Questions about competitive pay

[onefastpony]

I am the lead in a small shop (10 people including myself) that operates within a large business. This means even though we are small the HR department handles pay and there is management above me that I need to work with to get anything outside of our normal day to day operations done. We are going to have an opening soon which doesn't happen often, so I want to be sure we get a good person in here. While discussing this with management the current shortage of skilled labor came up and they want feedback on pay.

Everyone in here can run manual mills and lathes as well as CNC mills and lathes. We all program using MasterCam. We program and run a Flow waterjet. We have a couple universal lasers that are programmed using CorelDraw. We have a Trumpf press brake as well. We TIG, MIG, spot and laser weld. We design as well as fabricate and half the staff are able to use Solidworks. Some have their Solidworks CSWA. Basically there isn't much we don't or can't do. I have been asked if our current compensation is where it should be. I don't know where to start as the staff here do a lot more than your typical machinist. Our HR department works with an outside company to determine our pay. Is there a job description that relates to everything our staff does on a daily basis?

Thanks,
Mark

 

[CITIZEN F16]

Location matters a lot when it comes to machinist pay, there are plenty of places in the USA where a 50 mile drive will raise the pay $5-10 an hour for a top skilled guy. The cost of living in an area determine pay. You should list your location, at least general area.

 

[michiganbuck]

Keeping employees from waking a concern. What is common in the area is another. Paying a little over the norm is fine if the outfit is solid in the black. $12 to $50 per is not uncommon... and $25 to $35 is another common range.

My son was thinking of walking..until I added up his pay and bonus to show him that he made close to $60 per this year.

Hourly+ bonus+ IRS contrbution

 

[CITIZEN F16]

Keeping employees from waking a concern. What is common in the area is another. Paying a little over the norm is fine if the outfit is solid in the black. $12 to $50 per is not uncommon... and $25 to $35 is another common range.

My son was thinking of walking..until I added up his pay and bonus to show him that he made close to $60 per this year.

Hourly+ bonus+ IRS contrbution

I would go with $25-$35 depending on location.

 

[mneuro]

Where you are in Minnesota can make a big difference. I am near the Twin Cities for what its worth, and work for a 50 person company. Current asking rates I have been seeing through recruiters, head hunters, indeed, word of mouth, and walkins:

$25 per hour for a first year tech student to work part time
$28 per hour the minute they graduate, with a raise within the first 6 months
$35-$40 per hour for someone who can do what you are asking, with a raise within the first 6-12 months
$80k-$90k a year for salary employee with less than 3 years experience in anything technical

This is on top of PTO, holidays, short term and long term disability, 401k match, medical, dental, eye, HSA contribution of $1k annually, quarterly bonus, unlimited overtime, and flex start and stop times. I am sure there are some other benefits that I am forgetting.

These have been the asking rates for the last year or so around me. We have hired 10 or so people, so my info is based on the dozens of interviews.

Farther away from the metro pay is larger, but benefits worse.

This is just my experience.

 

[Strostkovy]

You program a laser with coreldraw?

At an old jobshop I was making airplane parts for an old guy. He made his files in coreldraw and they were the worst drawings I had ever seen. Basically none of the line connected and circles were often 720+ degrees of stacked arcs.

The guy spent 5 years designing this airplane so it was my job to clean up each part piece by piece. He was about 90 years old at the time and I am fairly certain he died well before completion, but got far enough to leave a lot of airplane parts for his next of kin to deal with.

 

[michiganbuck]

Q: [Is there a job description that relates to everything our staff does on a daily basis?]
Toolmaker, Machinist, Tool and die maker, Pattern maker were the old school titles. Now you may add with CNC experience.

likely few of your guys are best at every job in the shop. The best manual machinist may not like welding or CNC production work.

Hr may choose what you say you want, and so not pick what your shop really needs.

It is likely that a 35-year-old guy claiming pro/good talents in all the skills mentioned is the guy who mastered few/none.
Just a good lathe guy has to be able to run a class 3 thread and run a taper to a few tenths to rate top tallent, a grinder guy to able to make flat, angle and radius size to 50 millionths or so. It is likely few talented welders can do that... and a good welder can be just as valuable as a good grinder hand.

I think pay rate of 15 to 45 should be in a shop that has normal 40 hr weeks and a successful product.
Overtime shops can get away with a top of 25 or 35 top.
Job shops competing/bidding on jobs often can't pay that rate, and do expect people to walk.
little skill production shops try to get away with next to nothing pay and do expect people to walk.

