4.4JOB PRICING AND PAY RATE ADMINISTRATIONAfter the jobs have been arranged in a hierarchy of job worth, specific amounts of pay need to be associated with them. The process of placing a dollar value on the worth of a job is referred to as job pricing In pricing a job, most organizations assign a pay range rather than a specific fixed amount to allow for individual differences in performance. Similar jobs are grouped together into pay grades. Job pricing involves making decisions about pay ranges and pay grades in addition to developing a plan for adjusting the wage structure as necessary because of inflation. Developing the pay ranges is part of the wage-structure decision.4.4.1 Pay Grades and Pay RangesWhen a wage structure is developed, jobs are grouped into pay grades (also called a labor grade or job class) according to the points associated with them, and a range of pay rather than a specific wage is usually assigned to each pay grade to reward individual performance. By grouping similar jobs into a limited number of pay grades, rather than dealing with dozens of separate jobs companies can simplify the administration of their compensation system Pay grades are illustrated in Exhibit 13. An organization could have fewer pay grades by expanding the width of each grade. How many pay grades a company should have can be decided arbitrarily by assigning a fixed width to each labor grade; however, a better procedure is to plot each of the jobs on a chart and see if natural clusters of jobs exist.Most pay grades have pay ranges that are ten to 20 percent above and below the midpoint of each grade, called the range spread, The pay grades shown in Exhibit 13 have a range spread of 30 percent(15 percent above and below the midpoint of the wage line) to allow for Individual incentives, A narrow pay range, such as ten percent above or below the wage curve, provides a much smaller incentive than a wide pay range, such as plus or minus 20 percent. Exhibit 14 illustrates these two pay ranges.