SHRM's design method runs in order: evaluate jobs into points, regress points against market pay, adjust the line for pay policy, make policy-line rates the midpoints, then set minimums and maximums by percent guidelines.
The market pay line
Build it with a simple regression using job evaluation points as X and weighted average market base pay as Y. The slope and y-intercept give the line equation and predicted rates. R squared should generally be .95 or higher; below that, re-examine the job evaluation points or the weighted average calculations.
Do not reverse the variables, do not lower the standard to .80, and do not regress pay on tenure. Evaluated job worth is the X.
Working the equation
The case yields Y = 360.33(x) - 24,324.19, so each job evaluation point is worth $360.33. For a job at 300 points:
360.33 x 300 = 108,099.00, then 108,099.00 - 24,324.19 = $83,774.81.
The traps are stopping at 108,099.00 and omitting the negative intercept, and adding the intercept instead of subtracting it (132,423.19).
Pay policy: lead, lag or meet
The pay policy line is the market pay line adjusted for that choice. A 3 percent lead multiplies each predicted market rate by 1.03, paying 103 percent of market, with the slope unchanged. Reading the lead as a slope change is the common error; reducing rates by 3 percent describes a lag; and R squared is a fit statistic, never adjusted for pay policy.
Midpoints to endpoints
Policy-line rates become the midpoints. Then:
- Clerical and office grades: minimum 90 percent and maximum 110 percent of midpoint. A $54,000 midpoint gives 0.90 x 54,000 = $48,600 and 1.10 x 54,000 = $59,400.
- Professional and management grades: minimum 70 percent and maximum 130 percent of midpoint.
The case's Pay Grade A confirms the clerical rule: midpoint $19,766.23, maximum $21,742.85 (110 percent), minimum $17,789.60 (90 percent). Not a fixed dollar increment, and not a 20 percent offset.
Carry this: 10 percent clerical against 30 percent professional is the pairing these items turn on.