Chapter 5: Job-Based Structures and Job Evaluation

Question 1

Define job evaluation (p.141)

Answer 1

Job evaluation is the process of systematically determining the relative worth of jobs to create a job structure for the organization. The evaluation is based on a combination of job content, skills required, value to the organization, organizational structure, and the external market. This potential to blend organizational forces and external market forces is both a strength and a challenge of job evaluation.

Question 2

Review Exhibit 5.1, Many Ways to Create Internal Structure (p.141)

Answer 2

Focus is on what to value in the jobs, how to assess that value, and how to translate it into a job-based structure. Job evaluation is a process for determining relative value.

Question 3

How are content and value related to the job evaluation process (p.142)

Answer 3

• Content refers to what work is performed and how it gets done.
• Internal alignment is just one of the building block blocks of the pay model.
• Internal alignment based on content orders jobs on the basis of the skills required for the jobs and the duties and responsibilities associated with the jobs.
  o Is not the only basis for pay.
• A structure based on job value orders jobs on the basis of the relative contribution of the skills, duties, and responsibilities of each job to the organization’s goals.
  o Might also include the jobs value in the external market. Pay rates may be influenced by collective bargaining or other negotiations.

Question 4

What does it mean to “link content with the external market”, and how does it relate to the job evaluation process (p.142)

Answer 4

• Aspects of job content take on value based on the relationship to market wages. Some aspect of job content is not related to wages paid in the external labor market then that aspect may be excluded in the job evaluation. The value of job content is based on what it can command in the external market, has no intrinsic value.
• Others argue job evaluation is an important tool for organizations that wish to differentiate themselves from competitors. For example, if their particular strategy relies more heavily on certain jobs or skills than is the case in other organizations.

Question 5

How are technical and process dimensions related to the job evaluation process (p.143)

Answer 5

• If job evaluation can make made significantly rigorous and systematic then it can be judged according to technical standards. The reliability, validity, and usefulness of job evaluation plans can be compared.
• Different ways of using job evaluation to make pay decisions:
  o Job evaluation as a process that helps gain acceptance of pay differences among jobs.

Question 6

List (and discuss) some major decisions in job evaluation (summarized by Exhibit 5.3, and then each decision is discussed individually starting on p.144).

Answer 6

Some major decisions in job evaluation are established purpose of evaluation, decide whether to use single or multiple plans, choose among alternative approaches, obtain involvement of relevant stakeholders, and evaluate plans usefulness.

• Establish the purpose: job evaluation is part of the process for establishing an internally aligned pay structure. It is aligned if it-
  1. Supports organization strategy
  2. Supports workflow: supports workflow in two ways 1. it integrates each job’s pay with its relative contributions to the organization and 2. it helps set pay for new, unique, or changing jobs
  3. It’s fair to employees
  4. Motivates behavior towards organization objectives
  Establishing purporse helps make job evaluation useful.
• Single versus multiple plans: Many employers design different evaluation plans for different types of work.
• To capture all relevant aspects of work in an evaluation an organization may start with a sample of benchmark (key) jobs. A benchmark job is:
  1. Contents are well known and relatively stable over time.
  2. job is common across a number of different employers it is not unique to a particular employer.
  3. reasonable proportion of the workforce is employed in this job.
• Choosing among job evaluation methods: ranking, classification, and point method. Many companies use market pricing as the primary method of job evaluation.

Question 7

What are three characteristics common to point methods (p.149)?

Answer 7

• Point method: valuation method that employs 1. compensable factors 2. factor degrees numerically scaled and 3. weights reflecting the relative importance of each factor.

Question 8

How does the point method represent a significant change from the other two methods (p.149)?

Answer 8

• Point plans and the most commonly used job evaluation approach from the United States and Europe. They represent a significant change from ranking and classification methods and that they explicit the criteria for evaluating jobs - compensable factors.

Question 9

Define compensable factors and factor weights (p.151)

Answer 9

• Compensable factor: job attributes that provide the basis for evaluating the relative worth of jobs inside an organization. A compensable factor must be work related, business related, and acceptable to the parties involved. Based on the strategic direction of the business and how the work contributes to those objectives and strategy. Points are then attached to each factor weight.
• Factor weight measures that indicate the importance of each compensable factor in a job evaluation system.

Question 10

List (and discuss) the eight steps included in the design of a point plan (p.151).

