PERFORMANCE AND COMPENSATION MANAGEMENT
(HRM 751)
JOB EVALUATION
NUR ATIQAH BINTI A. RAHMAN
(2012889288)
Prepared for:
Ass...
OUTLINE
1. STEPS IN DEVELOPING TOTAL COMPENSATION STRATEGY
 Assess total compensation implications
 Map a total compensa...
4.

JOB ANALYSIS
 What is Job Analysis
 Why performing Job Analysis?
 What information do we need?
 How should we coll...
7.





JOB EVALUATION METHODS
Ranking Method
Classification Method
Factor Comparison Method
Point Method

8.




...
STEPS IN DEVELOPING A TOTAL COMPENSATION
STRATEGY
STEP 1: ASSESS TOTAL COMPENSATION IMPLICATIONS

• Competitive Dynamics – Understand the
Business
–
–
–
–
–

Changing custo...
Cont..
• Employee preferences
– How to better satisfy individual needs and
preferences
• E.g., text notes that 75% of empl...
STEP 2: MAP A TOTAL COMPENSATION STRATEGY
• Mapping is used in marketing to clarify and
communicate a product's identity
•...
Exhibit 2.8: Contrasting Maps Of Microsoft And SAS
Microsoft’s ‘pay
brand’:
Total
compensation
prominent; strong
emphasis ...
STEPS 3 AND 4: IMPLEMENT AND REASSESS

• Step 3
– Involves implementing strategy through the
design and execution of compe...
COMPENSATION PAY MODEL
POLICIES

TECHNIQUES

OBJECTIVES

INTERNAL
ALIGNMENT

INTERNAL
STRUCTURE
(JA, JD, JE,JS)

•EFFICIEN...
POLICIES: INTERNAL ALIGNMENT
DEFINITION

Refers to comparisons among jobs or skill levels
inside a single organization
(Mi...
Structures vary among organizations, internal pay
structure can be defined:
TECHNIQUE: INTERNAL JOB STRUCTURE
JOB ANALYSIS
JOB ANALYSIS

JOB EVALUATION
JOB EVALUATION

COMPENSATION

JOB DESCRIPTION
JOB DESCRIPTION

• CRITERION
DEVEL...
INTERNAL WORK RELATIONSHIPS WITHIN THE
ORGANIZATION
JOB ANALYSIS
JOB ANALYSIS
OVERVIEW
WHAT is job analysis?
WHAT is job analysis?
WHY performing JA?
WHY performing JA?
WHAT information d...
JOB ANALYSIS
WHAT is job analysis?
WHAT is job analysis?
• Process of defining a job in terms of its component tasks or
du...
DATA RELATED TO JOB
JOB IDENTIFICATION

JOB CONTENT

Title

Tasks

Department in which job is located

Activities

Number ...
HOW should we collect the information?
HOW should we collect the information?
CONVENTIONAL METHODS
•Interview
•Questionnai...
The supervisor or HR specialist normally collects one or more of the following
types of information via the job analysis:
HOW useful are the results?
HOW useful are the results?
DISCREPANCIES
CASE IN 3M COMPANY
3M had an interesting
problem whe...
USES OF JOB ANALYSIS INFORMATION
B
JOB DESCRIPTIONS
JOB DESCRIPTION
OVERVIEW
WHAT is job description?
WHAT is job description?
General guidelines
General guidelines
Job Descr...
WHAT is job description?
WHAT is job description?
• Job Description is necessarily based on the information obtain through...
JOB TITLE: Computer Programmer
DEPARTMENT: IT
REPORTS TO: Director of Computer Services
POSITION SUMMARY: Responsible for ...
Basic considerations
Basic considerations

Common Misconceptions
Common Misconceptions
JOB EVALUATION
JOB EVALUATION
OVERVIEW
What is Job evaluation?
What is Job evaluation?
Objectives Job Evaluation
Objectives Job Evaluatio...
What is job evaluation?
What is job evaluation?
“Job evaluation is a
systematic way of
determining the
value/worth of a jo...
Features
•Tries to assess jobs ,not people
•The standards of job evaluation are relative not absolute
•The basic informati...
OBJECTIVES IN SETTING COMPENSATION RATES
JOB EVALUATION VS PERFORMANCE
APPRAISAL
JOB EVALUATION
PERFORMANCE APPRAISAL
DEFINE

Find the selective worth of a job

Fi...
JOB EVALUATION PROCESS STEPS
JOB EVALUATION FLOWS
BENEFITS OF JOB EVALUATION
ESSENTIALS FOR SUCCESS OF A JOB
EVALUATION PROGRAM
•Compensable factors should represent all the major aspects of job
cont...
JOB EVALUATION METHODS
STANDARD METHODS FOR CONDUCTING JOB
EVALUATION
Unit of Comparison

Target of Comparison

Whole
Job

Other
Jobs

Common
Sta...
JOB EVALUATION QUALITITATIVE APPROACHES
1

2

3

4
1

RANKING METHOD
• As per this method, jobs are arranged form highest to lowest, in order of
their values or merit to the...
CLASSIFICATION METHOD

2

• Job classification method general purpose is to create and maintain pay
grades for comparable ...
3

FACTOR COMPARISON METHOD
• Job evaluators rank jobs that have similar responsibilities and
tasks.
• The evaluators then...
AN EXAMPLE OF FACTOR COMPARISON
METHOD

Suppose the job of a painter is found to be similar to
electrician in skill (15), ...
4

POINT METHOD

• This is a commonly used job evaluation technique. It is an
analytical method which breaks down each job...
POINT METHOD STEPS
CONDUCT JOB
ANALYSIS

DETERMINE
COMPENSABLE
FACTORS

SCALE THE
FACTORS

APPLY TO NON
BENCHMARK
JOBS

CO...
STEP 1: CONDUCT JOB ANALYSIS
• Point plans begin with job analysis
• A representative sample of jobs (benchmark jobs) is d...
STEP 2: DETERMINE COMPENSABLE FACTORS
• Compensable factors – characteristics in the work that the
organization values, th...
UNIVERSAL COMPENSABLE FACTORS

COMPENSABLE
FACTORS
Can be defined as those
characteristics in the
work that the
organizati...
Exhibit 5.9: Compensable Factor Definition: Decision Making
STEP 2: DETERMINE COMPENSABLE FACTORS (CONT.)

