Human Resources Management Flashcards
What is a Job Analysis?
- process for gathering, documenting and analyzing information about a job to determine:
- activities and responsibilities it includes
- its relative importance to other jobs
- qualifications necessary for performing the job
- conditions under which the work is performed
What gets done, How it gets done, Skills required to get it done
Basis/source for HR decisions: who gets hired, who has skills, wage, how measure performance when evaluating them, what training necessary to perform job
What should a Job Analysis conclude in/produce/provide?
- Job Description: A list of tasks, duties, and responsibilities that a job entails
- Job Specification/Job Profile: A list of KSAOs that an individual must have to perform a job.
What are KSAOs? Or what does it stand for?
- Knowledge: Factual or procedural information necessary to perform a task
- Skill: Individual’s level of proficiency at performing a task
- Ability: refers to general enduring capability that an individual
possesses - Other characteristics: might include personality traits, resilience, motivation…
What is a Position Analysis Questionnaire?
194 item questionnaire that a job analyst or supervisor fills in to broadly identify work behaviours, work conditions and job characteristics (to find what are the conditions for the job).
What is ESCO and O*NET?
Public taxonomies (Klassifizierungen) of occupations and related skills. (online)
- ESCO–EuropeanSkills,Competencies,QualificationsandOccupations.BasedonEUinfo. o - - O*NET–OccupationalInformationNetwork.BasedonUSAinfo.
How can I conduct a Job Analysis/How can I find out what work behaviors, conditions and job characteristics are relevant to a job?
Position Analysis Questionnaire
or
(Rely on existing) Public taxonomies of occupations and related skills ( ESCO & O*NET)
What is Job Design? And what is important to effectively execute Job Design?
Process of defining how work will be performed and the tasks that will be required in a given job
- To effectively design jobs, one must thoroughly understand the job as it exists (using job analysis) and
its place in the larger unit’s work-flow process.
What are the 4 approaches for job design?
Mechanistic Approach
Motivational Approach
Biological Approach
Perceptual-Motor Approach
Can you only use one approach to design a job?
No they are not mutually exclusive, we can use several
What is the Mechanistic Approach and what are drawbacks and Antitodes?
The focus is to identify the simplest way to structure work that maximizes efficiency by :
- increasing simplicity
- specialization
- repetition
Work is reduced in its complexity and it’s so simple that anybody could be quickly and inexpensively trained to perform it. Ex: in factory lines: each person does the same (simple) thing over and over again
- Low meaningfulness of the work
- Individuals are easily replaceable; Reduce need for individual workers (low reliance and less
dependency on high ability individuals)
- Potential drawback: Boredom, fatigue in employees
o Antidote: Job/TaskRotation: periodic shift of responsibilities and tasks between employees
What is the major focus of the Motivational Approach?
Focuses on job characteristics that affect meaning and motivation through increasing meaningfulness of jobs. How can we design jobs where people are really engaged in, putting continuous effort?
What Model is an example for the Motivational Approach in job design? And what is it about?
Job Characteristics Model (Hackmann & Oldham)
Model of how job design affects employee reactions
o Jobs have 5 characteristics, which determine the motivating potential of a job, by affecting 3 critical psychological states
- Core Job Characteristics: Skill variety, Task Identity, Task significance, Autonomy, Feedback
- Critical Psychological States: Experienced Meaningfulness of work, Experience. responsibility of the outcomes of work, Knowledge of actual results of the work activities
o When the core job characteristics are high, individuals will have:
- high level of intrinsic work motivation
- high work effectiveness (quantity and quality)
- higher levels of job satisfaction
- Learning and feeling able to meet challenges
o Experienced meaningfulness may be the most important when it comes to managing work- related stress
o Although the 5 characteristics are important, task significance may be the most critical motivational aspect of work
How can meaningfulness of jobs be increased (motivational approach /Job Characteristics Model)?
Meaningfulness of jobs can be increased by:
o Job enlargement: Broadening types of tasks performed
o Job enrichment: Empowering workers by giving more decision-making authority doing the
jobs
o Self-managing teams: when making decisions, Leadership is distributed throughout the team,
instead of centralized in one person
o Increasing the Prosocial impact that people perceive that job might have: Judgment that one’s actions are beneficial to other people. Make people feel that their job has really strong beneficial impact to other people.
