SALARY PROJECT

STRUCTURE

Author: Date: Version: Document Status

HR/CC 17 JANUARY, 2012 1.0 Draft

Table of Contents

1 2 3 4 5 6

Document Purpose .............................................................................................3 Document Stakeholders .....................................................................................3 Scope ...................................................................................................................3 Definitions and Acronyms ..................................................................................4 References ...........................................................................................................4 Process Details....................................................................................................4 6.1 Process Name ................................................................................................4 6.2 Process Stakeholders .....................................................................................4 6.3 Pre-Conditions ................................................................................................4 6.4 Inputs ..............................................................................................................4 6.5 Outputs ...........................................................................................................4 Process Steps .....................................................................................................5 Document Sign-Off ..............................................................................................6

7 8

1 Document Purpose
Compensation is a critical area of human resource (HR) management, and one that can greatly affect employee behavior. To be effective, compensation must be perceived by employees as fair, competitive in the market, accurately based, motivating and easy to understand. Salary Structures are used to classify a companys jobs by compensation value. Jobs Of similar value or worth are assigned to the same classification within the salary structure. Jobs of dissimilar value are assigned to different classifications within the structure. The purpose of this project is to provide a framework for administering employee compensation programme which balances the pay levels for employees inside the company in relation to that of the market.

2 Document Stakeholders
Name/Team
HR/CC Group FC GM CCO CEO

P
x

C
x x x

x x

P = Producer, C= Contributor, R= Reviewer, A= Approver

3 Scope
Most companies determine their employee pay levels by evaluating market pay levels against internal job worth hierarchy. This project would cover the internal factors of job evaluation to determine the relative worth of jobs within the group, the parity between jobs, and the parity between individuals in the same job, in relation to market data

4 Definitions and Acronyms

a. Internal equity- this is a fairness criterion that implies an employers pay practices correspond to each jobs relative value in the organisation b. External equity is a measure of an employers compensation levels compared to others in same industry. Job evaluation- is a formal process used to create job value within an organisation. Job evaluation helps to ensure that pay is internally aligned and perceived to be fair by employees. This project will use the market data and job content approaches.

5 References
Documents required for this process includes a. A comprehensive job description b. Organogram c. Market salary survey (PWC) d. Payroll

6 Process Details
6.1 Process Name6.2 Process Stakeholders: same as document stakeholders 6.3 Pre-Conditions
To begin this project, there is the need to have a working job description for all job roles, up to date personnel records, an organizational structure, cooperation and availability of stakeholders.

6.4 6.5

Inputs- same as point 5 Outputs- as indicated earlier, the establishment of a salary scale will influence

employee attraction and retention. And this can be achieved by improving and maintaining externally aligned pay structures.

7 Process Steps-

There are several steps to designing a pay structure: job analysis; job evaluation; pay survey analysis; pay policy development; and pay structure formation. Each step is briefly explained below.

Step 1: Job Analysis This is the process of studying jobs in an organization. This will be done through the reviewing of job descriptions to include a list of the essential tasks and responsibilities, a description of the work context, and also the knowledge, skills and abilities needed to perform the job. Step 2: Job Evaluation Job evaluation is the process of judging the relative worth of jobs in an organization. The outcome of job evaluation is the development of an internal structure of ranking jobs. Step 3: Pay Policy Identification Pay policy identification is the process of determining whether the Group wants to lead, lag or meet the market in compensation. The pay policy or strategy will likely influence employee attraction and retention. Step 4: Pay Survey Analysis At this stage, we will analyse compensation data gathered from other employers in the Oil and Gas industry. This external pay data (e.g., base pay, bonuses, stock options and benefits) is essential to keep the companys compensation externally competitive within the industry. Step 5: Pay Structure Creation Pay structure creation is the final step, in which the internal structure created in (Step 2) is merged with the external market pay rates (Step 4) in a simple regression to

develop a market pay line. Depending on whether the organization wants to lead, lag or meet the market, the market pay line can be adjusted up or down. To complete the pay structure, pay grades and pay ranges are developed.

8 Document Sign-Off
We, the undersigned hereby agree that this document has described <Name of Process> satisfactorily and has provided adequate information required to ensure <Project Name> meets its success criteria. This process is hereby approved.

Name

Signature

Date