Answer 10

1.Conduct job analysis - representative sample of jobs (benchmark job), is drawn for analysis. The content of these jobs is the basis for defining, scaling, and weighting the compensable factors.
2.Determine compensable factors -Business asked itself what is it about the work that adds value? To be useful compensable factors should be based on the strategy and values of the organization, based on the work performed,
3.Scale the factors- factor scales: measures that reflect different degrees within each compensable factor. Suggested criteria for scaling factors: 1. Ensure that the number of degrees is necessary to distinguish among jobs 2. Use understandable terminology, 3. Anchor degree definitions with benchmark job titles and or work behaviors, 4. Make it apparent how the degree applies to the job.
4.Weight the factors according to importance Factor weights: - measures that indicate the importance of each compressible factor in a job evaluation system. Weights can be derived through either a committee judgment or a statistical analysis.
5.Select criterion pay structure - Once the criterion structure is agreed on, statistical modeling techniques are used to determine the weight for each factor and the factor scales that will reproduced the chosen structure. Policy capturing: compensable factor importance weights are inferred using statistical methods such as regression analysis. Statistical approach. Committee a priori judgment: compensable factor important weights are assigned by a committee based on judgment.
6.Communicate the plan and train users - A manual is prepared so that other people can apply the plan. The manual describes the method, defines the compensable factors, and provides enough information to permit users to distinguish varying degrees of each factor. Allow users who were not involved in the plans development to apply the plan as its developers intended
7.Apply to non-benchmark jobs - Final step is to apply the plan to the remaining jobs (nonbenchmark). An equation can be used to translate job evaluation points into salaries. This can be done by people who are not involved in the design process but have been given training in applying the plan.
8.Develop online software support - Online job evaluation is widely used in larger organizations. It becomes part of a total compensation service center for managers and HR generalists to use.

Question 11

What do we call the final result of the job analysis-job description-job evaluation process (p.163)?

Answer 11

Final result of the job analysis, job description, job evaluation process is a structure - a hierarchy of work.

Question 12

Recognize that Exhibit 5.16 (p.163) shows four hypothetical job structures within a single organization.

Answer 12

• Obtained by different approaches to evaluating work. Illustrates the results of evaluating work: structures that support a policy of internal alignment. The jobs are arrayed within four basic functions: managerial, technical, manufacturing, and administrative.
  o The managerial and administrative - obtained through a point job evaluation plan
  o Technical and manufacturing structures - by two different person based plans.
  o The manufacturing plan - negotiated with the union.

Question 13

Why is job evaluation so critical (to answer this question, read the section on p.164 labeled “Balancing Chaos and Control”)

Answer 13

• In the 1930s and 1940s there was a irrational pay structures, had a legacy of decentralized an uncoordinated wage setting practices. Paid differences were a major source of unrest among the workers. Employment and wage records were rarely kept, only foreman knew with any accuracy how many workers were employed in the department and the rates they received. Job evaluation help change that. The technique provided work related and business related order and logic.
• Removing inefficient bureaucracy is important but balanced guidelines are necessary to ensure that employees are treated fairly and that the pay decisions help the organization achieve its objectives.

Question 14

What are the three job evaluation methods?

Answer 14

RANKING, CLASSIFICATION AND POINT

• • (Market pricing is directly matching as many of your own organizations jobs as possible to jobs described in the external pay surveys. Your job will be based on survey data internal equity is greatly deemphasized. Many companies do this it does not complete a job evaluation.) NOT ONE OF THE THREE METHODS.
• Ranking: orders the job descriptions from highs to low is based on a global definition of relative value or contribution to the organization’s success. Simple, fast, easy to understand and explain to employees, and least expensive. Negative is that it doesn’t tell employees and managers what it is about their jobs that is important.
  1. Alternation ranking orders job descriptions alternately at an extreme. Valuators agree on which jobs are the most and least valuable which is a 10 and which is a 1 then the most at least valued which is a 9 which is a 2 and so on until all jobs have been ordered.
  2. Pair comparison uses a matrix to compare all possible pairs of jobs. When all comparisons have been completed the jobs, most frequently judged more valuable become the highest ranked jobs.
• Classification: method that involves slotting job descriptions into a series of classes or grades that cover the range of jobs that serve as a standard against which job descriptions are compared.
• Writing class descriptions can be troublesome when the jobs from several job families are covered by a single plan. Gives specificity of the class definition and improves the reliability of the evaluation but it also limits the variety of jobs that can easily be classified. Trying to include a diverse set of jobs in one class can result in vagueness of job descriptions leaves room for subjectivity or judgment.
• Point method: valuation method that employs 1. compensable factors 2. factor degrees numerically scaled and 3. weights reflecting the relative importance of each factor. Once scale degrees and weights are established for each factor, each job is measured against each compensable factor and a total score is calculated for each job. The total points assigned to a job determine the jobs relative value and hence its location in the pay structure.