§ Example: Telecommunications technicians have to drive out to remote places to check the networks. It’s tedious, boring work. But technicians are motivated knowing it’s important to make sure even people in remote places receive important fire or earthquake warnings through the network
What is the Biological Approach? What is its Goal?
- Addresses physical demands through ergonomics and work conditions
o Ergonomics is concerned about examining the interface between individuals’ physiological characteristics and the physical work environment - GOAL: reduce physical strain on the worker by structuring the physical work environment around how the body works. Thus, it focuses on outcomes such as: reducing physical fatigue, reducing exam pains and reducing health complaints
- Example: the redesigning of machines, technologies, furniture, … to minimize occupational illnesses, such as carpal tunnel syndrome (pain derived from doing repetitive awkward movements)
o Ex: Social media influencer hires someone to take photos of him/herself to prevent further carpal tunnel / selfie wrist - Direct effects on physical health
- Indirect effects on employee’s psychological state and organizational climate of health and safety.
This approach signals to employees that organizations care about their physical and psychological well-being.
Human Capital
Human Capital refers to employee knowledge, skills, and abilities that are valuable for the firm. One important function of HRM is its “buying” and “making” of desirable employee knowledge, skills, and abilities, which can in turn be used to create value for the firm
Motivation
Motivation refers to an individual’s direction, intensity, and duration of effort (Campbell et al., 1993).
Human Capital –> capabilities to contribute
Motivation –> extent to which employees are willing to utilize these capabilities.
“The potential value of human capital can be fully realized only with the cooperation of the person” (Jackson & Schuler, 1995, p. 241).
HRM practices need to effectively align the interests of employees and employers so that employees are willing to exert their effort
Skill-enhancing/Human capital Practices
Practices designed to ensure appropriately skilled employees:
* Comprehensive recruitment
* Rigorous selection
* Extensive training
Motivation-enhancing HR practices
HR practices implemented to enhance employee motivation:
* Developmental performance management
* Competitive compensation
* Incentives and rewards
* Extensive benefits
* Promotion and career development,
* Job security
Opportunity-enhancing Practices
Practices designed to empower employees to use their skills and motivation to achieve organizational objectives:
* Flexible job design, work teams,
* Employee involvement and participation, and
* Information sharing
What is “horizontal fit”?
Horizontal fit among various HR practices - such that these practices complement and are aligned with each other
What is “vertical fit”?
Vertical fit - such that the work system is aligned with the organization’s strategy
* e.g. If an organization commits to diversity and inclusion, then this philosophy should be at all levels of the company – not just hiring diversely but making sure training and development opportunities address diversity issues, and making sure pay is equitable
What did Pfeffer, J., & Sutton, R. I. (2006) say?
“If doctors practiced medicine the way companies practiced management, there would be far more sick and dead patients, and many more doctors would be in jail.”
Business decisions frequently based on…
- (Obsolete) knowledge of practices
- Personal past experience
- Specialist skills
- Hype
- Casual benchmarking
- Ideology
Evidence-based HR requires…
…collecting data on such metrics as
- productivity
- turnover
- accidents
- employee attitudes
- medical costs
and showing their relationship with HR practices
Evidence-based HR demonstrates …
that human resource practices have a positive influence on the company’s bottom-line or key stakeholders (employees, customers, community, shareholders)
Why is there a research-practice gap?
- Managers don’t read academic research
- Managers turn to other HR professionals at work, SHRM website, other internet sites
- Managers don’t feel very strongly about the usefulness and applicability of research
findings
Decoy effect
When an irrelevant 3rd option can influence how people decide between 2 viable options.
This happens due to CONTEXT-DEPENDENT WEIGHTING (decoy and target candidate excel are given more weight in the final choice) and to DOMINANCE HEURISTIC (choosing dominating candidate allows the decision maker to avoid difficult trade- offs)
- Decisions are hard. Relative Decisions are Easier
- Be aware that presentation of choice sets can affect your judgment; an issue of systems not of individuals
Fundamental attribution error - (and how is behavior effected in reality?)
when we attribute behaviors to traits and personality and discount the situational factors.