• To be effective, compensable factors should be:
– Based on strategy and v...
COMPENSABLE FACTORS - HOW MANY FACTORS?
– “Illusion of validity” - Belief that factors are capturing
divergent aspects of ...
Exhibit 5.10: Compensable Factor Definition: Multinational
Responsibilities
Exhibit 5.11: Factors in Hay Plan
Job Evaluation Manager (JEM)

A powerful solution for managing an organizations job structure

© 2008 Hay Group. All Right...
The facts and figures

88

2600

7000

$450m

Offices in 47 countries

Employees worldwide

International clients

Turnove...
How we organize our business

Helping organizations work

Our purpose

Building effective
organizations

Leadership and
ta...
Who we work with

© 2008 Hay Group. All Rights Reserved

71
Introduction to Hay Group
Established in
Philadelphia in 1943

47 countries/88 cities

2,370 employees

10,000+ clients
Wo...
Introduction to Hay Group (cont’d)
 Hay Group understands the issues associated with the
development of a classification ...
About Hay Group

85
offices in

49 countries

2,600

10,000

$500M

10M

consulting
professionals

clients
working with
mo...
HAY METHOD

The evaluation process
generally begins with
the highest valued
compensable factor and
proceeds in order to th...
KNOW-HOW

PROBLEM SOLVING

HAY
METHOD

ACCOUNTABILITY
KNOW-HOW
• To achieve the accountabilities of a job requires “Know-How”(or inputs), which is
the sum total of every capabi...
PROBLEM-SOLVING
• The value of Know-How is in its application to achieve results.
• “Problem Solving” (or throughputs) ref...
ACCOUNTABILITY
• Every job exists to add organizational value by delivering some set of
results (or outputs). Accountabili...
Exhibit 5.12: Hay Guide Chart – Profile Method of Job
Evaluation
Job Evaluation
Two Point-Factor Methods
• Factor Evaluation
System
Developed in 1977 by the Office
of Personnel Management...
STEP 3: SCALE THE FACTORS
• Construct scales reflecting different degrees within each factor
– Most factor scales consist ...
Exhibit 5.13: Factor Scaling – National Metal Trades Association
STEP 4: WEIGHT THE FACTORS ACCORDING TO
IMPORTANCE
• Different weights reflect differences in importance attached to each
...
Exhibit 5.14: Job Evaluation Form
1000 POINTS METHOD
Point range

Daily range

Job grade of key bank
officials

500 - 600

300 – 400

1 Officer

600 – 700

...
AAIM National Position Evaluation Plan
Points Assigned to Factor Degrees

Factor

1st
2nd
3rd
4th
5th
Degree Degree Degree...
Position:
Grade:
MAXIMUM
FACTOR
POINTS
250
250
500
500
250
250
125
125
125
125
2500

Engineering Manager
7

FACTOR
Communi...
JOB EVALUATION
Example consulting company
ASSISTANT
REQUIREMENTS

Weight

Rating

Value

JUNIOR
CONSULTANT

SENIOR
CONSULT...
STEP 5: COMMUNICATE THE PLAN AND TRAIN USERS
• Involves development of manual containing information to allow
users to app...
STEP 6: APPLY TO NON-BENCHMARK JOBS
• Final step involves applying plan to remaining jobs
– Could involve both designers a...
OVERALL ABOUT THE JOB
EVALUATION METHOD
MAJOR
ADVANTAG
E

MAJOR
DISADVANTAG
E

Nonquantitative

Relatively
quick and
expensive

Entirely
subjective

Whole job

Co...
METHODS
SIMPLE
RANKING

ADVANTAGES
• Simple and easy to understand
• Best suited for small organization

PAIRED
• Analytic...
LIMITATIONS OF JOB EVALUATION
•Rapid changes in demand, supply and technology
•Substantial differences between job factors...
THE FINAL RESULT: STRUCTURE
• The final result of the job analysis – job
description – job evaluation process is a
structu...
Exhibit 5.15: Resulting Internal Structures – Job, Skill, and
Competency Based
SALARY INCREASE BUDGETS SHOW FEW
SURPRISES FOR 2014
TOP 10 HIGHEST PAYING JOBS IN THE WORLD
1

SURGEONS

2

CHIEF EXECUTIVE OFFICERS

3

ENGINEERING MANAGERS

4

AIRLINE PILO...
Cont..
6

LAWYERS

7

AIR TRAFFIC CONTROLLERS

8

COMPUTER & INFORMATION SYSTEMS’ MANAGERS

9

MARKETING MANAGERS

10

NAT...
TOP 5 BEST JOBS
RANK

BUSINESS
JOBS

HEALTHCARE
JOBS

SOCIAL
SERVICE JOBS

TECHNOLOGY
JOBS

CONSTRUCTION
JOBS

CREATIVE
JO...
AVERAGE AUSTRALIAN SALARY

Source: MyCareer job listings inclusive of wage
BEST PAYING SECTORS IN AUSTRALIA
RANK

