chapter 5 - job-based structures and job evaluation Flashcards
what impacts job-based structures and evaluation (I think this is the question?)
industry, size of company and location
Remember, Job Analysis is
a basic building block for all major functions of HR
Purpose of a job evaluation
- A formal, methodical way to bring more consistency to often arbitrary ways of setting wages
- To provide information to design more equitable and defensible job leveling and ultimately pay decisions
- Basis for equal pay for equal work
- The formal process (versus an informal process) brings more credibility, defensibility and validity (reliability), all which make pay more accepted by manager and employees
Purpose of a job evaluation - Helps set pay by:
Determining the relative value of jobs in a company
Establishing the criteria to match internal jobs to jobs in salary surveys (these salary survey jobs are called benchmark jobs)
Establishing the criteria for evaluating internal jobs that are not easily benchmarked to salary survey data to interpolate what is appropriate market pay
Definition of Job Evaluation
A process of systematically determining the relative worth (importance or value) of jobs within an organization in a structured, orderly & consistent manner which takes accounts of job content & organizational context
It is used to establish internal relativities and provide a basis for designing equitable (and defensible) pay grades and pay structure
A formal process to establish a job worth hierarchy or the relative worth of jobs in an (one) organization
Job Evaluation - How it Influences Internal Job Structure
Building a Job Worth Hierarchy (another view of building internal job structures)
(look at image in notes)
ADEHG
ADES
Market Pricing - NOT a Job Evaluation Method
Competitive Market Analysis Method (Market Pricing):
Direct matching of jobs to external pay surveys; job evaluation forms the basis for market pricing:
- Utilize job descriptions to compare jobs to like positions within the external marketplace
- Pay data collected from published sources and the value of the position within the competitive market is determined
- Considers the organization’s compensation philosophy; where do we want to position ourselves vis-à-vis the market?
- Requires an overlay to see how it fits with the internal hierarchy
Market pricing is used by many organizations to determine:
- Competitive value of individual positions
- Company’s overall positioning in the marketplace
- Company’s pay positioning against its compensation philosophy
- Whether pay programs achieve basic objectives of compensation
- Internal equity
Comparison of Job Evaluation Methods
Types or methods of job evaluation methods
Research shows that different methods will result in different pay structures, so the choice of method matters
(look at image)
ranking
classification
point
Job Evaluation Methods; Point Method
Point methods have compensable factors, with factor degrees numerically scaled, and weights reflecting importance of each factor; each job’s relative value is determined by its total points
Point methods Identify job factors that add value & worth to a position; job factors separated into groups (i.e., skill, responsibility, effort) and assigned a numerical or weighted point value; points for individual factors are added up to get a point value for the job
Job Evaluation Methods; Point Method - Compensable factors
Compensable factors are characteristics in work that the organization values that are aligned with the strategic direction of the business, and contribute to the objectives and strategy
- The factors are scaled to reflect the degree to which they are present in each job and weighted to reflect their overall importance
- Points are then attached to each factor weight
Job Evaluation Methods; Point Method (advantages vs disadvantages)
Advantages
- Reliable and defensible
- Relatively objective
- Easy to use for new jobs or as jobs change
- Logical to most employees and managers
- Can be applied to a wide range of jobs
Disadvantages
- Time-consuming to develop and maintain
- Requires skilled practitioner to develop – “job analyst” don’t really exist in the market
- “Value” for factors is based on judgments that are subjective
Point Factor - Examples (ON QUIZ)
As a rule, Know-How points as a percentage of the total tends to decrease as job value increases
Problem Solving and Accountability points as a percentage of the total tend to be lowest at the lower valued jobs
look at image
- Benchmark Jobs: Starting Point
- One that has a standard and consistent set of responsibilities from one organization to another (and across industries)and therefore, can be compared from one organization to another
- Job content is not unique to one employer and doesn’t differ significantly from employer to employer
- Content of job well-known & relatively stable over time
- Data is widely available on the key metrics of these jobs, including salary and career path
_ of jobs in most companies are benchmark jobs
80-95% of jobs in most companies are benchmark jobs
- Determine Compensable Factors
Work characteristics that, based on the company’s strategy and objectives, are:
- Valued by the organization
- Help the organization pursue its strategy and achieve its objectives
- Reinforce the organization’s culture, values, business direction
The “value” of certain work characteristics and compensable factors can change over time:
- For example, if the business starts to expand internationally, international perspective becomes “valued” or if the company begins to have more software aspects of its product (versus mainly hardware), software skills may become more valued than they were when the company was only a hardware company
- Also, companies de-emphasize the value of certain aspect of a job if they no longer support the business, e.g., Burlington Northern eliminates # subordinates supervised as a compensable factor