Ex: if someone cuts you off on the road you think that’s because of who they are (bad person); we don’t usually think they might be speeding to the hospital
(In reality, behavior is a product of both the personality and situational factors (i.e. Person-Situation Interactionist view)
- Doing my job requires me to do more “extraverted” or “conscientious” behaviors
- These behaviors are “rewarded” and the opposite is “punished”
- Behaviors can be trained and learned
- Don’t overrely on personality traits and selection)
What is Performance Management about?
Not only about performance evaluation but:
Process through which managers ensure that employees’ activities and outputs (and behaviors) are congruent with the organization’s goals in order to maximize individual and, by extension, organizational performance.
What is the process of performance Management?
Performance Management is a cyclical, never-ending process –> system
Step 1: Define performance outcomes for company division and department
- Ex: in a R&D department of a pharmaceutical company performance outcomes can be the number of
patents filed for new drugs or the number of scientific discoveries converted into products and launched into the market
Step 2: Develop employee goals, behavior, and actions to achieve outcomes – this helps to set individual expectations to be tied to organizational goals
- Ex: the researches in the pharmaceutical company may be told that they need to set their personal work goals, specifying their own progress that they would like to see in perhaps three months until the rest of the year. In R&D it is typically collaborative team behaviors that help to advance scientific discoveries
Step 3: Provide support and ongoing performance discussions – This should be frequent check-ins and being given the tools and help that is required to succeed (e.g. providing coaching and feedback aimed at helping employees to improve). These can also overlap with training and development issues
Step 4: Evaluate performance – we are making judgments on how well an employee has performed relative to expectations. There are many approaches to evaluating performance. As this is a social judgement, biases and errors are bound to affect it and we will also explore those
5& 6 are noch chronological but next to each other
Step 5: Identify improvements needed – employee performance should be measured and evaluated to inform talent decisions (e.g. should an employee be promoted or fired?). Part of these set of questions also concern how employee performance should be rewarded. This step also includes improvements needed to the performance management system: is this performance system working well?
Step 6: Provide consequences for performance results
Performance Management vs Performance appraisal/evaluation
- Performance management is the broad collection of activities designed to maximize individual and,
by extension, organizational performance. The purpose is to align individual efforts to achieve
organizational goals.àSystem/Process that encompasses a broad collection of activities - Performance appraisal/evaluation: assessment of past performance within a given time frame, by completing rating tools/forms and having formal conversation between employee and manager to
discuss the evaluation results.àone part of the performance management process
o This aims to judge how well employees have performed relevant to expectations and to make a variety of talent and organizational decisions based on this information
What are different options for performance evaluation?
360 degrees feedback: If everyone is providing feedback on you. This is a common and used tool in large organizations. Many companies use this for mix purposes (both development and administrative purposes), leading to it being misused.
o Self-appraisal: individuals can evaluate themselves
o Managerial appraisal: managers can evaluate individuals
o Peer appraisal: your colleagues can give you feedback and appraisal
o Individuals can also receive feedback from subordinates and others outside the organization
(ex: clients and relevant stakeholders)
What are the two functions of Performance Management? And what is the consequence of that for the performance evaluation process?
- Developmental use/function: geared toward improving employees’ performance and strengthening
their job skills, through providing feedback, counseling on effective work behaviors, giving training
and other learning opportunities, … - Administrative use/function: whenever they are the basis for a decision about the employee’s work
conditions, including promotions, termination, and rewards
Consequence: An effective performance management system should: 1) in a 1st cycle run through improvements needed, and then (Steps 1-5) 2) in a 2nd cycle making the decisions and enacting consequences for performance results. (Step1-4+6)
In what conflict are managers when they evaluate performance?
Helper Vs Judge
due to developmental function (improve employees skills) vs Administrative function (evaluate, promote/fire)
How employees feel about performance management?
- Performance management is often not done well, resulting in a process perceived as time consuming, burdensome and failing to deliver value.
° “The performance management system does not reward high performance, deal effectively with poor
performances nor motivate them to improve”
° “The process is too time-consuming and burdensome and it takes me away from “real work””
° Executives also don’t trust performance ratings: “I don ́t believe that performance ratings are accurate
reflections of performance. Using these ratings as basis of talent decisions is really difficult”
What are approaches to Performance Management?