SECTOR

AVG.
MIN

AVG.
MAX

AVERAGE
$85,415

AVERAGE AUSTRALIAN SALARY

1

ACCOUNTI...
RISKS AND CONSIDERATIONS OF
JOB EVALUATION
POSSIBLE RISKS
Fears that salary costs will rise

Administrative/process costs rise

There is no fit with the strategic ag...
IMPLEMENTATION CONSIDERATIONS
CONCLUSION
Job evaluation is alive
and well. Leading
Job evaluation is not
organization use job
only about maintaining
eva...
QUESTIONS
JOB EVALUATION
JOB EVALUATION
JOB EVALUATION
JOB EVALUATION
JOB EVALUATION
JOB EVALUATION
JOB EVALUATION
JOB EVALUATION
JOB EVALUATION
JOB EVALUATION
JOB EVALUATION
JOB EVALUATION
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  • You might find it more useful to delete some of the logos and focus on a few brands that you want to talk about. Include some local companies and some that are relevant to your client and the work they are interested in.
  • The point factor system uses compensable factors to evaluate jobs. Compensable factors are work-related criteria that the organization considers most important in assessing the relative value of different jobs. The MAA plan has three separate units: Unit 1 for hourly blue-collar jobs; Unit 2 for nonexempt clerical, technical, and service positions; and Unit 3 for exempt supervisory, professional, and management-level positions. The MAA plan includes 11 factors divided into four broad categories. The Unit 1 plan is shown here, with the points assigned to factor degrees.
  • See Exhibit 5.15 on page 144
  • JOB EVALUATION

