A critical component of both compensation and selection systems, job descriptions define in writing the responsibilities, requirements, functions, duties, location, environment, conditions, and other aspects of jobs. Descriptions may be developed for jobs individually or for entire job families.
1865 - Karl Marx wrote in Das Kapital that the value of goods and services is based on the amount of labor that goes into them
1885 - Frederick Winslow Taylor stated that the content of labor in labor determines the price of labor
1935 - Edward Hay developed the Hay point factor system
1963 - The Equal Pay Act prohibited discrimination on the basis of sex…for equal work on jobs, the performance of which requires equal skill, effort, and responsibility and which are performed under similar working conditions. The EPA formalized non-market based pay plans
Thus, Ranking each job relative to all other jobs, usually based on some overall factor.
Steps in job ranking:
Obtain job information.
Select and group jobs.
Select compensable factors.
Combine ratings .
Common Methods of Job Evaluations
Ranking method: the grade consists of all jobs that fall within two or three ranks .
Importance of job evolution 1 > To involve the people occupying the positions under evaluation. This is especially so if you think your organizations job descriptions are poorly written or out of date. The people in positions and their immediate supervisors have the best idea of what the job is really about. 2 >Job evaluation is most effective as a participative exercise and this in itself can improve employment relations. It is therefore recommended that job evaluation is introduced or revised jointly by allowing management and employee representatives to discuss relevant issues initially in a non-negotiating forum 3>T o ensure integration of internal fairness and external competitiveness .
Up to date, accurate job descriptions are absolutely essential and should be reviewed for accuracy with the current incumbent before evaluation. More complex job evaluation techniques require more information and often the primary source of this is job descriptions, so the more complex the job evaluation scheme, the more detailed the job description needs to be. . Keep accurate records of decisions taken, to ensure openness, and transparency. Build confidence in the process and outcomes by briefing people Many organizations choose to engage consultants to manage parts or the entire process. These consultants often have access to the expensive but comprehensive data bases containing detailed information about remuneration levels in different sectors. job evaluation methods are not to be confused with performance management or appraisal, where the primary concern is with how well a job is performed . Aspects of job evolution
Job evaluation process The major objectivity of job evaluation process is to establish satisfactory wage and salary differentials, so job analysis should precede the actual programme of evaluation. Objective of job evaluation Job description Job analysis Job evaluation Job specification Wage survey Employee classification
Examines job description and arrange jobs according to value to company e.g. highest to lowest.
Job Classification Method
Classes or grades are defined to describe a group of jobs e.g. government organisations.
Breaking down jobs on identifiable criteria and the degree to which these criteria exist on the job.
Job Evaluation Methods 1/5/2008 Advantage Disadvantage Ranking Fast, simple, easy to explain. Cumbersome as number of jobs increases. Basis for comparisons is not always acceptable. Classification Can group a wide range of work together in one system. Descriptions may leave too much room for manipulation. Point Compensable factors call out basis for comparisons. Compensable factors communicate what is valued. Can become bureaucratic and rule-bound.
Hay’s Method – 3 Factors Jobs exist to achieve an end result Accountability Accountability Therefore, the job holder requires a level of knowledge and experience commensurate with the scale and complexity of the result Problem Solving To achieve this end result, job holders must address problems, create, analyse and apply judgement 1 3 2 Accountability Problem Solving Know-How
Hay’s Method - Process Depth & Range of Know-How Planning & Organising Communicating & Influencing Freedom to Act Nature of Impact Area of Impact (Magnitude) Thinking Environment Thinking Challenge KNOW- HOW PROBLEM SOLVING ACCOUNTABILITY + + = Job Size
Advantages and Disadvantages Incentives Advantages Disadvantages Financial 1.Focus on hitting target 2.Achievement a given value 1.Rewards are sometimes small 2.Can demoralize if not earned Non Financial 1.Can recognize employee priorities and lifestyle 2.Can encourage attachment to business 1.Can be taken for granted 2.May be inappropriate
The Payment of Wages Act, 1936 is a central legislation which applies to the persons employed in the factories and to persons employed in industrial or other establishments specified in sub-clauses (a) to (g) of clause ) of section 2 of this Act
This Act does not apply on workers whose wages payable in respect of a wage period average Rs. 1600/- a month or more.
