Time for Change in Pay Plans?

You are a newly hired HR professional now working for Jeans Inc. Jeans does not have a formal wage structure or rate ranges and does not use compensable factors. Wages are basically set on prevailing wages in surrounding communities coupled with some attempt for internal equity among workers.

Jeans does not participate in formal pay surveys. Instead, the administrative assistant routinely looks over online job openings and conducts informal surveys among her friends in local organizations. Jeans has always followed a policy of paying employees about 10% above what the assistant determines are the prevailing rates. She thinks this reduces turnover and fosters employee loyalty. The practice is to pay men about 20% more than women for the same job. The assistant explains, “When we hire males, they have families, and they are stronger and can work harder for longer hours.”

Answer the following four questions below. Use question-and-answer (Q&A) format; in other words, include the original question along with your response. Within your answer, support your responses with information from at least 2 reputable sources (library and/or Web-based), and provide the full citation at the end. Use APA format for your references. Share your own personal experiences, readings, and research, where applicable.

1. Compare and contrast two job evaluation methods discussed in this module. Which method (if any) do you recommend for Jeans Inc.? Why?
2. Should Jeans Inc. set up a formal salary structure based on a complete job evaluation? Why or why not?
3. Is the policy of paying 10% more than the prevailing rates a sound one? If so, how could it be determined? If not, what do you recommend?
4. What would you do now with respect to a pay plan process at Jeans Inc.? Why?