    1. 1. PERFORMANCE AND COMPENSATION MANAGEMENT (HRM 751) JOB EVALUATION NUR ATIQAH BINTI A. RAHMAN (2012889288) Prepared for: Assoc. Prof. Dr Roshidi Hassan
    2. 2. OUTLINE 1. STEPS IN DEVELOPING TOTAL COMPENSATION STRATEGY  Assess total compensation implications  Map a total compensation strategy  Implement strategy  Reassess 2. MAP A TOTAL COMPENSATION STRATEGY  Objectives  Internal alignment  External competitiveness  Employee contributions  Management 3. INTERNAL ALIGNMENT  Job Analysis  Job Description  Job Evaluation
    3. 3. 4. JOB ANALYSIS  What is Job Analysis  Why performing Job Analysis?  What information do we need?  How should we collect it?  Who should be involved?  How useful are the results? 5. JOB DESCRIPTION  What is Job Evaluation?  General Guidelines?  Job Descriptions Form  Basic Considerations  Common Misconceptions 6. JOB EVALUATION  What is Job Evaluation  Objectives of JE  Job Evaluation vs Performance Appraisal  Benefits of JE  Job Evaluation Methods
    4. 4. 7.     JOB EVALUATION METHODS Ranking Method Classification Method Factor Comparison Method Point Method 8.        POINT METHOD Steps in Point Method conduct Job Analysis Determine Compensable Factor Scale the factors Weight the factors according importance Communicate the plan and train users Apply to non-benchmark jobs
    5. 5. STEPS IN DEVELOPING A TOTAL COMPENSATION STRATEGY
    6. 6. STEP 1: ASSESS TOTAL COMPENSATION IMPLICATIONS • Competitive Dynamics – Understand the Business – – – – – Changing customer needs Competitors’ actions Changing labor market conditions Changing Laws Globalization • Culture/values – A pay system reflects the values that guide an employer's behavior and underlie its treatment of employees
    7. 7. Cont.. • Employee preferences – How to better satisfy individual needs and preferences • E.g., text notes that 75% of employees report satisfaction with compensation, yet over 40% say they would change mix of cash or benefits if given chance • Choice – Examples: Flexible benefits and choices • Union preferences – Compensation deals with unions can be costly to change
    8. 8. STEP 2: MAP A TOTAL COMPENSATION STRATEGY • Mapping is used in marketing to clarify and communicate a product's identity • Offers picture of a company’s compensation strategy based on the five choices in the pay model • Clarifies the message the company is trying to establish with its compensation system • Maps do not tell which strategy is the “best,” providing rather framework and guidance
    9. 9. Exhibit 2.8: Contrasting Maps Of Microsoft And SAS Microsoft’s ‘pay brand’: Total compensation prominent; strong emphasis on market competitiveness, individual accomplishments, performancebased strategy SAS’s ‘pay brand’: total compensation supports work/life balance; competitive market position, co-wide successsharing, egalitarianism
    10. 10. STEPS 3 AND 4: IMPLEMENT AND REASSESS • Step 3 – Involves implementing strategy through the design and execution of compensation system • Step 4 – Reassess and realign, closes the loop and recognizes that the strategy must be changing to fit changing conditions – Involves periodic reassessment
    11. 11. COMPENSATION PAY MODEL POLICIES TECHNIQUES OBJECTIVES INTERNAL ALIGNMENT INTERNAL STRUCTURE (JA, JD, JE,JS) •EFFICIENY COMPETITIVENESS PAY STRUCTURE • FAIRNESS •COMPLIANCE CONTRIBUTIONS PAY FOR PERFORMANCE MANAGEMENT •ETHICS EVALUATIONS (Milkovich, Newman & Gerhart (2011)
    12. 12. POLICIES: INTERNAL ALIGNMENT DEFINITION Refers to comparisons among jobs or skill levels inside a single organization (Milkovich, Newman, Gerhart. 2011) Internal alignment, often called internal equity, refers to the pay relationships among different jobs, skills, competencies within a single organization (Vandae. 2010)
    13. 13. Structures vary among organizations, internal pay structure can be defined:
    14. 14. TECHNIQUE: INTERNAL JOB STRUCTURE
    15. 15. JOB ANALYSIS JOB ANALYSIS JOB EVALUATION JOB EVALUATION COMPENSATION JOB DESCRIPTION JOB DESCRIPTION • CRITERION DEVELOPMENT • PERFORMANCE APPRAISAL • JOB DESIGN/REDESIGN • TRAINING JOB SPECIFICATIONS JOB SPECIFICATIONS SELECTION PLACEMENT
    16. 16. INTERNAL WORK RELATIONSHIPS WITHIN THE ORGANIZATION
    17. 17. JOB ANALYSIS
    18. 18. JOB ANALYSIS OVERVIEW WHAT is job analysis? WHAT is job analysis? WHY performing JA? WHY performing JA? WHAT information do we need? WHAT information do we need? HOW should we collect it? HOW should we collect it? WHO should be involved? WHO should be involved? HOW useful are the results? HOW useful are the results?
    19. 19. JOB ANALYSIS WHAT is job analysis? WHAT is job analysis? • Process of defining a job in terms of its component tasks or duties and the knowledge or skills required to perform them. • Job analysis produces information used for writing job descriptions (a list of what the job entails) and job specifications (what kind of people to hire for the job). WHY performing Job Analysis? WHY performing Job Analysis? Two critical uses of JOB ANALYSIS: •It establishes similarities and differences in the work contents of the job •It helps establish an internally fair and aligned job structure
    20. 20. DATA RELATED TO JOB JOB IDENTIFICATION JOB CONTENT Title Tasks Department in which job is located Activities Number of people who hold job Constraints on actions Performance criteria Critical incidents Conflicting demands Working conditions Roles (e.g., negotiator, monitor, leader) WHAT information do we need? WHAT information do we need? DATA RELATED TO EMPLOYEE EMPLOYEE CHARACTERISTICS INTERNAL RELATIONSHIPS EXTERNAL RELATIONSHIPS Professional/Technical knowledge Boss and other Suppliers Manual skills Superiors Customers Verbal skills Peers Regulatory Written skills Subordinates Professional industry Quantitative skills community Mechanical skills Union/employee groups Conceptual skills Managerial skills Leadership skills Interpersonal skills
    21. 21. HOW should we collect the information? HOW should we collect the information? CONVENTIONAL METHODS •Interview •Questionnaire QUANTITATIVE METHODS •Questionnaire via web-site WHO should be involved? WHO should be involved? JOBHOLDERS SUPERVISORS ANALYSTS
    22. 22. The supervisor or HR specialist normally collects one or more of the following types of information via the job analysis:
