in performance
- Pay Equity
- Staff Development
- Assignment of each position to salary grades or bands.
Develop Salary Guidelines
- Define Salary Range
- Based on job evaluation, each position is assigned to a salary grade or band
- Salary Structure is a grouping of salary grades or bands and ranges
- Maintain salary structure
- Assist clients in maintaining their salary structure on an annual or bi-annual to reflect internal equity and the competitive market
- Define position in range: Administer salaries within the salary range based on with three reference points:
- The minimum of the range represents the lowest salary for a job in the range. Typically, minimums are used as a guide for establishing the starting salary of a job.
- The midpoint of the range represents the going rate for the position, or what a fully qualified incumbent would be expected to perform and contribute.
- The maximum of the salary range represents the highest salary that normally would be paid to individuals in the range.
- Assist clients in defining salary guidelines for hiring, promotion, lateral job changes consistent with the following factors:
- Employee credentials and experience compared to the relevant competitive market.
- Employee expected level of performance.
Staff Compensation – FLSA REVIEW
The FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek.
However, Section 13(a)(1) of the FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bona fide executive, administrative, professional and outside sales employees. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than prevailing wages per week. Job titles do not determine exempt status. In order for an exemption to apply, an employee’s specific job duties and salary must meet all the requirements of the Department’s regulations.
For each position selected for FLSA review:
- Review the job description.
- Apply the appropriate FLSA exemption test(s) under current regulations.
- Prepare a chart listing each position title reviewed, with recommendations for exemption status and comments relevant to the determination of the status for each job.
- Integrate the FLSA review results into the Salary Grade and Range Structure.
- Review required qualifications, education and experience to ensure they are consistent with FLSA status.
- Assess whether the FLSA status of jobs within an assigned job grade/band is consistent or if there are outliers.
- If there are outliers, flag them to determine if jobs should be reclassified.