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Pay Structures

The salary and job evaluation information below is from a large accounting firm that is having financial troubles due to many accountants leaving the firm for higher paying jobs elsewhere. Based on the job evaluation and salary information given in the table below, do the following tasks:

(1) Design one or more base pay structures that incorporate the job evaluation information and the salary information. To show the pay structures you design, draw a diagram of each pay structure you created and identify on the diagram the following elements:
a. Market pay line(s) (you can draw a line that best fits the points, or use Excel or some other spreadsheet program to calculate the regression line)
b. Pay policy line(s)
c. Pay grades
d. Pay ranges
e. Where the jobs in the table are located in the pay structure (identify jobs by the letter in first column of the table below).

(2) Explain in detail your rationale (including any assumptions you made about compensation strategies) for the:
a. Number of pay structures
b. Number and sizes of the pay grades in the structure(s)
c. Sizes of the pay ranges in the structure(s)
d. Pay range overlaps in the structure(s)
e. Pay policy or policies that you chose
f. Describe any changes you made to the job points to better integrate the internal job structure and external pay information in your pay structures.

Job Title Job Points Mean Minimum Maximum
Accountant 525 $ 3,974 $ 3,609 $ 4,949 A
Accounting Clerk 340 $ 1,695 $ 1,663 $ 2,140 B
Accounting Technician 440 $ 2,422 $ 2,044 $ 2,833 C
Associate Accounting 475 $ 2,769 $ 2,394 $ 3,127 D
Professional
Associate Director 750 $ 5,985 $ 5,246 $ 7,478 E
of Accounting
Bookkeeper 310 $ 1,693 $ 1,639 $ 2,215 F
Director, Chief 1000 $ 9,811 $ 7,935 $ 11,692 G
Financial Officer
Finance Associate 350 $ 1,907 $ 1,731 $ 2,154 H
Financial Analyst I 580 $ 4,082 $ 3,626 $ 4,941 I
Financial Analyst II 420 $ 2,449 $ 2,108 $ 2,804 J
General Clerk I 285 $ 1,678 $ 1,579 $ 2,013 K
General Clerk II 250 $ 1,663 $ 1,565 $ 1,987 L
Manager, Associate 700 $ 5,851 $ 4,918 $ 6,991 M
Fiscal Officer
Senior Accounting 450 $ 2,540 $ 1,810 $ 2,596 N
Technician
Senior Bookkeeper 380 $ 1,966 $ 1,696 $ 2,323 O
Sr. Accounting Clerk 400 $ 2,149 $ 1,902 $ 2,552 P
Supervisor Section 625 $ 4,238 $ 3,712 $ 5,247 Q
Chief, Accounting

Solution Preview

Please see attached excel file.

I calculated the Mean Salary / Job Points and came up with ratios of what the current Job Points were worth in real dollar terms based on the survey that was conducted. Using these results, I decided to break up the jobs into three pay categories: Employee, Senior Employee and CFO. This is because the jobs naturally seemed to have three different tiers for these Mean Salary / Job Points ratios. Managers were significantly higher than regular employees and the ...

$2.19