    23. 23. HOW useful are the results? HOW useful are the results? DISCREPANCIES CASE IN 3M COMPANY 3M had an interesting problem when it collected job information from a group of engineers The engineers listed a number of responsibilities that they might viewed as part of their jobs.(using other ways to do job efficiently) Therefore, 3M looked for additional ways to reward these engineers rather than bureaucratize them. However, the manager realized that those responsibilities actually belonged to a higher level of work. The engineers had enlarged their jobs beyond what they were being paid to do. So, no one wanted to tell these highly productive engineers to slack off.
    24. 24. USES OF JOB ANALYSIS INFORMATION
    25. 25. B
    26. 26. JOB DESCRIPTIONS
    27. 27. JOB DESCRIPTION OVERVIEW WHAT is job description? WHAT is job description? General guidelines General guidelines Job Description Form Job Description Form Basic considerations Basic considerations Common Misconceptions Common Misconceptions
    28. 28. WHAT is job description? WHAT is job description? • Job Description is necessarily based on the information obtain through the job analysis interview. • It is prepared primarily for defining duties and responsibilities and for job evaluation. • It also useful for such purposes as organization analysis, recruitment, employee placement, performance appraisal, and training development. General guidelines General guidelines
    29. 29. JOB TITLE: Computer Programmer DEPARTMENT: IT REPORTS TO: Director of Computer Services POSITION SUMMARY: Responsible for the application of basic knowledge of programming, logic, and mathematics in the preparation of computer programs. ESSENTIAL FUNCTIONS: 1) Analyses, reviews, and rewrites programs, using workflow chart and diagram, applying knowledge of computer capabilities, subject matter, and symbolic logic. (10%) 2) Converts detailed logical flow chart to language processible by computer. (10%) 3) Resolves symbolic formulations, prepares flow charts and block diagrams, and encodes resultant equations for processing. (10%) 4) Develops programs from workflow charts or diagrams, considering computer storage capacity, speed, and intended use of output data. (10%) 5) Assists computer operators or system analysts to resolve problems. (10%) 6) Assigns, coordinates, and reviews work and activities of programming personnel. (10%) 7) Compiles and writes documentation of program development and revisions. (8%) 8) Prepares or receives detailed workflow chart and diagram to illustrate sequence of steps to describe input, output, and logical operation. (7%) 9) Revises or directs revision of existing programs to increase operating efficiency or adapt to new requirements. (7%) 10) Collaborates with computer manufacturers and other users to develop new programming methods. (5%) 11) Trains subordinates in programming and program coding. (5%) 12) Consults with managerial and engineering and technical personnel to clarify program intent, identify problems, and suggest changes. (4%) 13) Writes instructions to guide operating personnel during production runs. (4%) EXAMPLE JOB DESCRIPTION FORM
    30. 30. Basic considerations Basic considerations Common Misconceptions Common Misconceptions
    31. 31. JOB EVALUATION
    32. 32. JOB EVALUATION OVERVIEW What is Job evaluation? What is Job evaluation? Objectives Job Evaluation Objectives Job Evaluation Job Evaluation vs Performance Appraisal Job Evaluation vs Performance Appraisal Job Evaluation Process Job Evaluation Process Benefit Job Evaluation Benefit Job Evaluation Job Evaluation Methods Job Evaluation Methods
    33. 33. What is job evaluation? What is job evaluation? “Job evaluation is a systematic way of determining the value/worth of a job in relation to other jobs in organization” It is a systematic process of analysing and evaluating jobs to determine the relative worth of each job in an organization. It forms the basis for designing the compensation management system in an organization. (Mehta, 2013)
    34. 34. Features •Tries to assess jobs ,not people •The standards of job evaluation are relative not absolute •The basic information is obtained from job analysis •Carried out by groups, not by individuals •Provides a basis for a rational wage-structure SOME MAJOR DECISIONS IN JOB EVALUATION • Establish the purpose of evaluation • Decide whether to use single or multiple plans • Choose among alternative approaches • Obtain involvement of relevant stakeholders • Evaluate plan’s usefulness
    35. 35. OBJECTIVES IN SETTING COMPENSATION RATES
    36. 36. JOB EVALUATION VS PERFORMANCE APPRAISAL JOB EVALUATION PERFORMANCE APPRAISAL DEFINE Find the selective worth of a job Find the worth of a job holder AIM Determine wage rates for different jobs Determine incentives and rewards for superior performance SHOWS How much a job is worth How well an individual is doing on assigned jobs COMPULSION Not compulsory Compulsory BASIS OF RATING Responsibility, qualification, experience, working condition, etc. Performance TIME Before employee is hired After the employee is hired PURPOSE To establish satisfactory wage differentials To effect promotions, offers, awards, punishments, assess training needs resorts to lay offs, transfers, etc.
    37. 37. JOB EVALUATION PROCESS STEPS
    38. 38. JOB EVALUATION FLOWS
    39. 39. BENEFITS OF JOB EVALUATION
    40. 40. ESSENTIALS FOR SUCCESS OF A JOB EVALUATION PROGRAM •Compensable factors should represent all the major aspects of job content •Operating manager must be convinced about the techniques and programs of job evaluation •Al employees should be provided with complete information about the evaluation techniques and program •All groups and grades of employees should be covered by the job evaluation program • Program and technique of job evaluation should be understood by all employees •The union’s acceptance and support to the program should be obtained
    41. 41. JOB EVALUATION METHODS
    42. 42. STANDARD METHODS FOR CONDUCTING JOB EVALUATION Unit of Comparison Target of Comparison Whole Job Other Jobs Common Standard Job Components JOB RANKING FACTOR COMPARISON JOB CLASSIFICATION POINT SYSTEM
    43. 43. JOB EVALUATION QUALITITATIVE APPROACHES 1 2 3 4
