Simulation Phase 2 Instructions

Requirements

1. Separate from your job evaluation system, you will need to define your Pay-for Knowledge structure. You will use the pricing skill blocks information found in Chapter 4 to assist you as well as the market data included in the simulation. You will choose market comparators to match top and entry level pay for your respective positions which you will use to price your skill grid.

 Pay-for-knowledge Pay Structure

In this section, use the high-low method to establish the entry-level and top-level total compensation amounts in your skill grid and for pricing your skill blocks (see the “Pricing the Skill Blocks” section of Chapter 4). To do so, you will need to use the market data included in the simulation. Use the same market sample of companies that you selected earlier for your job evaluation analysis (but of course you will not use the same benchmark jobs that you used for job evaluation).

You will need to pick a market comparator job from the compensation data that matches the skills required at the “top level” of your pay-for-knowledge system (PKS) and one that matches the “entry level” of your PKS. (To actually get the total market compensation for these two market comparator jobs, the software will require you to enter three jobs. Pick any other job and include it, but ignore the results for that job.) As is necessary for all sections of your report, be sure to provide your rationale for everything you do, and carefully explain the basis for your calculations.

Once you have the total compensation levels for your high and your low jobs, you do not use Excel any further for your pay-for-knowledge system. If you are applying a lead or a lag strategy to your PKS jobs, adjust the total compensation for your high-low jobs accordingly. As explained in Chapter 4, calculate the actual dollar amounts (in terms of total compensation) for each skill block, and put them right on your skill grid. Include a copy of your priced skill grid in this section of your report. Also in this section, be sure to include your entry level compensation and your top level compensation, including a breakdown of base pay, performance pay, and indirect pay, based on your compensation strategy template for your PKS jobs.