Example: Scenario 2 - The Pay Grade Step Table as the Default Pay Rate Source

To ensure that all of the employees working in a job receive the same rate of pay, and to provide for progression within a pay grade, you can use the Pay Grade Step Table program (P082003) as the pay rate source.

If the chosen pay rate source is the pay grade step table, you must use the Pay Grade Step Table (P082003) and Pay Grades By Class (P082001) programs to set up pay grades and pay grade steps. The compensation information that you provide in these programs is copied to the forms that you use when you hire employees.

Using the Pay Grade Step Table program is convenient for a company whose structure consists of many positions that allow for progressive advancement. Using the Pay Grade Step Table program to enter compensation also saves data entry time and reduces calculation errors and compensation inconsistencies.

In the Pay Grade Step Table program, a pay grade consists of a group of jobs that are equal in pay range. For example, assume all junior accountant positions and junior graphic artists in a company are in pay grade A, and pay grade A represents a pay range of 30,000 to 40,000 USD. Therefore, all junior accountant and junior graphic positions need to be compensated within this pay range.

However, within each pay grade, you set up pay grade steps that represent a specific salary or hourly rate. For example, suppose that pay grade A includes pay steps A1, A2, and A3. Employees in step A1 receive 33,000 USD, employees in step A2 receive 36,000 USD, and employees in step A3 receive 40,000 USD.

Setting up pay grade steps lets you automate the process of entering compensation information for employees. When you enter employee information, the system automatically calculates the employee salary or hourly rate, based on the pay grade step that you enter for the employee.

When you define pay grade steps, you can also save time and reduce calculation errors by having the system automatically calculate the pay rates for a group of steps. You enter a base pay rate that applies to the group of steps, and then you enter a pay rate multiplier for each step. The system automatically calculates the rate for each step by multiplying the base pay rate by each step pay rate multiplier.

You might also prefer to use pay grades without using pay grade steps to calculate compa-ratios for pay grades. Compa-ratios are helpful calculations for management to determine equitable pay increases for employees.

When you hire an employee, do not complete the Job Type or Job Step fields in the Employee Organizational Assignments program (P0801ORG). Instead, complete the Pay Grade and Pay Step fields on the Basic Compensation form (W0801CMPB). The system automatically updates the Basic Compensation form with the appropriate salary, hourly rate, and hours per year from the Pay Grade Step table.

This table illustrates the guidelines for changing the values on the Basic Compensation form:

Value	Impact
Pay grade step	When you change the employee pay grade step, the system replaces the employee hourly rate, salary, and standard hours per year with the corresponding information from the pay grade step table.
Hourly rate	You cannot change the hourly rate for an employee. The system supplies the default hourly rate from the table.
Standard hours per year	When you change the standard hours per year for an employee, you must also delete the employee salary. The employee hourly rate does not change. The system recalculates the employee salary, based on the new standard hours per year and the hourly rate for the pay grade step.
Salary	When you change the employee salary, the hourly rate does not change. The system recalculates the employee standard hours per year, based on the new salary and the hourly rate for the pay grade step.
FTE	When you change the FTE for an employee, you must also delete the employee salary and standard hours per year. The system adjusts the employee standard hours per year and salary, based on the pay grade step.