Operative Compensation Structure

Assignment #3: Building a Pay Structure


You are the Compensation Analyst for Big Blue Construction Company. Your Company is primarily focused on concrete construction projects. Recently, the President has announced the acquisition of a small quarry to help Big Blue become more vertically integrated on the supply side. The recently acquired company has Operative jobs that have never existed in your Company before. These jobs include Mill Worker, Welder, Tool Grinder, Mixer, etc.

The President is looking to create a new Operative Compensation Structure for these new positions without disturbing the already established structures at Big Blue.

Your boss has asked you to create this new Operative Compensation Structure. He has asked you to determine the appropriate range spreads and range overlap. His only instruction is that the new structure must contain 10 grades and start at $12.50 as the minimum of the first grade. You will be presenting your new Compensation Structure to the President of Big Blue Construction Company.


Use the template below to create the new Operative Compensation Structure. You are responsible for determining the Range Spread and overlap for your structure.

Your new structure and recommendation should be submitted in the form of a formal report to the President of Big Blue Construction Company. Your report should be professional in nature and scope and should include the new Compensation structure as well as the justification of how the structure was designed.

Your report should be no more than 3 pages in total length and include proper references where necessary.


















Helpful Information

Read Chapter 8!!

It is not necessary to know market data on these jobs in order to create a salary structure. Please do not research pay data on these jobs for this assignment.

A Pay Structure represents pay rate differences for jobs of unequal worth and the framework for recognizing differences in employee contributions.

Pay Ranges represent the span of possible pay rates for each pay grade. Pay Ranges include midpoint, minimum and maximum pay rates. The minimum and maximum values denote the acceptable lower and upper bounds of pay for the jobs within particular pay grades.

It is perfectly acceptable and recommended that pay grades have a certain level of overlap with the grade below and above. This will ensure consistency in how the structure is created and maintained.

Ways to progress ranges to have overlap include:

Midpoint Progression – Where the midpoint of a range is progressed by a % or flat dollar amount to obtain the midpoint of the next grade.

Minimum Progression – Where the minimum of a range is progressed by a % or flat dollar amount to obtain the minimum of the next grade.

The book talks about a complicated formula to overlap ranges. Please just use one of the methods above. That is how it is done in the real world.

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