Comparative Approach
Attribute Approach
Results Approach
Behavioural Approach
What is a comparative approach?
Requires the rater (= examinador) to compare an individual ́s performance with that of others (e.g.: ranking, forced distribution, paired comparison)
- Categorize people into different grades of performance. Example: top, middle and bottom performers
o High performers are rewarded; Low performers are given chances to improve (if no improvement, asked to leave)
- Problems: 1) threatens teamwork; 2) encourages sabotage; 3) typically ignores middle performers
–> You should only use this approach if within your company/unit there are huge discrepancies in performance and the job is something that doesn’t benefit from collaboration (jobs whose outputs are clearly individual)
Attribute Approach
- Extent to which individuals have certain attributes believed desirable for the company ́s success
- Rate people on qualities
- Benefits: easy for managers to come up with it
- Problems:
o Some of the qualities/attributes can be very ambiguous, leaving room for conscious or unconscious biases (inter-judge/integrated reliability)
o Definitions of reliability and standards can differ dramatically across supervisors
o Assessment of traits focuses on the person rather than on the performance, which can make employees defensive. This type of person-focused approach is not conducive for development.
Results Approach
- Managing the objective, measurable results of a job or work group
- Using quantifiable, objective data to assess performance. Examples: Amount of sales ($, volume);
client satisfaction, key performance indicators (KPI), … - Problems: results can be affected by external or seasonal factors that are out of control of the
employees, who have to be rated on these metrics. Ex: car seller is not able to sell cars due to the shortage of cars, as an aftermath of the pandemic; or he may sell more cars at the end of the year, when people receive their bonuses. - In order to gain acceptance of employees in using this approach, organizations should try to take into account those external factors (beyond employees’ control)
Behavioral Approach
- Define the behaviors an employee must exhibit to be effective in the job (e.g.: critical incidents, behaviorally anchored rating scales (BARS), Behavioral Observation Scales (BOS))
- Building rating scales that are linked to clear definitions of behavior
- Problem: this approach is tedious to develop because you need to cycle through a lot of incidents to
come up with a comprehensive list of behaviors that are performance relevant - Benefits/Strengths: 1) High Validity and 2) Acceptance among employees in using this to assess performance Is usually very high. These are due to its congruence to performance and clarity in defining what performance is.
How to develop the behavioral skills used to evaluate performance?
- Critical Incidents Technique.
STEPS:
1) Identify key incidents representing performance issues (“What are some incidents in which performance was affected, positively or negatively?”)
2) Review key incidents and find out information about them (for instance, the context, behaviors,
consequences, relevance to performance, …)
3) Double-check with others (ex: supervisors, other employees, …) 1) that the incidents represent one dimension of performance and 2) that the behavior is relevant to dimension
a. If others don’t agree that this incident is about performance, then you discard the incident
and the behaviors that don’t generate agreement
4) Using the incidents and behaviors that do generate agreement, then Build a scale to assess these performance-relevant behaviors
What are two possibilities to rate within the behavioral approach for performance management?
- Behaviorally Anchored Rating Scales (BARS): bring the benefits of qualitative and quantitative data to the employee assessment process. BARS compare a person’s performance with concrete examples of behavior anchored in numerical assessments
- Behavioral Observation Scales (BOS): process of identifying key tasks for a particular job, but the difference is that employees are scored according to how often they perform the behavior required for effective performance
Biases in Performance Management (Übergeordnete Arten)
Rater Responding Bias
Rater Perceptual Bias
Rater Social Bias
Ratee Bias
What are Rater Responding Bias (name and explain)?
Rater Responding Bias: originate from the rater in the way that they use the scales
a) Leniency bias: people tend to use only the high end of the scale when rating others. Ex: classes where
the professor only gives 18, 19, 20
b) Central tendency bias: there ́s a tendency to use only the middle part of the scale. Ex: using only 3 –
“Neither agree or disagree”
–> These 2 biases can happen when raters have continually existing work relationships with ratees (even
after raters have submitted the ratings). Thus, raters tend to be neutral to avoid bad feelings.