A worker, who either has not been paid wages in time or an unauthorized deductions have been made from his/her wages, can file a Claim either directly or through a Trade Union or through an Inspector under this Act, before with the Authority appointed under the Payment of Wages Act
Apart from the action by the Inspectorate in the Department, if a worker gets less payment, he can also file a claim before the Competent Authority appointed under the Act, which are Deputy Labour Commissioners for the respective districts. The authority can impose penalty up to 10 times the difference in minimum wages that was due and paid.
Internal Vs External Equity : Will the compensation plan be perceived as fair within the company or will it be perceived as fair relative to what other employers are paying for the same type of labor?
Fixed Vs Variable Pay: Will the compensation be made monthly on a fixed basis – through base salaries – or will it fluctuate depending on such pre-established criteria as performance and company profits?
Performance Vs Membership: Will the compensation emphasize performance and its pay to individual or group contributions, or will it emphasize membership in the organization – logging in a prescribed number of hours each week and progressing up the organizational ladder?
Job Vs Individual Pay: Will compensation be based on how the company values a particular job, or will it be based on how much skill and knowledge an employee brings to that job?
Monetary Vs Non-monetary Awards: Will the compensation plan emphasize motivating employee through monetary awards rewards like pay and stock options, or will it stress nonmonetary rewards such as interesting work and job security?
Open Vs Secret Pay: Will employees have access to information about other workers compensation levels and how compensation decisions are made (open pay), or will this knowledge be withheld from employees(secret pay)?
Centralization Vs Decentralization Of Pay Decisions: Will compensation decisions be made in a tightly controlled central location, or will they be delegated to managers of the firm’s unit?
Egalitarianism Vs Elitism: Will the compensation plan place most employees under the same compensation system (egalitarianism), or will it establish different plans by organizational level and/or employee group (elitism) ?
Below-Market Vs Above-Market Compensation: Will employees be compensated at below-market levels, at market levels, or at above-market levels?
“ Profit-Sharing is a system where an employer gives to all the workers besides the regular appropriate wages, special current or postponed amount which is not based human groundwork but is based on the prosperity of the whole business.”
Profit Sharing Vs Co-partnership Basis Profit Sharing Co-Partnership Scope Allow labor only a share in the profit Has a wider scope and it includes profit sharing plus in the management also Features Brings about no handicap. No risk. No share in losses. Worker as a shareholder is tied down to the company. Reduces mobility. Cash Bonus We usually have cash bonus Indicates that a worker as a shareholder has a right to share in the profit as well as a voice in the bonus. Gets wage + dividend. Usually in kind. Promotion of Industrial Democracy One step short of co-partnership Gives wider diffusion of ownership Application of Scheme Applicable to any type of business Only to company enterprises Interest of worker Workers have no stake, hence no personal extent to that extent Labor enjoys a sense of ownership in the joint enterprise. Workers are personally interested in the success of the company.
Profit Sharing Vs Bonus Basis Profit Sharing Bonus Meaning Employer gives to the workers a portion of surplus profit of the business in addition to wages. A bonus to workman beyond their wages. Basis Profit showing is usually based on definite agreement between the employer and the worker. Payment of bonus depends on the sweet will of the employer or is provided of law. Legal provision No Act has been passed concerning profit sharing. Bonus Act has been passed in the year 1965. Statutory Obligation A voluntary payment although depends on agreement. Was originally , a voluntary payment has become a statutory obligation under the Payment of Bonus Act 1965.
The payment of dearness allowance facilitates employees and workers to face the price increase or inflation of prices of goods and services consumed by him. The onslaught of price increase has a major bearing on the living conditions of the labour.
In India, Dearness allowance (D.A.) is part of a person's salary. D.A. is calculated as a percent of the basic salary. This amount is then added to the basic salary along with house rent allowance to get the total salary.