    44. 44. 1 RANKING METHOD • As per this method, jobs are arranged form highest to lowest, in order of their values or merit to the organization • Jobs can also be arranged according to the relative difficulty in performing them. • The job at the top has the highest value and job at the lowest has the lowest value. • Jobs are arranged in each department and then department ranking are combined to develop an organization ranking Eg; ranking of jobs in any department can be done as follows: RANK MONTHLY SALARIES (RM) ACCOUNTANT 6000 ACCOUNT CLARK 3600 PURCHASE ASSISTANT 3400 MACHINE OPERATOR 2800 TYPIST 1800 OFFICE BOY 1200
    45. 45. CLASSIFICATION METHOD 2 • Job classification method general purpose is to create and maintain pay grades for comparable work across your organization. • It uses job classes or job groups to provide more customization in the evaluation • This method also uses scales to measure performance rather than comparing and ranking employees CLASS RANK EMPLOYEES Class 1 Executives Office manager, Deputy Office manager, Office Superintendent, etc. Class 2 Skilled workers Purchasing Assistant, Cashier, Receipts Clerk, etc. Class 3 Semi-skilled workers Steno typists, Machineoperators, etc. Class 4 Less-skilled workers File Clerks, Office boys, etc.
    46. 46. 3 FACTOR COMPARISON METHOD • Job evaluators rank jobs that have similar responsibilities and tasks. • The evaluators then analyse jobs in the external labour market. • Jobs across the organization are then compared to the benchmark jobs according to the market rate of each job’s compensable factors to determine job salaries. • Under this method, instead of ranking complete jobs, each job is ranked according to a series of factors. • These factors include mental effort, physical effort, skill needed, responsibility, working conditions, etc. • Pay will be assigned in this method by comparing the weights of factors required for each job. • Wages are assigned to the job in comparison to its ranking on each job factor.
    47. 47. AN EXAMPLE OF FACTOR COMPARISON METHOD Suppose the job of a painter is found to be similar to electrician in skill (15), filter in mental effort (10), welder in physical effort (12), cleaner in responsibility (6), and labourer in working conditions (4). The wage rate for this job would be (15+10+12+6+4) is 47.
    48. 48. 4 POINT METHOD • This is a commonly used job evaluation technique. It is an analytical method which breaks down each job into a number of factors; for example, skill, responsibility and effort, with the factors sometimes being further broken down into sub-factors, for example, education, decision making and dexterity. • These sub-factors will be further divided into degrees or levels. Points are awarded for each factor according to a predetermined scale and the total points decide a job's place in the ranking order. • The factors should reflect the varying degrees of importance attached to them. • Care must be taken to ensure that the weightings do not result in a sex-biased scheme - for example, by attaching an unjustified weighting to the physical strength factor at the expense of manual dexterity.
    49. 49. POINT METHOD STEPS CONDUCT JOB ANALYSIS DETERMINE COMPENSABLE FACTORS SCALE THE FACTORS APPLY TO NON BENCHMARK JOBS COMMUNICATE THE PLAN & TRAIN USERS WEIGHT THE FACTORS ACCORDING THE IMPORTANCE
    50. 50. STEP 1: CONDUCT JOB ANALYSIS • Point plans begin with job analysis • A representative sample of jobs (benchmark jobs) is drawn for analysis • Content of these jobs is basis for: – Defining compensable factors – Scaling compensable factors – Weighting compensable factors
    51. 51. STEP 2: DETERMINE COMPENSABLE FACTORS • Compensable factors – characteristics in the work that the organization values, that help it pursue its strategy and achieve its objectives • Compensable factors play a pivotal role – Reflect how work adds value to organization – Decision making is three-dimensional: • Risk and complexity • Impact of decision • Time that must pass before evidence of impact
    52. 52. UNIVERSAL COMPENSABLE FACTORS COMPENSABLE FACTORS Can be defined as those characteristics in the work that the organization values, that help it pursue its strategy and achieve its objectives. SKILLS SKILLS EFFORTS EFFORTS RESPONSIBILITY RESPONSIBILITY WORKING CONDITIONS WORKING CONDITIONS
    53. 53. Exhibit 5.9: Compensable Factor Definition: Decision Making
    54. 54. STEP 2: DETERMINE COMPENSABLE FACTORS (CONT.) • To be effective, compensable factors should be: – Based on strategy and values of organization – Based on work performed • Documentation is important – Acceptable to the stakeholders – Adapting factors from existing plans • Skills, and effort required; responsibility, and working conditions • NEMA, NMTA, Equal Pay Act (1963), and Steel plan
    55. 55. COMPENSABLE FACTORS - HOW MANY FACTORS? – “Illusion of validity” - Belief that factors are capturing divergent aspects of a job and are both important – “Small numbers” - If even one job has a certain characteristic, it must be a compensable factor – “Accepted and doing the job” – 21 factor, 7 factors, 3 factors – Research results  Skills explain 90% or more of variance  Three factors account for 98 - 99% of variance
    56. 56. Exhibit 5.10: Compensable Factor Definition: Multinational Responsibilities
    57. 57. Exhibit 5.11: Factors in Hay Plan
    58. 58. Job Evaluation Manager (JEM) A powerful solution for managing an organizations job structure © 2008 Hay Group. All Rights Reserved 68
    59. 59. The facts and figures 88 2600 7000 $450m Offices in 47 countries Employees worldwide International clients Turnover © 2008 Hay Group. All Rights Reserved 69
    60. 60. How we organize our business Helping organizations work Our purpose Building effective organizations Leadership and talent Our service lines BEO solutions Leadership transformation Performance management Capability assessment Talent management Reward services Hay Group Transforming Learning: online diagnostics Our practice clusters Executive rewards Job evaluation Reward Information Services Reward strategies Hay Group Insight: employee and customer surveys © 2008 Hay Group. All Rights Reserved 70
    61. 61. Who we work with © 2008 Hay Group. All Rights Reserved 71
