From the course: Human Resources: Compensation and Benefits
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Job-based
- Think about the last time you went to a supermarket. As you strolled through the various sections of the store, did you notice bakers, butchers, stock clerks, produce managers, deli workers, and cashiers? Did you see the store manager? Each of those people is probably paid differently, and this raises an interesting question. How does an organization decide what they will pay for different jobs and how to go about valuing the work? I'm going to explain how various techniques are used to determine the relative worth of jobs. One approach, often used with executive-level jobs, is simply to base each job's pay on what competitors offer for the same work. This is called direct market pricing. Another approach, very common in small organizations with fewer than about ten different jobs, is simply to rank order the jobs in terms of their relative worth to the firm. In a law firm, for example, the highest ranking job might be equity partner followed by non-equity partner, senior associate,…