Yes, 15 for a single guy learning a skill, taking odd hours going to school/college, taking up journeyman time, making some scrap..
15 with a tool buying bonus might be a good plan.

 

[onefastpony]

Thanks for all the feedback everyone. This is something that has been an issue for a long time, so I am aware finding a solution its going to happen overnight. I've answered some of the questions and really appreciate all the feedback.

One thing that I overlooked in my initial post is that everyone here is also meeting with our customer and coming up with solutions to their issues. We only do work for requests from inside our company. The company we work for has over 60,000 staff covering 5 states and three countries. We do everything from repairs for facilities to custom medical devices.

About a third of our staff in the shop have 35-40 years in and are looking to retire in the next 1-5 years. There are two of us in the middle with 20-30 years and then there are the young guys with 2-10 years. It really is a fun job, but it is getting more and more difficult to find skilled employees that not only have the fabrications skills, but also people skills. We seem to pay about the same starting pay as a new grad that can go somewhere and push start and maybe inspect parts. It takes a different person to want to meet with customers and come up with solutions, then be able to fabricate the parts. This is where I struggle to capture what we do with a job description that HR can use.

"Location matters a lot when it comes to machinist pay"

We are in SE Minnesota.

"$25 per hour for a first year tech student to work part time
$28 per hour the minute they graduate, with a raise within the first 6 months
$35-$40 per hour for someone who can do what you are asking, with a raise within the first 6-12 months
$80k-$90k a year for salary employee with less than 3 years experience in anything technical

This is on top of PTO, holidays, short term and long term disability, 401k match, medical, dental, eye, HSA contribution of $1k annually, quarterly bonus, unlimited overtime, and flex start and stop times. I am sure there are some other benefits that I am forgetting."

We are a little lower, but fairly competitive to this although we don't have salaried employees and we pay for medical, dental, HSA, no bonuses, and no overtime unless approved.

"You program a laser with coreldraw?"

Yeah, universal lasers are basically treated like a printer. You can do very detailed engraving with them or cut out plastic parts. Most of the time we are cutting out parts and use MasterCam for a DXF and then use that in CorelDraw for the outline.

"Q: [Is there a job description that relates to everything our staff does on a daily basis?]
Toolmaker, Machinist, Tool and die maker, Pattern maker were the old school titles. Now you may add with CNC experience.

likely few of your guys are best at every job in the shop. The best manual machinist may not like welding or CNC production work."

The problem I am having is I can't find a job description that covers everything we do and HR and the outside firm just seem to search for competitive pay based on a job title. You are correct that not everyone is a Rockstar on everything. Most everyone is great on a few machines, so everyone has their strengths. For the most part everyone in here is very proficient on 80% of our equipment and great on a few.

 

[Bill D]

These days it is better to pay health insurance then salary since it comes out before taxes. Company provided work shoes, clothes, safety gear same deal. Problem is most younger workers focus on pay rate not take home.
Bill D

 

[mhajicek]

The problem I am having is I can't find a job description that covers everything we do...

There isn't one.

Hats I wear, off the top of my head:
Operations Manager
Salesman
Process Engineer
Purchaser
CNC Programmer
CNC Setup
CNC Operator
Inspector
Shipping and Receiving
Accounts Receivable


Within each of those, there are areas of expertise; I specialize in small medical device parts. I wouldn't perform nearly as well dropped into a shop doing giant weldments for example. Titles alone won't cut it to get the person you need.

 

[CITIZEN F16]

Where you are in Minnesota can make a big difference. I am near the Twin Cities for what its worth, and work for a 50 person company. Current asking rates I have been seeing through recruiters, head hunters, indeed, word of mouth, and walkins:

$25 per hour for a first year tech student to work part time
$28 per hour the minute they graduate, with a raise within the first 6 months
$35-$40 per hour for someone who can do what you are asking, with a raise within the first 6-12 months
$80k-$90k a year for salary employee with less than 3 years experience in anything technical

This is on top of PTO, holidays, short term and long term disability, 401k match, medical, dental, eye, HSA contribution of $1k annually, quarterly bonus, unlimited overtime, and flex start and stop times. I am sure there are some other benefits that I am forgetting.

These have been the asking rates for the last year or so around me. We have hired 10 or so people, so my info is based on the dozens of interviews.

