Development of a Formal Pay Plan System 

A transportation company had a good track record in retaining their employees.  Each year since the mid- 90’s, they were giving all of their employees cost of living increases and as a result, their labour costs had significantly increased.  Over the last few years, they noticed that their top performers were becoming de-motivated because they were at the same rate as the satisfactory performers.  They also noticed that by giving their employees higher rates each year, it did not necessarily improve their performance.

 

THE SOLUTION?

The company’s goal was to provide a competitive, compensation package and to reward employees for contributing to their company’s success while managing labour costs.  We developed a formal compensation plan with a pay grade structure and we used the Toronto Board of Trade Survey data to competitively position all the pay grades.


The Bottom Line Impact

The tool that was used to develop the formal compensation plan was the Point Factor Comparison Method.  The benefits of using this method are that it is objective, numerical, documented and reliable.  The end result is that employees know what is valued in their jobs and managers have a system to manage labour cost.  They are also now compliant with Pay Equity legislation since we  developed a pay equity plan which is a legal requirement for companies with 10 or more employees.

 

HRPAR