Dear Yoyi
As promised, attached please find a perfect example of using an Internal Equity Analysis to determine whether an organization should have more than 1 pay structure.
In the first chart, it shows internal equity at its original practice i.e. one pay structure after a job evaluation exercise. Even though the R-squared was a 0.94 (exceeded the minimum of 0.8 and pretty close to 1.0), there are other "tell-tale" signs that indicates "unknowingly" / "unintentionally", the company was adopting a two pay structures.
The signs are:
1. Job Clusters - 1 cluster at Jobs Points from 50 to 250 and another cluster at Job Points 350 all the way to 1050.
2. A "break" in the form of missing grade(s) - there is no jobs in between job points from 251 to 349.
3. Beyond the visual, background information about this company confirmed that the 1st cluster belongs to non-executive jobs (blue collar & clerical) while the 2nd cluster belongs to executive jobs (professional & managerial). From the chart, it is confirmed that the company is paying more aggressive for their executive jobs vs the non-executive jobs.
Because of all the above factors, a second internal equity analysis was constructed, but with a break or with 2 pay structures. Notice the decline in the R-squared for both lines? Although there is a decline, the 2nd chart is a better representation of the pay practice for this company. Therefore, pay recommendations should be based on the 2nd chart instead of the 1st.
Hope my explanation is clear and useful.
Regards
Autumn Jane
From Singapore, Singapore
137As promised, attached please find a perfect example of using an Internal Equity Analysis to determine whether an organization should have more than 1 pay structure.
In the first chart, it shows internal equity at its original practice i.e. one pay structure after a job evaluation exercise. Even though the R-squared was a 0.94 (exceeded the minimum of 0.8 and pretty close to 1.0), there are other "tell-tale" signs that indicates "unknowingly" / "unintentionally", the company was adopting a two pay structures.
The signs are:
1. Job Clusters - 1 cluster at Jobs Points from 50 to 250 and another cluster at Job Points 350 all the way to 1050.
2. A "break" in the form of missing grade(s) - there is no jobs in between job points from 251 to 349.
3. Beyond the visual, background information about this company confirmed that the 1st cluster belongs to non-executive jobs (blue collar & clerical) while the 2nd cluster belongs to executive jobs (professional & managerial). From the chart, it is confirmed that the company is paying more aggressive for their executive jobs vs the non-executive jobs.
Because of all the above factors, a second internal equity analysis was constructed, but with a break or with 2 pay structures. Notice the decline in the R-squared for both lines? Although there is a decline, the 2nd chart is a better representation of the pay practice for this company. Therefore, pay recommendations should be based on the 2nd chart instead of the 1st.
Hope my explanation is clear and useful.
Regards
Autumn Jane
From Singapore, Singapore
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