Assignment- Factors Affecting a Company Pay Structure One of the key decisions employers must make is the level of compensation provided to employees. Compensation is a significant cost, and employees are one of the most important assets of the organization. It is important that the organization makes and executes good strategic choices.

Factors Affecting a Company Pay Structure

One of the key decisions employers must make is the level of compensation provided to employees. Compensation is a significant cost, and employees are one of the most important assets of the organization. It is important that the organization makes and executes good strategic choices. To facilitate this process, many organizations think systematically about its job structures for compensation and pay levels for different jobs.

An organization’s job structure consists of relative pay for different functions and different levels of responsibility. It defines, for example, the difference in pay between entry-level and management jobs, as well as different entry-level jobs in different departments, such as in production or accounting. Pay level is the average amount that an organization pays for a particular job and includes wages, salaries, and bonuses. Job structure and pay levels together form the pay structure, a policy that helps the organization achieve goals related to employee motivation, cost control, and the ability to attract and retain talented employees.

This activity is important because it will help you distinguish the various factors that impact an organization’s pay structure. The goal of this activity is to identify the kinds of decisions involved in establishing a pay structure.

Read each scenario, then select the factor to which it best applies.

1. An online retailer revises its pay rate for female workers to make it comparable to the rate paid to male workers in the same job.

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Legal Requirements

Organizational Goals

Market Forces

2. Employees compare their pay to what they think workers in other companies earn for doing the same job.

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Legal Requirements

Organizational Goals

Market Forces

3. The HR director at the new Wilmington Medical Center has devised a competitive pay strategy to attract experienced nurses and technicians.

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Legal Requirements

Organizational Goals

Market Forces

4. Product markets, composed of a company’s competitors, place an upper limit on the pay a firm can offer because of the need to be profitable.

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Legal Requirements

Organizational Goals

Market Forces

5. At Chuck’s Burger Bar, management starts all workers at $8.00/an hour once their training period ends.

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Legal Requirements

Organizational Goals

Market Forces

6. The HR manager at Contemporary Kitchens reviews various job websites on a regular basis to be sure the company’s pay structure is competitive.

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Legal Requirements

Organizational Goals

Market Forces

7. Gina’s Pizzeria requires teenagers to obtain working papers before hiring them.

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Legal Requirements

Organizational Goals

Market Forces

8. The Internet has made it much easier for HR managers to find out what kind of pay and benefits competing companies are paying their employees.

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Legal Requirements

Organizational Goals

Market Forces

9. Smithville’s HR director meets regularly with the company’s CEO to review state mandates for minimum wage and child labor.

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Legal Requirements

Organizational Goals

Market Forces

10. The Bureau of Labor Statistics provides an ongoing report that measures wages, salaries, and benefits paid to the nation’s employees.

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Legal Requirements

Organizational Goals

Market Forces

11. Hourly workers at Bee Gee’s Toy Store worked 50 hours a week during the holiday season and were unhappy they were not compensated fairly.

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Legal Requirements

Organizational Goals

Market Forces

12. Sean walks a fine line when it comes to the pay structure at his marketing services firm. He wants to pay a competitive wage but at the same time he needs to keep costs under control.