Assigment 3 Flashcards
Salary
Cornerstone of the compensation program. it is the base upon which the other elements of compensation are built.
The amount of salary an executive is paid is a function of
the value of the individual’s responsibilities to the organization and how well the individula is discharging these responsibilities
The value of an individual’s responisbility generally is determined by
job analysis, salary surveys, and the resulting salary structure adjustments
Job analysis and the executive posistion
The purpose of a job analysis is to gather specific information about a job and summarize it in a manner that sets the job apart from other jobs within an organization. For an executive position, this information can be obtained through an interview with the executive or a questionnaire completed by a job incumbent. The focus should be on principal responsibilities and also on reporting relationships within the organization structure.
Ranking method
Ranking is a nonquantitative method of arraying jobs in order of importance and is the simplest job evaluation approach. The array begins with by comparing two jobs to determine which is more important . Then a third job is compared with the first tow, and its position with respect to them is determined. The process is repeated until all jobs have been placed in the arrary
Simplicity is the biggest advantage. Little preparation is required and it works well when only a few jobs are involved. Simplicity is also the greatest disadvantage because of the difficulty of taking into consideration all of the individual tasks of each job, it is a natural tendency to rate each job on the basis of its dominant characteristic.
simply reports the sequence it does not give the relative differences among jobs
Classification Method
Compares each job with a set of written standards. In this approach grade levels are predetermined and identifying the grade for a job simply requires matching the most appropriate descriotors.
However, determining job levels, which much be suffienciently generic to be usuable with any type of job and yet sufficiently specific to allow direct comparison with a particular position, takes signifigant time and effort.
Another problem is the number of grades used. As organizations mature and more levels of management are introduced, it may not be possible to categorize all the levels into existing grades, and additional grades may need to be added or the standards may need to be completely rewriten.
Point Factor Method
Point factor plans are smiliar to the classification method in that they require the comparison of a job to a predetermined measure rather than directly to other jobs. Unlike the classification method, instead of using grade-level standards as the benchmark, the point factor method indicates the separate tasks (compensable factors) that make up the job and assigns each a number of points depending on its importance.
Most factor plans focus on responsibilities and the knowledge needed to perform each task. Within these two major categories, a number of separate factors can be constructed. Such plans typically have five to ten factors. The more factors, the more suspect the evaluation plan, as it is very likely that several factors are measuring the same value in only a slightly different manner
Maturity approach of job evaluation
The maturity method of job evaluation uses only one measurement of value- time. Thus, the X axis is defined as time.
This method of job evaluation is rarely used for exectives, since its greatest appeal is in those instances where there are a large number of employees who are performing essentially the same work, and it is almost impossible to draw lines of distinction establishing separate jobs.
Frequently, this method is used for engineers and chemists, with separate curves for each discipline as well as separte curves for supervisors and non supervisors.
Market Pricing Method
Traditional job evaluation methods begin by establishing job value based on some method of internal equity. The hierarchy is then measured in terms of survey data to determine the competitive level of pay for comparable positions, in order to establish external equity.
Requires surveying as many jobs as possible
Not all jobs can be surveyed due to
a combination or magnitude of effort and lack of comparability. However, a careful attempt should be made to ensure that the survey has a good balance of horizaontal and vertical representation.
Horizontal represenation
requires the inclusion of the various organization functions
vertical representation
focuses on promotional career paths within a particular function. The number of jobs to be surveyed is a function of availability and the extent of cooperation of the surveyed compines, as well as the mothod of evaluation.
Job Matching
Job matching is the most common method of ensuring comparability of data. It requires matching jobs to ensure that similar responsibilites exist. This is improtant because job content can vary signifigantly b/t 2 organizations even though the jobs may have the same title. for this reason, organization charts showing reporting relationships along with job descriptions are included to maximize good job matches
Mutiple Regression Analysis
The power of the computer has made possible the use of multiple regression analysis. Instead of simply comparing compensation to one independent variable, it is possible to compare to 2 or more. The computer orders the independent variables studied in terms of single regression analysis and picks the one which, when combined with the first analysis will produce the highest 2 measurement predictions.
Indexing pay relationships
A frequently employed survey-reporting format is a percentage relationship of pay for the top 3 executives. The top paid executive would be given an index number such as 100. The other executives would have a number such as 90 or 75.
Unfortunatley, there is very little value in this format in viewing the competitivness of these 3 executives if only the index values are reported, since they can mask very signifigant differences. These numbers only express pay relationships, they do not indicate anything about level of pay unless the actual pay values are also reported. If the absolute pay levels are not known, the relative percentage relationships are of little value. Furthermore, remember that it is also unlikely that the second and third highest paid positions are the same in the survey community.