Rater Perceptual Bias (name and explain)
a) Contrast effect: An average performance is rated much poorer when contrasted with an excellent
performance. Similarly, an average performance is rated much better when contrasted with an extremely poor performance. Example: The group presentation before of yours was exceptional and your group’s presentation was averagely executed. But the audience rated you lower than average because of how the first group performed
The order of what is presented affects the ratings:
b) Recency effect: Items near the end of a sequence are the easiest to recall (the one that you have seen
most recently)
i) If we only have annual performance evaluations, most people will be affected by this, as the last
2 months of performance will be the ones most evaluated, rather than the whole 12 months.
c) Primacy effects: The items at the beginning of a sequence are next easiest to recall.
–> Items in the middle are the least likely to be remembered. Example: Your ratings for the course tend
to be based on the class before the performance evaluation and the first class of the course. The middle parts are a blur.
Rater Social Bias (name and explain)
a) 3.2. Halo effect: Tendency to rate favorably on one aspect because of a high rating on a different aspect. Ex: Because a person you are interviewing is good looking, you have a good perception of them regarding job performance/intelligence
3.3. Horns effect: Tendency to rate unfavorably on one aspect because of a low rating on a different aspect. Ex: Because a person you are interviewing is badly dressed, you infer that they probably are bad at the job
3.4. Similarity/Liking: Tendency to rate those who are similar to us/we like favorably. Ex: If the person you are interviewing belongs to the same football team as you, you will think of them more favorably
b) Confirmatory bias: the tendency to search for, interpret, favor, and recall information in a way that affirms one’s prior beliefs or hypotheses. Example: Manager A believes that subordinate B is hardworking. When making performance evaluations, the manager only remembers the months where his productivity is high. Also, manager thinks that B’s productivity is because of his hardworkingness and staying late at work (but this only happened a few times)
- We tend to look for evidence that confirms our beliefs
c) Implicit bias: happens outside of our control and we are unaware of it. It happens automatically when we make quick judgements and assessment of people/situations, influenced by our background, cultural environment and personal experiences
i) The Implicit Association Test (IAT): measures implicit bias. Reaction times on the IAT indicate how
much you implicitly associate one concept (ex: women) with another (ex: career). If the concepts are easily associated for you, then the reaction time is faster. Scores on the IAT correlate somewhat with people’s explicit associations. Even though we explicitly say we are not sexist, for instance, we still hold some subconscious implicit beliefs about career and gender.
- This bias originates from the society where we live (thus, those living in the same society have the same beliefs, independently of gender/background), as since a very young age we are exposed to certain beliefs. Overtime, these beliefs start to operate at an automatic/unconscious level, influencing us!
- Representation matters: the dominant ideas we have, even though it’s subconscious, it’s that successful businessman or scientists are men/white/look a certain way, …
- “Rate my Professor”: “brilliant”, “funny” most used for men; “nice”, “rude” and “unfair” for women
o Male professors tend to be seen as more competent than women professors
o Women professors tend to be evaluated with expectations of warmth and agreeableness (if
they are strict, they’re a bitch)
Ratee bias: What effect belong into thiss bias category and what are its implications fro managers?
Ratee Bias: Knowing the limits of your knowledge is real wisdom
* Dunning-Kruger Effect / Unskilled and Unaware Effect: common effect in self-ratings. Cognitive bias in
which people mistakenly assess their cognitive ability as greater than it is (not everyone does that!)
Observations:
® “Better than average Effect”: Most people are saying they are better than the 50 percentile.
Everybody thinks they are better than average.
® People who are objectively in the bottom quartile are greatly overestimation their performance,
whereas people who are top performers are usually underestimating their performance
Implication of Dunning-Kruger effect for managers:
° Poor performers are not able to see that they are performing poorly and thus Feedback for poor
performance is crucial (show them what they are doing poorly and show how to do it better) o Whatshouldmanagersdo?ProvideAdditionaltrainingorcoaching
° Actual high performers may not be advertising their performance o Whatshouldmanagersdo?Spotlighttheirachievements
Has compensation a small/moderate/large impact on attitudes and behaviors?
Large
On what has compensation consequences?
