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Dear Workforce How Should We Handle An Employee’s Salary When It Reaches The Maximum Salary Grade

A number of things ought to be considered, including “hot skills” or individual performance.
May 5, 2002
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Related Topics: Compensation Design and Communication, Dear Workforce, Compensation
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A Dear Advice:

When a person’s salary reaches the maximum of the salary range, a number ofthings need to be considered.

First, is the salary range still appropriate?

Sometimes organizations will structure their salary administration in a waythat causes certain special skills or "hot skill" jobs to riseinappropriately to the top. Consideration should be given to whether this mightbe the case and if so, special market-based ranges should be considered forthese hot skills. This is handled through a special adjustment as opposed topermanently making it part of the range, since today’s hot skill position maynot be tomorrow’s.

If "hot skills" are not the case, then the individual’sperformance is the key issue. If the individual’s performance is high, then alump sum should be considered. This preserves the compensation structure whilesimultaneously rewarding the high performer.

If the performance is not above the average and the compensation systemprovides for competitive pay, then the person should get a smaller increase orno increase, since they are already paid above market for their level ofcontribution. Being at the top of the range can mean different things todifferent people. This has to be decided on a case-by-case basis, not a blanketpolicy.

SOURCE: David A. Hofrichter, PhD, partner and National Practice Leader, BuckConsultants, Chicago, Illinois, Jan. 9, 2002.

LEARN MORE: What'sMy Line Worth?

The information contained in this article is intended to provide usefulinformation on the topic covered, but should not be construed as legal advice ora legal opinion. Also remember that state laws may differ from the federal law.

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