Devolving pay decision-making to the line

What you will find in this report

The June 2003 issue of Workforce looks at how three US businesses determine market pricing and then hand the compensation -- and performance management -- decisions over to line managers.

Case study 1. Marriott International -- 2,600 hotels staffed by 140,000 employees.

New "flexible" career bands system integrates compensation, performance management and career development. Each job has a market reference point -- the competitive rate for that job in a specific market -- and managers can pay plus or minus 25% from that reference point.

Case study 2. Dow Chemical Company -- 50,000 employees in 170 countries.

Global salary management process launched in 1998 as part of a larger effort to integrate compensation, job levels, learning, development and competencies. Manager now determine pay levels for their employees, including base pay, bonus and long-term incentives in a global exercise held each January.

Case study 3. KoSa -- global manufacturing company with 7,500 employees.

Scrapped its 21-level salary structure and all job rating systems. It now uses one-paragraph capsule summaries for benchmark positions and provides upper and lower quartile as well as median ranges for each position. Line managers review employee pay on the basis of this data.