Total Rewards and Compensation Structures
4
Job Eval Methods
Ranking classification point-factor market pricing
100%
Compa-Ratio Target
Salary / Range Midpoint
3
Pay Structure Types
Broadbanding traditional step
Job Evaluation Methods
four methods, each with a distinct personalityRanking
QUALITATIVECompare jobs to each other and rank from highest to lowest value. Simple and fast, but highly subjective. Best for small organizations with few jobs.
Classification
QUALITATIVECreate predefined job grades (like the federal GS scale) and slot each job into the appropriate grade based on a written description. Easy to administer at scale.
Point-Factor Method
QUANTITATIVEAssign numerical points for compensable factors (skill, effort, responsibility, working conditions). Total points determine job value. The most systematic and legally defensible method. Most heavily tested on the exam.
Market Pricing
EXTERNALSet pay based on external salary survey data. Reflects market reality but does not evaluate internal job worth. Best used alongside an internal method.
Pay Structures and Key Formulas
Pay Structure Types
Traditional (Step-Rate)
Narrow pay grades with defined steps. Employees advance through steps based on tenure or performance. Rigid but predictable. Common in government and union environments.
Broadbanding
Combines multiple pay grades into fewer, wider bands. Gives managers more flexibility to reward performance and accommodate lateral moves. Less bureaucratic but harder to control.
Market-Based
Pay ranges anchored to external market data. Midpoints reflect the market rate for benchmark jobs. Keeps compensation competitive with external labor market.
The Compa-Ratio
this will absolutely be on your examCompa-Ratio = Employee's Salary / Range Midpoint x 100
< 80%
Flight Risk
Significantly underpaid
80% to 120%
Healthy Range
Market competitive
> 120%
Investigate
May indicate compression
A compa-ratio of 100% means the employee is paid exactly at the midpoint. A ratio of 90% means the employee is paid 10% below midpoint, which could indicate a newer employee or one with growth potential. Above 120% warrants a review but does not automatically mean overpaid.
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Practice NowExam Traps
Point-Factor Is Most Defensible
When the exam asks which method is most objective, systematic, or legally defensible, the answer is point-factor. It assigns numerical values and is the most quantitative approach.
Market Pricing Alone Is Insufficient
Market pricing reflects external equity only. Without internal job evaluation, it can create internal pay inequity. The exam tests whether you know it should be combined with other methods.
Above 100% Does Not Mean Overpaid
A compa-ratio of 110% can be perfectly appropriate for a long-tenured, high-performing employee at the top of their range. Context matters.
Pay Compression
When new hires earn close to what experienced employees make. Often caused by raising starting salaries without adjusting existing pay. The exam tests whether you can identify this from a scenario.
Job, Not Person
Job evaluation is about the JOB, not the person.
Compa-Ratio Ranges
Below 80% = flight risk. 80 to 120% = healthy. Above 120% = investigate.
You walk through five houses and rank them best to worst based on overall impression. Quick but subjective. This is the ranking method of job evaluation.
You sort houses into predefined categories. Starter home, mid-range, luxury. You are fitting each house into a bucket. This is the classification method. The federal GS pay scale uses it.
You assign points for square footage, kitchen quality, location, yard size. Add them up. The house with the most points is worth the most. Objective, defensible, and systematic.
You look at what similar houses in the neighborhood actually sold for. Fast and market-relevant, but ignores unique internal features. This is market pricing.
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