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August 19, 2010
Explaining Pay Policies to Employees

In a BLR webinar entitled "Pay Grades and Salary Increases: How to Build a Competitive, Equitable Compensation System in Your Workplace This Year," Dan Kleinman, principal of Dan Kleinman Consulting enumerated some of the explanations that should be offered to employees regarding the company's pay policies.

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  • Explain the company's compensation philosophy and how it is driven by the business mission and strategies, the organizational design and structure, and the critical skills and people needed.
  • Cover the role of job descriptions in delineating duties and responsibilities, determining exempt and nonexempt status, and facilitating pay comparisons.
  • Describe the company's pay ranges, including how they are determined, such as by market surveys, benchmarking, maintaining internal equity, and other factors.
  • Help employees understand the competition by including salary and benefit comparisons. Present the organization's total compensation (or rewards) package, explain the minimum, mid-point, and maximum in pay ranges, and talk about the role of skills in placing employees in the range.
  • Wind up by discussing how salary increase decisions are made: on the basis of an annual budget, prevailing economic conditions, and individual performance.

Dan Kleinman is the principal of Dan Kleinman Consulting (, a California-based compensation and human resource consulting firm. For the past 18 years he has served a broad spectrum of regional, national and international companies providing compensation, performance, organizational planning and reward-system design services.

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