-Has consequences on SELECTION:
Influences the kind of employees who are attracted to the organization
- Has consequences on TURNOVER:
determines who remains with the organization - Has MOTIVATIONAL consequences:
is a powerful tool for aligning current employee ́s interests with those of the broader organization (because it explicitly says what kinds of behaviors and outcomes are rewarded)
How do organizations determine what is an employee’s base pay?
-> Follow the 9-step process that guides determining base pay
What is Step 1 to determine what is an employee’s base pay?
STEP 1: Determine Pay Philosophy
- The question that an organization should ask when doing this is: “What is the organization ́s goal or
beliefs about compensation?” –> This should guide how everyone in the organization is paid - The key is to create a central philosophy and be consistent in its application regarding pay practices
o Ex: a company can choose to have a “fair” repartition of salaries, and so everyone receives the same. OR, it can also choose a philosophy that says that the company is ultra-competitive and so salaries will reflect this philosophyàYou just need to be consistent: once you have a philosophy, apply it consistently and don’t apply it arbitrarily
Consider market forces, in order to determine the pay philosophy: What is your strategy relatively to the market? Compared to your competitors, what should your salaries look like? -> Possible Strategies, considering market forces:
- LEAD the market: Organization pays above market rate / more than its competitors. Purpose is to 1) gain personnel advantage or 2) attract talent away from competition
- MATCH the market: Organization pays around market rate, similar to competitors
- LAG BEHIND the market: Organization pays below market rate / less than its competitors. This can be:
a. Not a conscious decision:
i. Usually a misjudgment that needs to be corrected
ii. Or could be a result of limited compensation budget
b. Or a conscious decision:
i. Only happens if this is a highly attractive organization and has a really attractive employer branding: employer branding is so attractive that they can afford to lag behind the market without any negative impact on recruitment and retention. Ex:
interns compared to regular workers
o Be super careful with this last strategy: Bad is greater than good. –> Prospect Theory (Kahneman & Tversky (1979)
What is the Prospect Theory and by who is it and when was it introduced?
By: Kahneman & Tversky
In 1979
The orange dot refers to market rate: Saying that “bad is greater than good” means that dollar for dollar being under the market or having a bad or lower pay has a stronger deterrent or demotivational effect than the positive effect of
paying above the market (so having a good pay).
Why shouldn’t you underpay people?
Justification 1
The orange dot refers to market rate (Ursprung): Saying that “bad is greater than good” means that dollar for dollar being under the market or having a bad or lower pay has a stronger deterrent or demotivational effect than the positive effect of paying above the market (so having a good pay).
- If the orange dot is pay at market rate: paid ONE DOLLAR MORE than market rate (+$1), then the perceived value is going to INCREASE TO 15 POINTS approximately (and we see that with the blue line on the top right corner of this grid).
- But if you are paid OMNE DOLLAR LESS than market rate (-$1), then this leads to a DECREASE OF PERCEIVED VALIUE OF 40 (and we can see that on the bottom left part of the grid).
–> Losses loom larger than gains.
–> So, as an organization you must try your hardest never to pay under market, as people often reject low paying jobs (low offers) on the basis of pay alone, and don’t even consider other factors. Most concreete info you have of job
Justification 2
The Ultimatum Game is a way that behavioral economics try to understand how people respond to being paid and receiving rewards. Research has shown that in these type of ultimatum games, people overwhelmingly reject low offers.
What is Step 2 to determine what is an employee’s base pay?
STEP 2: Conduct a Job Analysis
- Recall: A job analysis is a process for gathering, documenting and analyzing information about a job
to determine the activities and responsibilities it includes, its relative importance to other jobs, the qualifications necessary for performing the job and the conditions under which the work is performed.
What is Step 3 to determine what is an employee’s base pay? And name examples for the topic.
STEP 3: Group jobs into job families
- Once you ́ve done the job analysis you will have accurately developed job descriptions. With them,
organizations should determine whether
o They want to group the jobs into separate job families (each with their own pay grades)or
o Have one pay grade system for all the positions throughout the organization
Examples of job families:
° Very SIMILAR FUNCTIONS of jobs are grouped together in a family: Administrative job family, technical job
family, management job family and executive job family
° Job families based on GEOGRAPHIC locations (different countries or regions)
° Job families based on DIFFERENT DIVISIONS (marketing is one division, strategy in other, communication in another – and then jobs that deal with those divisions could be grouped together)
What is Step 3 to determine what is an employee’s base pay?
