3job Evaluation

JOB EVALUATION: Establishing pay structure

Assoc. Prof. Dr. Fulya AYDINLI KULAK

Pay structureDefined: pay rates for different jobs within a single organizationApplicable concept: Internal EquityPay more for jobs withgreater qualificationsless desirable working conditionsmore valuable outputMechanism used: Job Evaluation

Job as Determinant of Direct Financial CompensationJob itself a factor, especially in firms that have internal pay equity as primary considerationOrganizations pay for value they attach to certain duties, responsibilities, and other job-related factors, such as working conditions

Job EvaluationFirm determines relative value of one job in relation to another

Right pay for the right job

*Job evaluationProcedure :Select the group of jobsStudy the job job analysisPrepare the job descriptionDevice an evaluation plan (education, experience, responsibilities)Committee of raters / evaluateGroup / classify the jobs Convert job grades to money valueObtain approval from union and managementEstablish a grievance procedure

Job Analysis and Job DescriptionsBefore organization can determine relative difficulty or value of jobs, must first define contentDone by job analysis / job descriptions Compensable factor: Something for which an organization will compensate an employee.

Examples of Compensable Factors for Different Job Families

Job evaluation methodsRanking ClassificationFactor comparisonPoint(Hay profile method)

Standard for ComparisonOther JobsFixed CriteriaUnit ofComparisonWholeJobJobFactorsRanking (qualitative method)Classification(qualitative method)FactorComparison (quantitative method)Point(quantitative method)

Ranking Method

Raters examine description of each job Jobs are compared to each other based on their overall worth to the company.

Ranking MethodAll jobs are ranked in order of complexity, responsibility and demands on respective employeesMade easier by identifying those at the two extreme ends and then the middle regionRanking more than once arrive at final ranking

Simplest, oldest and less time consuming methodThe disadvantages:the intervals between the ranks are assumed to be equal, As the number of jobs for evaluation increases, it becomes increasingly difficult. The evaluators must have knowledge of all jobs.

Ranking Method

Classification MethodDefine number of classes or grades to describe group of jobsEstablish classesCompare job description with class descriptionClass description that most closely agrees with job description determines job classification

For example, the Westinghouse system had:Grade 1 Unskilled ex. File clerkGrade 2 Skilled ex. Typist, Grade 3 Interpretive ex. Chief clerkGrade 4 Creative ex. Engineers, sales repsGrade 5 Executive ex. Department headsGrade 6 Administrative ex. Chief engineer, Director of R&DGrade 7 Policy ex. Vice-president of Marketing

Classification Method

Less time consuming, simple and has been in use for many years.Classification judgments are subjective, Some jobs may fit into more than one grade/category or their descriptions are so broad that they do not relate to specific jobs.

Classification Method

Factor Comparison MethodSelect benchmark jobs.Sets of compensable factors are identified as determining the worth of jobs. 5 universal job factors:Mental requirements, Skills, Physical requirements, Responsibilities, Working conditions

Jobs are ranked on each factor.Wages are allocated to the factors.

The organizations other jobs are compared to the benchmark jobs and rates of pay for each of the other jobs.

Evaluation is accomplished on a factor-by-factor basis by developing a factor comparison scaleFactor Comparison Method

Need not keep entire job in mind; raters make decisions on separate aspects or factors of jobThe value of the job is expressed in monetary terms, Applicable to a wide range of jobs.The pay points for each factor is based on subjective judgments.

Factor Comparison Method

Point MethodNumerical values (points) assigned to specific job componentsJobs are analysed through 5-8 factors and 20-30 sub factors (eg. skill, effort, responsibility and working conditions)Factors are divided into degreesPoints are assigned the degreesSum of points gives quantitative assessment of jobs relative worth

Procedure for Establishing Point Method of Job EvaluationSelect Job ClusterIdentify Compensable FactorsDetermine Degrees and Define Each Compensable FactorDetermine Factor WeightsDetermine Factor Point ValuesValidate Point System

A Point Method Example Select job cluster - Assume we are going to develop point system for administrative job cluster Identify compensable factors - Assume compensable factors identified are: education, job knowledge, contacts, complexity of duties, initiative

A Point Method Example (Cont.)Determine degrees and define each compensable factor - In administrative job cluster, Education, Job Knowledge, and Initiative have been determined to have five degrees; Contacts has four degrees; Complexity of Duties has three degrees.

A Point Method Example (Cont.)FACTOR: CONTACTSLevel (Degrees) - PointsIV Usual purposes of contacts are to discuss problems and possible solutions, to secure cooperation or coordination of efforts, and to get agreement and action; more than ordinary tact and persuasiveness required. 90IIIUsual purposes of contacts are to exchange information and settle specific problems encountered in course of daily work. 66IIContacts may be repetitive but usually are brief with little or no continuity. 42IContacts normally extend to persons in immediate work unit only. 18

A Point Method Example (Cont.)FACTOR: COMPLEXITY OF DUTIES

IIIPerforms work where only general methods are available. Independent 85action and judgment are required regularly to analyze fact, evaluate situations, draw conclusions, make decision, and take or recommend action.IIPerforms duties working from standard procedures or generally 51understood methods. Some independent action and judgment are required to decide what to do, determine permissible variations from standard procedures, review facts in situations, and determine action to be taken, within limits prescribed.ILittle or no independent action or judgment. Duties are so standardized 17 and simple as to involve little choice as to how to do them.

A Point Method Example (Cont.)Determine Factor Weights - Assume committee believes education is very important for administrative job cluster and sets weight for education at 35%. Weights of other four factors were determined by committee to be: Job Knowledge - 25 Contacts - 18 Complexity of Duties - 17Initiative - 5 The percent total is 100%

A Point Method Example (Cont.)Determine Factor Point Values - Committee determines total number of points for plan. Number may vary, but 500 or 1,000 points may work well. Committee has determined that a 500-point system will work.

Job Evaluation Worksheet for Administrative 2 Position

Degree of Factor Job FactorWeight12345Education35%3570105140175Job Knowledge25%255075100125Contacts18%18426690Complexity of Duties17%175185Initiative 5%510152025Total Job Value239

The Hay Profile MethodRefined version of point method Executive and managerial positions are evaluatedFactors:Know-howProblem solvingAccountabilityAdditional compensable elements, such as working conditions

The aggregation of all capabilities or skills required for successful job performanceEx. Technical skills, managerial skills, human relations skillsKnow-how

Problem solvingThe value of know-how is assessed through its application to achieve results.The use of know-how to identify, delineate and resolve problems

AccountabilityMeasures the type and level of value a job can add. 3 dimensions:Freedom to actScopeImpact

Dimensions of accountabilityFreedom to act: The degree of empowerment to take action and the guidance provided to focus on decision-makingScope: Business measuresImpact: The nature of the jobs influence on business results.

Other compensable elementsWorking conditions such as:Physical environmentHazards,Manual effort,Mental concentration.

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