Salary structure

Elle · October 2004

I am in the process of reevaluating our current salary/wage structure. Without getting into too much detail, I am coming across many positions that are extremely overpaid and way out of the position's salary range.

I don't think there is anything I can do about it at this point. There were many bad decisions made in the past and now many of us are trying to rectify those bad decisions.

Does anyone have any advice on how to handle overpaid positions or even how to handle them once it is annual raise time???

Thanks in advance.

Rockie · October 2004

Elle: What I do in a situation like this is I redline the person so that their base salary will not increase until the range catches up to where they are. Typically, ranges are increased some percent every year.

A company can either choose not to give any increase to these folks or to give the increase in a lump sum or part of a lump sum.

I would definitely notify the individual that they are in this category and what your plans are, whether to freeze raises totally or give in a lump sum as to not continue to inflate the base rate.

Good luck. This is never a popular thing to do!

marc · October 2004

Is this something that is supported by top management? I would think their support would be critical before embarking on this kind of a change. It is logical and defendable, but I think you must have the head-nod from the top. Otherwise you come across in a very bad way and can set yourself up for some very harsh criticism if the wrong people are impacted.

Elle · October 2004

marc: I understand that harsh criticism may arise from this change but part of my job here is to evaluate these situations and then present them to my boss and if he chooses to...do something about it.

I would much rather leave the situation alone, but other bad things can come out of it if it isn't handled.

Thanks for your post.

marc · October 2004

That's good. I was responding to the idea of "red-lining" these folks and letting inflation fix their position on the range. The approach you are taking is a good way to go. I agree with not ignoring it, just wanting to see the idea of having buy-in before proceeding. Good luck.

Elle · October 2004

I couldn't just make those changes on my own even though there are somethings I wish I could do w/o consulting management. Maybe then things actually would take a positive turn, in my non-bias opinion of course.

ritaanz · October 2004

Is this something you have been directed to do by your manager? It is extremely important that this project have the stamp of approval from the higher ups. Without it, you are out on a limb.

The information you gather may be helpful to them but if they decide to ignore it, there is little that you can do.

Elle · October 2004

Haven't you read the earlier posts? If not, it has already been explained that this is something my boss is very interested in resolving, depending on the process though.

ritaanz · October 2004

Of course I read the earlier posts (duh). But.... in your original post or the ones that followed, I did not read where your manager/boss requested this to be done. Perhaps my crystal ball is cloudy today.

ray a · October 2004

We have a few ee's above the max. Typically their next increase is pushed out 18 months and it is minimal - in the 1.5 to 2% range. This gives them at least a token increase and allows the pay scale to "catch up" to them.

Elle · October 2004

ray: That sounds like another good option. Thanks.

KathiHR · October 2004

Elle,

We had exactly the same problem & we've done what Ray suggested...any red-circled could only get 2%or less. But one other point...after years of making salary decisions off the top of their heads & by the "good ole boy" system, our salaries showed gender discrimination as well. My boss didn't want to believe it until I plotted all the salaries against the ranges (blue dots for men, pink for women). For the most part, women consistently fell below mid-point & all red circles were men. Once my boss saw this in black & white, he took the whole idea of bringing salaries back in line a lot more seriously & I had all the cooperation I needed. (Whenever he would start to balk, I suggested he practice explaining those charts to a jury...worked every time!) When looking at salaries that are out of range, its also good to look at groups for disparate treatment that may have occurred over a period of time. For various ingrained reasons, I must watch for gender bias in our organization.

marc · October 2004

Nice idea for the presentation, Kathy. Sounds very effective.

lhill · October 2004

We hired an H-R consultant to analyze our entire salary structure. It was well worth the cost. Not only do we now have definite wage ranges for all categories, but we have a matrix to work with. It works on a sliding scale--the higher you are in your range, the lower percentage you are eligible for. This percentage is based on the annual evaluation. A 2% increase may be a good-size raise for someone who is overpaid, while 4% may not be enough for someone starting out onthe career ladder.

Dutch2 · October 2004

You have already received some very good advice. One additional comment is if you have not already done so, set a salary range for each job position (min. and max.). The only way we can pay anyone more than the max amount for their position is with Board approval. We also take time every two or three years to review the salary ranges to see if any adjustments are needed at the entry level or max. levels for our positions. HR is responsible to alert each Supervisor as each evaluation season draws near of every employee that is near the top of their salary range. The Supervisor then covers this with the emplyoee so no one is surprised.
This does not help your current situation, but may help going forward.
Good luck,
Dutch2

Elle · October 2004

I have already created salary ranges and have presented them to management. I await a response and then will take further action.

Your advice does help, thank you.

LindaE · October 2004

Elle, please let us know how you handle this and the outcome. This is a problem for our company, a construction company founded and managed by good ole boys! We have no women in positions of authority, the guys are paid more and have better benefits, and I need a non-abrasive, non-confrontational way to present this to the powers that be. Of course, that's after our controller approves my policy & procedures manual...

Elle · October 2004

KathiHR's post (no. 10) was very helpful and sounds like she had a similar situation to yours. She outlined the differences in pay among the genders.

Fortunately, I don't have the gender issue, some of our highest paid ee are women and the benefits are all the same here for all levels of ees, I make sure of that (we are also non-profit).

I have some time though to do this project (little less then a year), so I might not get back to you with results right away.

Read the other posts, they were all very helpful.

Salary structure

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