This document discusses building an internally consistent compensation system through job analysis and job evaluation. It explains that job analysis is the systematic study of job duties and responsibilities to obtain relevant information about job skills, factors, environment, and requirements. Through job analysis, various data is collected about work activities, demands, tools, knowledge, performance, context, and personal requirements. The results of job analysis are a job description defining responsibilities and requirements, and a job specification defining the knowledge, skills, and abilities required. Job evaluation then compares jobs to determine appropriate compensation levels.

1. Building Internally Consistent
Compensation System
Dr. G C Mohanta, BE, MSc(Engg), MBA, PhD(Mgt)
Professor
Al-Qurmoshi Institute of Business Management
Hyderabad
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2. Components of Compensation System
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3. Types of Equity
 Internal Equity - Fairness of the pay
structure, relationship among jobs within a
single organization
 External Equity - Comparisons of similar
jobs in different organizations
 Individual Equity - Comparisons among
individuals in the same job within the same
organization
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4. Equity Theory
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5. Creating Internal Equity through
Job Analysis and Job Evaluation
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6. Internal Equity in Practice
Job analysis
Collecting data about jobs
Job evaluation
Valuing jobs
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7. Job Analysis
 The systematic, formal study of the duties and
responsibilities that comprise the job
 The process seeks to obtain important and relevant
information about the nature and level of the work
performed
 It Can be used to identify/determine:
• Skill levels
• Compensable job factors
• Work environment (e.g., hazards; attention; physical effort)
• Responsibilities (e.g., fiscal; supervisory)
• Required level of education
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8. Types of Data Collected Through Job
Analysis
 Work Activities – work activities and
processes; activity records; procedures used;
personal responsibility
 Worker-oriented activities – human
behaviours, such as, physical actions and
communications on the job; elemental motions
for methods analysis; personal job demands,
such as, energy expenditure
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9. Types of Data Collected Through Job
Analysis (Contd.)
 Machines, tools, equipment, and work aids
used
 Job-related tangibles & intangibles –
knowledge dealt with or applied; materials
processed; products made or services
performed
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10. Types of Data Collected Through Job
Analysis (Contd.)
 Work performance – error analysis; work standards;
work measurements, such as, time taken for a task
 Job context – work schedule; financial and nonfinancial
incentives; physical working conditions; organizational
and social contexts
 Personal requirements for the job – personal
attributes, such as, personality and interests; education
and training required; work experience
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11. Job Analysis Result
• Job Description
– Job based
– Tasks
– Work performed
• Job Specification
– Employee based
– Knowledge, skills & abilities
– Experience
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12. Job Description
 Output from job analysis used to develop job
description and job specification
 It defines the responsibilities, requirements,
functions, duties, location, environment, conditions
and other aspects of jobs
 It may be developed for jobs individually or for the
entire job families
 It describes and focuses on job itself and not on any
specific individual who might do the job
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13. Job Specification
 It defines worker characteristics (i.e.,
knowledge, skills and abilities) required to
perform the job competently
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14. Job Evaluation
 Methods and practices for ordering jobs or
positions with respect to their value or worth
to the organization
 A system for comparing jobs for purpose of
determining appropriate compensation
levels for individual jobs or job elements
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