Farther away from the metro pay is larger, but benefits worse.

This is just my experience.

Sounds good there, but the weather. Do employees get snow days?

 

[CITIZEN F16]

There isn't one.

Hats I wear, off the top of my head:
Operations Manager
Salesman
Process Engineer
Purchaser
CNC Programmer
CNC Setup
CNC Operator
Inspector
Shipping and Receiving
Accounts Receivable


Within each of those, there are areas of expertise; I specialize in small medical device parts. I wouldn't perform nearly as well dropped into a shop doing giant weldments for example. Titles alone won't cut it to get the person you need.

You are close to me, in almost 40 years of machining the biggest part I made working for myself or others was the size of a dog water/food bowl combo. That big part was when I was starting out as a manual job shop. Most of what I have made hundreds would fit in a medium flat rate box and often you could put a couple hundred in a shirt pocket. When I was a young job hopper looking for more pay and benefits I didn't make the connection in a help wanted ad that had gantry in it. At the time I was pretty much making watch parts and during the shop tour I saw what this place considered small and it was the size of a big rig tire. I just said thanks for your time, this is not for me.

 

[onefastpony]

There isn't one.

Hats I wear, off the top of my head:
Operations Manager
Salesman
Process Engineer
Purchaser
CNC Programmer
CNC Setup
CNC Operator
Inspector
Shipping and Receiving
Accounts Receivable


Within each of those, there are areas of expertise; I specialize in small medical device parts. I wouldn't perform nearly as well dropped into a shop doing giant weldments for example. Titles alone won't cut it to get the person you need.

I get that a certain job title won't get the right person. My issue is that is how HR determines our pay ranges. If we use the job title "machinist" they seem to correlate that with what I consider a low pay that I can only guess is more along the line of a machine operator or green button pusher. I hear you when you talk about wearing many hats. I never thought I would be involved in biocompatibility, reprocessing, mechanical drafting standards, outsourcing, product tracking...the list goes on. It doesn't seem like we are going to get a lot of interest if we have a job that starts at 22/hr with an annual increase of 2-3%. We used to be on the high side of the local machinist pay, but it seems the industry has changed and now we are behind. The more I look into this the more frustrated I am for both the staff here and myself. It seems that we could all leave and have a better wage somewhere else which wasn't the case 15-20 years ago.

 

[michiganbuck]

It seems to me that to keep/hire a skilled person as you describe the starting pay will be 25+..and expect people to walk when a 35 to 50$ job is offered.

Back in my day, a Machinist was a guy who could run/make just about anything on any manual machine including grinders.

Other guys called a hand, like lathe hand/ grinder hand /mill hand specialized in that matching but could do some work on others.
A machine builder was a machinist who could also pull wrenches for assembly and do fit-inspection.
A die maker could make die details/parts and build/assemble a die along with try out and some design.

 

[Thunderjet]

I would expect to be waiting a while for the new hire.

We've been looking for years for a good shop guy. We also have our guys wear many hats.

At least around here, there is a major shortage of good tool and die guys.

Your mileage may vary.

 

[mneuro]

Sounds good there, but the weather. Do employees get snow days?

HA!
No such thing as a snow day up here!

In all seriousness, we are very flexible with time off and start times. It is pretty rare that someone would call in because of snow.

 

[mneuro]

I get that a certain job title won't get the right person. My issue is that is how HR determines our pay ranges. If we use the job title "machinist" they seem to correlate that with what I consider a low pay that I can only guess is more along the line of a machine operator or green button pusher. I hear you when you talk about wearing many hats. I never thought I would be involved in biocompatibility, reprocessing, mechanical drafting standards, outsourcing, product tracking...the list goes on. It doesn't seem like we are going to get a lot of interest if we have a job that starts at 22/hr with an annual increase of 2-3%. We used to be on the high side of the local machinist pay, but it seems the industry has changed and now we are behind. The more I look into this the more frustrated I am for both the staff here and myself. It seems that we could all leave and have a better wage somewhere else which wasn't the case 15-20 years ago.

Maybe you are approaching the problem from the wrong direction. Maybe list all the hats your team wears, assign a percentage of time that is used by that hat, and develop a pay model based on the hybrid position. For example:

Machinist 50% - industry pay $10 an hour - calculated pay $5 per hour
Customer service 20% - industry pay $5 an hour - calculated pay $1 per hour
Engineer 30% - industry pay $10 an hour - calculated pay $3 per hour
Jack of all trades fee: $3 per hour

Then add them up. 5+1+3+3 = $12 per hour for the hybrid role. (obviously my numbers are just made up)

This way HR could still use industry standards and wage surveys. It would be consistent and repeatable year over year.