STEP 4: Rank positions using job evaluation method
- A Job Evaluation is the process of rank-ordering jobs – NOT THE PEOPLE in them – based on job content
to demonstrate the relative worth and level of responsibility of all jobs to one another.
- This is rank ordering of jobs, not the people in them and not about the performance. So, it is not the
same as performance evaluation – It is about the job itself
What is job evaluation method? How does it work?
- First, we want to Define Compensable Factors:
o Compensable factors: job characteristics that the organization values and chooses to pay for.
o Examples of compensable factors: knowledge skill requirements, responsibility, working
conditions (ex: in a construction site there is some danger – undesirable working conditions), physical requirements (Is this a job who really requires your manual labor?)
o There can be a difference in the maximum points to be achieved to give us an idea of relative importance and relative worth for the organization on these different factors - Then you rank it. Higher points –> higher compensation
What is Step 5 to determine what is an employee’s base pay?
STEP 5: Conduct Market Research
- Once you get the idea of how many points a job might be worth, then you can benchmark it against
Market Research and market data.
- Ensures that wages are comparable to similar positions
o consider that between different organizations, job titles can be very different, should read the descriptions of the job survey to make sure that the related tasks, functions and levels of responsibility match the positions at the organization.
–> this kind of data is called the SALARY LINE (and you could buy these kinds of data from consulting companies).
o To obtain current accurate salary information --> obtain information from more than one market survey resource. o other way of looking at market data is to look at professional organizations (ex: you want to hire engineers --> engineering association to see if the association conducts salary research). o never contact other competitors directly for compensation information o employer reported data are usually more reliable and trustworthy than employee provided salary information.
What is Step 6 & 7 to determine what is an employee’s base pay?
STEP 6 Create Job Grades
STEP 7: Create Salary Range for each Job Grade
- A conventional GRADED PAY STRUCTURE consists of sequence of job grades into which jobs of equivalent value are fitted: if 2 jobs are within the same grade, then they fluctuate around similar worth/value
- Each grade has a PAY RANGE or BRAND, offering the employee scope for progression within his grade.
- Graded pay structure places more significance on such factors as tenure and progression through organizational hierarchy
o HOW LONG SOMEONE HAS BEEN IN THE ORGANIZATION hugely matters in this kind of pay structure
- An employer can have as many/few pay grades as it wants. Usually, small startups/organizations may have only a few pay grades (2/3), while bigger institutions like governmental institutions may have more (as much as 15)
- Each job family can have its own pay grades and pay ranges that are established independently from other job families.
- OR: all job families can follow the same pay grades
What is a PAY RANGE or BRAND?
- Each grade in a Graded Pay Structure has a PAY RANGE or BRAND, offering the employee scope for progression within his grade.
What is a Graded Pay Structure?
A conventional GRADED PAY STRUCTURE consists of sequence of job grades into which jobs of equivalent value are fitted: if 2 jobs are within the same grade, then they fluctuate around similar worth/value
What is Step 8 to determine what is an employee’s base pay?
STEP 8: Determine how to deal with salaries not within range (deal with salaries that are not within these ranges/bands we have decided on)
What should we do when:
* Salaries are below the minimum rate that the employer has established for the position’s salary range?
–> Provide pay increases to match a minimum in the range (considering what we know about low offers)
What should we do when:
* * Salaries are above the maximum rate that has been established for the position’s salary range?
–> Facilitate promotions into the next pay grade
- Pay grade ranges will usually overlap - The more overlap, the more cost-effective it will be for career progression (for promoting someone into the next grade) - Less overlap will require a larger pay increase for internal promotions (when people switch to the next grade)
–> Adjust fixed pay to a performance bonus (which is roughly equal to the amount of what the pay increase would have been)
- This allows for the recognition of an employee’s outstanding performance without altering/increasing their base pay
–> Restrict further salary increases by freezing pay
–>Lowering an employee’s base pay
