Module 4 - Market-based Job Evaluation Flashcards
Market Data emphasis
- job descriptions are used to match survey data
- market data is analyzed and benchmark jobs are arranged into a hierarchy
- jobs with no market data are slotted using job content to determine relative worth
- problem areas are analyzed and discrepancies reconciled to develop the job worth hierarchy
Evaluating executive and non-executive jobs
- market pricing is a tool used to determine competitive market rate for a given job. the method of pricing base pay is essentially the same for both executive and non-executive jobs.
- when pricing executive jobs, however, determining competitive base pay is only the first step. the focus then shifts to pricing other elements of the executive compensation package, which could include short term and long term incentives, perks, and executive benefits. in many cases, looking at STI and LTI extends below the executive level. especially in the US, candidates are looking at the competitiveness of the overall compensation package when making a decision whether to join an organization.
- for both executive and non-executive jobs, the most frequently used method of job evaluation is the market data approach, based on market pricing of base pay.
Market Data - Reasons to Collect and Considerations
Reason to collect:
- price jobs (analyze pay competitiveness by collecting information on the going market rate for benchmark jobs in organizations with whom the organization competes for human resources)
- analyze pay trends (identify year-to-year movement of salaries and cash compensation in the labor market)
- identify pay practices (gather information on competitive compensation practices, programs, policies, and procedures)
- establish a job worth hierarchy (use market rates for benchmark jobs to establish a market based job worth hierarchy)
Considerations:
- data collection options
- selection of benchmark jobs
- selection of relevant labor market
Considerations in Data Collection and Options
Purchase published surveys
- there are thousands of published surveys available for purchase
- purchase price varies by survey scope, type of analysis, and overall sophistication of the final product
- most survey providers give a substantial discount to survey participants
Sponsor custom third-party survey
- a third party conducts the survey to meet your needs and specifications
- the third party can be a professional association, graduate students from a local university, or a consultant
- in many cases, participants in a survey sponsored by an individual company pay nothing to receive a copy of the survey results
Complimentary sources
- trade and industry associations
- internet sources
- periodicals and publications
- professional recruiters
Decision Factors
Cost: does the survey provide enough benefit to justify the expense?
Time: how much time will it take to gather survey data? how quickly must survey data be obtained and analyzed?
Reliability: is the survey sponsor reputable? has data been verified for accuracy?
Availability: is current data available in time to meet the organizations needs?
Data format: is data formatted to provide specific information? are data reported by industry, by geographic area, number of employees?
Published: low cost, fast time, high/medium reliability, high confidentiality
Third party custom: high custom, slow to medium time, high reliability, high confidentiality
Free: no cost, fast time, low reliability, ? confidentiality.
Benchmark jobs:
used for making pay comparisons to develop or validate a job worth hierarchy.
internal jobs that can serve as market anchor points because they closely resemble jobs performed in other organizations or industries (at least 70% match of duties)
at least 50% of jobs in organization should be benchmarked when using market-based job evaluation method
Selecting benchmark jobs
- easily defined and found in other organizations important to your organization. important to look at job description and match to survey jobs based on content of the job, not the title. survey data firms can provide mapping guides to help level jobs between one survey and another.
- representatives of all levels of the organization; spread from top to bottom and across all functions.
- important to the organizations internal hierarchy; ensure that core business employees are represented fairly
- established jobs with multiple incumbents in the organization
Relevant labor markets
employee sources and destinations: the relevant labor market can be described as the markets from which the organization draws its employees and or the markets to which it loses employees.
labor markets are generally defined in terms of:
- industry
- organization size
- geographic location
markets typically differ by job groups
Q: Differentiate between job evaluation with a market data emphasis and job evaluation with a job content emphasis
…….
Q: Identify data collection option and describe considerations related to each option
……….
Quiz: Which of the following statements is most accurate regarding the market based job evaluation method? A) the relative value of jobs is determined primarily by the nature and level of work. B) the emphasis for evaluating jobs is based on the internal value of the different jobs within the organization. C) jobs may be slotted using job content if there is insufficient market data.
jobs may be slotted using job content if there is insufficient market data.
Quiz: Which of the following best describes the relevant labor markets in which organizations compete for employees? A) they differ by job groups/levels. B) they are limited to the local market of operations. C) they are usually defined in terms of organization type (nonprofit, privately owned, corporation)
they differ by job groups/levels
Quiz: What method is used most frequently to evaluate executive level positions? A) point factor. B) ranking. C) paired comparison. D) market pricing
market pricing
