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Salary matrix is essential in compensation management, Lecture notes of Compensation and Reward Management

Salary is calculated using salary matrix

Typology: Lecture notes

2018/2019

Uploaded on 07/04/2019

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Compensation Management

Preparing Salary Matrix

  • Salary Matrix is a chart that can be used to determine the annual salary award & rate of salary progression of an individual Employee.
  • A Salary Matrix allows 2 variables to be taken into account in deciding the level of award – - The individual’s performance rating & - The position already attained within the salary range.
  • Ex: An individual with a Fully acceptable performance rating could receive a 5% increase when at the Bottom of the range, a 3% increase at the mid-point & 1% above the mid point.

Steps in preparing a Salary

Matrix

 Develop a matrix that lists each grade, the positions included

in each grade & the no. of levels considered appropriate for each grade.

 Then determine salary ranges for each level.

 Each year, salary schedule should be reviewed to see whether

it needs adjustment.

Importance

  • A salary matrix can provide a relevant structure by which to

assist a human resource department in establishing appropriate pay for both new hires & tenured employees.

  • The employees will know how their pay fits into the schedule

as well as their opportunities for future pay hikes.

  • The staff will also see that the manager’s approach to setting

salaries is unbiased.

  • A salary schedule provides essential structure for practices that

plan to expand or merge

Davis- Bacon act.

  • The act was passed in 1931.
  • It requires contractors & sub- contractors with contracts in excess of $2000 with the federal government to pay their workers a minimum wage that at least equal to the local prevailing wages & to provide them with the local prevailing benefits
Walsh- Healey Public Contracts act
  • The act was passed in 1936.
  • It applies to contracts over $10000 who are involved in either manufacturing or providing goods & services to the U.S government.
  • The firms must pay their workers the federal minimum wage for the first 40 hours they work in a particular week & 1.5 times the minimum wage for any additional hours they work during the week.

FLSA

The objectives of this act involves:

  • Minimum Wage.
  • Child Labor
  • Exempt & Non- Exempt status.
  • Overtime
  • Compensatory Time – off
  • Independent Contractor regulations.
  • Equal pay & pay Equity,
  • Industrial Wage Boards.
  • Wage boards are of 2 types

a. Statutory Wage Board : It means a body set up by law or with legal authority to establish minimum wages & other standards of employment which are then legally enforceable in particular trade or industry to which board’s decision relate b. Tripartite wage Board : It means a voluntary negotiating body set up by discussion between organized employers, workers & government to regulate wages, working hours & related conditions of employment.

Wage board decisions are not final & are subjected to
either executive or judicious review.
  • Pay commissions :
  • 1st: 1946- Conditions of service of central govt
employees
  • 2 nd:1957-norms for fixing a need based minimum
wage setup.
  • 3 rd:1973- System in which pay adjustments will
occur automatically upon an upward movement
in CPI.
  • 4 th: 1986-Examine structure of all central govt
employees, including those in union territories.
  • 5 th: 1996-Recommendations regarding restricting
of pay scales.
  • 6 th:

Significant Compensation Issues

  • Issue of Equal pay for Comparable worth
  • Problem of measuring comparability.
  • Issue of low salary budgets.
  • Issue of Wage- Rate Compression

Compensation as Retention

Strategy

  • Salary & Monthly Wage.
  • Bonus.
  • Economic Benefits.
  • Long – term Incentives
  • Health Insurance.
  • After Retirement.