Ed Llarena, Jr.
Owner/ Managing Partner
Placement Officer

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I want to know what are the scientific principles involved in fixing executives salary
why there are lot of differences in between the same jobs with different companies even if the the job and role play is the same

From United States, Chicago

There are four (4) basic compensation principles that you should know (or learn) so you will be able to fix properly your company's executive pay (and the entire corporate salary structure of your organization!). These basic principles (which I have repeatedly mentioned in this forum) are: Internal Equity, External Competitiveness, Affordability, and Sustainability.

Internal Equity would refer to the requirement that "jobs whose size are bigger" should be paid more than "jobs that are smaller". The size of jobs can be objectively measured through the use of the "point factor" Job Evaluation (JE) methodology (e.g. HayGroup's Profile Method of Job Evaluation).

When jobs of the same size (and job grades) have different salary rates in an organization, then that company has a problem called "salary distortion", unless the differences can be explained by seniority or performance factors. As we all know, salary distortion creates demoralization and retention/ turnover problems in corporate organizations.

The appropriate action to do is to re-align the rates of those jobs according to the band range of the job grade where such job has been classified pursuant to the results of the JE. But when a job has reached its "maximum rate range" in the job grade where it belongs, then it falls into the category of what we (in HR) call "red circle". The solution here is to do a "re-class" or promote the incumbent to the next higher job grade (if he/ she deserves it).

If you are neophyte in HR, these things can be very difficult for you. You will need specialists and highly skilled professionals to help you. This is the most pressing situation and problems in many companies worldwide. If you want to help your company, you should ask your top management to invest in this area so you can fix your problem.

Feel free to call us anytime (if you have a budget!)

Best regards.

Ed Llarena, Jr.

Managing Partner

Emilla International Consulting Services

From Philippines, Parañaque
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