 

[Fancuku]

We are a little lower, but fairly competitive

If you are lower than those numbers, then you are not competitive. Not even close.
The person you are seeking to do what you need him/her to do will not even give it a thought if you are not offering at least $40/hr.
To me it sounds like your shop is very detached from reality.

 

[mhajicek]

Sounds good there, but the weather. Do employees get snow days?

Carpet dwellers did at my previous employer. I had to keep the machine running to meet deadlines!

I get that a certain job title won't get the right person. My issue is that is how HR determines our pay ranges. If we use the job title "machinist" they seem to correlate that with what I consider a low pay that I can only guess is more along the line of a machine operator or green button pusher. I hear you when you talk about wearing many hats. I never thought I would be involved in biocompatibility, reprocessing, mechanical drafting standards, outsourcing, product tracking...the list goes on. It doesn't seem like we are going to get a lot of interest if we have a job that starts at 22/hr with an annual increase of 2-3%. We used to be on the high side of the local machinist pay, but it seems the industry has changed and now we are behind. The more I look into this the more frustrated I am for both the staff here and myself. It seems that we could all leave and have a better wage somewhere else which wasn't the case 15-20 years ago.

No, 2-3% a year won't keep up with inflation. True inflation is 15% right now, calculated by the 1980 standard.

If you want to pay someone more, tack "engineer" on the end of their title. I'm not a CNC programmer, I'm an automated manufacturing process engineer!

But yeah, even within the same title, pay ranges can vary widely. Consider a two and a half axis Prototrak programmer vs a 5 axis multi-machine pallet system programmer vs 17 axis Swiss mill-turn.

As a reference, fresh out of Dunwoody in '96 I was getting $20/hr as a 3 axis mill programmer. That's anywhere from $35 to $190 today depending on which inflation stats you use.

 

[Kalispel]

I get that a certain job title won't get the right person. My issue is that is how HR determines our pay ranges. If we use the job title "machinist" they seem to correlate that with what I consider a low pay that I can only guess is more along the line of a machine operator or green button pusher. I hear you when you talk about wearing many hats. I never thought I would be involved in biocompatibility, reprocessing, mechanical drafting standards, outsourcing, product tracking...the list goes on. It doesn't seem like we are going to get a lot of interest if we have a job that starts at 22/hr with an annual increase of 2-3%. We used to be on the high side of the local machinist pay, but it seems the industry has changed and now we are behind. The more I look into this the more frustrated I am for both the staff here and myself. It seems that we could all leave and have a better wage somewhere else which wasn't the case 15-20 years ago.

Employee compensation is one of the largest costs in any company. Compensation philosophy and standards are set by executive management in alignment with the company’s strategy and objectives. HR organizations in large companies will be charged with knowing how total compensation aligns with the job markets the company is participating in. They will use methodologies and databases provided by compensation consultants like Towers Watson, Mercer, Korn Ferry, etc. In general, they will follow established guidelines because executive management will easily accept their conclusions.

HR is caught in the middle when labor markets tighten. They told their management what labor should cost. The pressure builds when they cannot fill positions at the budgeted rates. They will reach out for justifications explaining why they should pay more but they will need to align the feedback with some objective standard.

Tacking on labels or titles will not help unless there is an objective standard to justify it. In my previous experience, I would have labeled your role as a “technician” or “technologist” depending on whether the role met the criteria for an hourly or salary position. Engineer generally won’t fly unless the person meets the educational requirements. Approximate wages for these categories range between $20 and $35 per hour or $45k to $90k for salary. Of course, it will vary based on market and the total cost of the compensation package including benefits offered.

Wage compression always starts in the entry positions. Companies are always tempted to pay a little more to fill a critical position. Trouble is, all the existing folks rightfully expect the same consideration for their contribution. A little leak quickly becomes a flood. Management will demand that HR must hold the line.

There is one more important point that good management knows — competitive compensation is essential but people quit their boss before they quit for pay. Leaders are often given new ‘opportunities’ when their group is tagged as a hot spot where turnover is troubling.

It sounds like you are already well compensated and whining about it because you think your group is special and could make more. I say, go try.