    62. 62. Introduction to Hay Group Established in Philadelphia in 1943 47 countries/88 cities 2,370 employees 10,000+ clients Worldwide 72 © 2007 Hay Group. All rights reserved. New Hampshire2007State of NH Report – Jan 2007.ppt
    63. 63. Introduction to Hay Group (cont’d)  Hay Group understands the issues associated with the development of a classification and compensation plan through the experience gained in working with a wide range of State Governments such as:   State of Mississippi  State of Idaho  State of New Mexico  State of Louisiana  State of Oklahoma  State of Minnesota  State of South Carolina  Comm. of Kentucky  State of Delaware  State of Maine  State of Kansas  Comm. of Pennsylvania  Comm. of Massachusetts  73 State of Alabama State of South Dakota  State of Oregon © 2007 Hay Group. All rights reserved. New Hampshire2007State of NH Report – Jan 2007.ppt
    64. 64. About Hay Group 85 offices in 49 countries 2,600 10,000 $500M 10M consulting professionals clients working with more than half of the Fortune 500 annual revenue leadership assessments around the world 14M and reward survey participants Hay Group partners with clients to achieve competitive advantage through talent. © 2013 Hay Group. All Rights Reserved 74
    65. 65. HAY METHOD The evaluation process generally begins with the highest valued compensable factor and proceeds in order to the lowest weighted factor.
    66. 66. KNOW-HOW PROBLEM SOLVING HAY METHOD ACCOUNTABILITY
    67. 67. KNOW-HOW • To achieve the accountabilities of a job requires “Know-How”(or inputs), which is the sum total of every capability or skill, however acquired, needed for fully competent job performance. • Know-How has three dimensions: 1. Technical/Specialized Skills: Depth and breadth of technical or specialized knowledge needed to achieve desired results. 2. Managerial Skills: The requirement to undertake managerial functions, such as planning and organizing staff or directing and controlling resources, to achieve business results over time. 3. Human Relations Skills: The interpersonal skills required for successful interaction with individuals and groups, inside and outside the organization.
    68. 68. PROBLEM-SOLVING • The value of Know-How is in its application to achieve results. • “Problem Solving” (or throughputs) refers to the use of Know-How to identify, delineate, and resolve problems. • We “think with what we know,” so Problem Solving is viewed as utilization of Know-How, and has two dimensions: 1. Thinking Environment: The job’s context and the degree to which problems and solutions are defined. 2. Thinking Challenge: The nature of addressable problems and the difficulty in identifying solutions that add value. • Problem Solving measures the requirement to use Know-How conceptually, analytically, and productively.
    69. 69. ACCOUNTABILITY • Every job exists to add organizational value by delivering some set of results (or outputs). Accountability measures the type and level of value a job can add. • In this sense, it is the job’s measured effect on an organization’s value chain. It has three dimensions: 1. Freedom to Act: The degree of empowerment to take action and the guidance provided to focus decision-making. 2. Scope: The business measure(s) the job is designed to positively impact. 3. Impact: The nature of the job’s influence on business results.
    70. 70. Exhibit 5.12: Hay Guide Chart – Profile Method of Job Evaluation
    71. 71. Job Evaluation Two Point-Factor Methods • Factor Evaluation System Developed in 1977 by the Office of Personnel Management for non-supervisory general schedule employees. It incorporates many of the characteristics of the Lott, Benge, and NEMA methods. • Hay Method Dates back to the early 50's and is one of the most popular methods in use today. It is particularly popular for evaluating executive, managerial, and professional positions as well as nonexempt clerical, blue collar, and technical jobs.
    72. 72. STEP 3: SCALE THE FACTORS • Construct scales reflecting different degrees within each factor – Most factor scales consist of four to eight degrees • Issue – Whether to make each degree equidistant from adjacent degrees (interval scaling) • Criteria for scaling factors  Ensure number of degrees is necessary to distinguish among jobs  Use understandable terminology  Anchor degree definitions with benchmark-job titles and/or work behaviors  Make it apparent how degree applies to job
    73. 73. Exhibit 5.13: Factor Scaling – National Metal Trades Association
    74. 74. STEP 4: WEIGHT THE FACTORS ACCORDING TO IMPORTANCE • Different weights reflect differences in importance attached to each factor by the employer • Determination of factor weights ₋ Advisory committee allocates 100 percent of the value among factors • Select criterion pay structure – Committee members recommend the criterion pay structure – Statistical approach is termed policy capturing to differentiate it from the committee a priori judgment approach – Weights also influence pay structure
    75. 75. Exhibit 5.14: Job Evaluation Form
    76. 76. 1000 POINTS METHOD Point range Daily range Job grade of key bank officials 500 - 600 300 – 400 1 Officer 600 – 700 400 – 500 2 Accountant 700 – 800 500 – 600 3 Manager I Scale 800 – 900 600 – 700 4 Manager II Scale 900 – 1000 700 – 800 5 Manager III Scale
    77. 77. AAIM National Position Evaluation Plan Points Assigned to Factor Degrees Factor 1st 2nd 3rd 4th 5th Degree Degree Degree Degree Degree Skill (40%) 1. Knowledge 2. Experience 3. Initiative and Ingenuity Physical Effort (30%) 4. Physical Demand 5. Mental or Visual Demand Responsibility (20%) 6. Equipment or Process 7. Material or Product 8. Safety of Others 9. Work of Others Job Conditions (10%) 10. Working Conditions 11. Hazards 14 22 14 28 44 28 42 66 42 56 88 56 70 110 70 10 5 20 10 30 15 40 20 50 25 5 5 5 5 10 10 10 10 15 15 15 15 20 20 20 20 25 25 25 25 10 5 20 10 30 15 40 20 50 25
    78. 78. Position: Grade: MAXIMUM FACTOR POINTS 250 250 500 500 250 250 125 125 125 125 2500 Engineering Manager 7 FACTOR Communication & Interpersonal Skills Education & Training Problem Solving & Decision Making Responsibility & Accountability Specialized Knowledge & Application Supervision & Leadership Internal Impact External Impact Planning & Organizing Innovation JE Points 250 250 400 500 200 250 125 75 125 90 2265 DEGREE LEVEL FACTOR WEIGHTS 4 5 4 4 4 4 3 1 4 2 10% 10% 20% 20% 10% 10% 5% 5% 5% 5% 100%
