Fair Compensation


Am I Being Cheated Out of Pay?

 
Many times I am asked by a company if they are paying someone fairly or an individual will ask me if they are being paid fairly (Am I being cheated)? 

There are many sites available to assist people with checking into what is a fair pay for a particular position.

The key elements for a business and individuals to determine fair pay is understanding what formula should be used to set fair compensation rates!  Even a small business can create a Compensation Plan! A complicated formula is just not needed for small businesses! But having a simple and easy to understand Compensation Plan goes a long way in proving that a company doesn't discriminate in their pay practices.

                              Here is what should be taken into consideration to determine fair compensation:
                                            «   Size of Company (to be explained)
                                            «   Industry
                                            «   Region/Location
                                            «   Position

                                            «   Relevance of Position in Company (Ranking)
                                            «   Market Demands (a shortage of skills)
                                            «   Part-time / Full-time
                                            «   Education Requirements / Training / Certifications
                                            «   Years of Experience
                                            «   Benefits,Travel, Hours,Work, Conditions,  

By the way - all of this must be in a Job Description in order to show there was a process that went into creating Compensation for each position.  A clearly defined process goes a long way in proving no discrimination took place - even for the smallest company with only 3-5 employees!  I often hear "I am doing the same job as my "friend" and they are paid more than I am".  I'm being cheated! Until we are able to compare all of the points we really can't say it's unfair pay!   Examples:

     «  Small town in rural PA needs a General Practitioner / Health Care Provider / Doctor. Will this person's pay be the same
         as someone in New York?
     «  How about a recent graduate with 1 year experience? How about someone with a degree and 10 years experience? 
     «  An applicant with experience, but has been out of the job market for 6 years may have a lower pay.

A small business is great for entry level employees, it gives the employee experience, and allows the company to hire someone that might normally be unavailable to them.  However, the downside is the entry level employee needs to be trained!

I recommend all businesses create a "Compensation Plan" to make sure they are current in their pay practices!

The next part of creating a "Compensation Plan" is to give each position a Rank of importance in the company in addition to Supply & Demand.  Executive Management being #1, Middle Management #2, Team Leaders #3 - Which position can you do without?  Which position can you outsource?

Truck Drivers in a truck driving company will Rank higher than say a Safety Manager.  Safety Managers can be automated or out-sourced, but there is a shortage of Truck Drivers and they are in high demand!!  I would rank a Truck Driver #2 or 3, and a 
Dispatcher as a  a #3 or #4.

Next would be the Level within each Rank.  A Truck Driver with 2 years long haul experience vs 1 with 6 years experience would have a different Level within the Rank.

And so on!!  But the burden of being paid fairly mostly rests on the shoulders of the employee/applicant!



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