Employee Ranking Systems LO16745

Wed, 28 Jan 1998 22:25:50, -0500

Replying to LO16676 --

In response to Patricia's questions on the design of an employee pay
system (LO16676)

> - employees have been asking for career paths and pay ranges tied to

Create salary grade structures that represent career ladders.

>- several folks in critical positions have demanded big pay raises
>rather than the 4-7% they had >planned (based on local merit raise info
>they had) so they have had to pay some 15%+ raises to >keep critical
>positions/customers filled

The salary structure should reflect the value of each position to the
company. Also, you probably want the salary structure to be comparable to
other companies (you are in competition with them for your employees) ..

> - they see performance appraisals as now needing to be formal
>documents used for pay purposes to keep themselves covered legally, meet
>employee expectations.

Develop an optional indiviudal development process that is separate from
the pay process. Input feedback from customers, subordinates, peers via a
360 process or other means. Select managers who demonstrate an
ability/desire to coach/develop employees (those who coach sports would
make good candidates).

Challenge that unquestioned legal assumption. Contact Saturn's best
practices consulting group (they are located in Springfield, Tennessee).
They share their best practices with anyone interested for a small, very
reasonable fee. Last I talked with them, they had no need of a
performance document to satisfy legal requirements (they do document their
disciplinary process for the legal reasons). They do not peer rank (ie,
one through thirty). As I recall, their individual performance pay system
(just a part of their overall pay system, which significantly emphasizes
team work and company-level performance) mirrors Deming's philosphy.
Most are rated as doing a good job (performing within the system). Some
are rated as doing an outsanding job (performing above the upper system

>- the senior management/owners are from large corporations/government
>agencies and want to build a 'great' company that is known for its

Figure out a way to share annual profit (award fees, whatever) based on
company-wide performance with all employees.


Geof Fountain tfyy93a@prodgy.com

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