    79. 79. JOB EVALUATION Example consulting company ASSISTANT REQUIREMENTS Weight Rating Value JUNIOR CONSULTANT SENIOR CONSULTANT PROJECT LEAD Rating Valu e Rating Rating Value Value MANAGER Rating Value Knowledge 2 2 4 4 8 8 16 6 12 4 8 Leadership 3 0 0 0 0 2 6 4 12 8 24 1.5 0 0 0 0 0 0 4 6 10 15 Responsibility for Results 3 2 6 2 6 4 12 6 18 10 30 Cognitive Challenges 2 3 6 4 8 6 12 6 12 6 12 Mobility 1 2 2 7 7 7 7 8 8 5 5 Strategic Impact 2 2 4 1 2 2 4 3 6 8 16 Budget Responsibility JOB VALUE 22 31 57 74 110
    80. 80. STEP 5: COMMUNICATE THE PLAN AND TRAIN USERS • Involves development of manual containing information to allow users to apply plan – Describes job evaluation method – Defines compensable factors – Provides information to permit users to distinguish varying degrees of each factor • Involves training users on total pay system • Includes appeals process for employees – Employee acceptance is imperative • Communication
    81. 81. STEP 6: APPLY TO NON-BENCHMARK JOBS • Final step involves applying plan to remaining jobs – Could involve both designers and/or employees trained in applying the plan • Tool for managers and HR specialists once plan is developed and accepted • Trained evaluators will evaluate new jobs or reevaluate jobs whose work content has changed – May also be part of appeals process STEP 7: DEVELOP ONLINE SOFTWARE SUPPORT • Online job evaluation is widely used in larger organizations • Becomes part of a Total Compensation Service Center for managers and HR generalists to use
    82. 82. OVERALL ABOUT THE JOB EVALUATION METHOD
    83. 83. MAJOR ADVANTAG E MAJOR DISADVANTAG E Nonquantitative Relatively quick and expensive Entirely subjective Whole job Compare job Nonto descriptions quantitative Readily available and expensive Cumbersome system FACTOR COMPARISON Compensable factors of job Compare job to key jobs on scale of compensable factors Quantitative Easy to use Hard to construct; inaccurate over time POINT METHOD Compensable factors of job Compare job to standardized description Quantitative Accurate and overtime May be costly METHOD WHAT FACT OF JOB IS EVALUATED HOW IS JOB EVALUATED TYPES OF METHODS RANKING Whole job (Compensable factors are implicit) Jobs are subjectively ordered according to relative worth CLASSIFICATION
    84. 84. METHODS SIMPLE RANKING ADVANTAGES • Simple and easy to understand • Best suited for small organization PAIRED • Analytical and objective COMPARISON • Relative and valid as each job is compared CLASSIFICATIO • Cooperatively less subjective N METHOD • Easy to understand • Takes into account all the factors • Effectively used for verity of jobs POINT METHOD • • • • Superior and widely used Systematic Reliable Minimum of rating error DISADVANTAGES • Not suitable for big organization • Difficult to understand • Same criteria to assess all the jobs is questionable • Time consuming and costly • Oversimplifies sharp differences • Job descriptions are vague and are not quantified • Complex • Time consuming ADVANTAGES & DISADVANTAGES OF THE JOB EVALUATION METHODS
    85. 85. LIMITATIONS OF JOB EVALUATION •Rapid changes in demand, supply and technology •Substantial differences between job factors and market factors •Difficult to change initial stage wage fixation •Doubts and fears •Financial limitations •Not exactly scientific difficulty in selecting compensable factors
    86. 86. THE FINAL RESULT: STRUCTURE • The final result of the job analysis – job description – job evaluation process is a structure, a hierarchy of work • Managerial, technical, manufacturing, and administrative
    87. 87. Exhibit 5.15: Resulting Internal Structures – Job, Skill, and Competency Based
    88. 88. SALARY INCREASE BUDGETS SHOW FEW SURPRISES FOR 2014
    89. 89. TOP 10 HIGHEST PAYING JOBS IN THE WORLD 1 SURGEONS 2 CHIEF EXECUTIVE OFFICERS 3 ENGINEERING MANAGERS 4 AIRLINE PILOTS 5 DENTISTS (Kunad, 2013)
    90. 90. Cont.. 6 LAWYERS 7 AIR TRAFFIC CONTROLLERS 8 COMPUTER & INFORMATION SYSTEMS’ MANAGERS 9 MARKETING MANAGERS 10 NATURAL SCIENCES (Kunad, 2013)
    91. 91. TOP 5 BEST JOBS RANK BUSINESS JOBS HEALTHCARE JOBS SOCIAL SERVICE JOBS TECHNOLOGY JOBS CONSTRUCTION JOBS CREATIVE JOBS 1 Mkt Research Analyst Dentist School Psychologist Computer Systems Analyst Cost Estimator Public Relations Specialist 2 Financial Advisor Registered Nurse Interpreter & Translator Database Administrator Construction Manager Architect 3 Accountant Pharmacist Substance Abuse Pathologist Software Developer Plumber Art Director 4 Compliance Officer Physician Speechlanguage Pathologist Web Developer Glazier - 5 Audit Clerk Physical Therapist Landscaper & Groundskeeper Computer Programmer Cement Mason - (US news, 2013)
    92. 92. AVERAGE AUSTRALIAN SALARY Source: MyCareer job listings inclusive of wage
    93. 93. BEST PAYING SECTORS IN AUSTRALIA RANK SECTOR AVG. MIN AVG. MAX AVERAGE $85,415 AVERAGE AUSTRALIAN SALARY 1 ACCOUNTING $48,781 $156,30 7 $83,273 2 ADMIN/OFFICE SUPPORT $32,891 $96,180 $54,987 3 AUTOMOTIVE $31,946 $138,75 0 $64,905 4 BANKING & FINANCIAL SERVICES $45,263 $188,58 8 $86,602 5 COMMUNITY, SPORT & LEISURE $34,842 $120,56 2 $68,619
    94. 94. RISKS AND CONSIDERATIONS OF JOB EVALUATION
    95. 95. POSSIBLE RISKS Fears that salary costs will rise Administrative/process costs rise There is no fit with the strategic agenda There are no positive benefits for stakeholders The organization takes on too much
    96. 96. IMPLEMENTATION CONSIDERATIONS
    97. 97. CONCLUSION Job evaluation is alive and well. Leading Job evaluation is not organization use job only about maintaining evaluation as a source internal equity in the of competitive compensation program. advantage by improving It facilitate the organization’s organizational clarity, ability to manage its building capability, and investment in human establishing resources with greater commitment through credibility, discipline, culture and rewards. and fairness. It is a critical management tool, extremely useful in ensuring an organization’s proper integration of strategy, culture, structure, process, people, and rewards.
    98. 98. QUESTIONS

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