2. Job Evaluation
A job evaluation is a systematic way of determining the
value/worth of a job in relation to other jobs in an
organization. It tries to make a systematic comparison
between jobs to assess their relative worth for the purpose of
establishing a rational pay structure.
5. Ranking of Jobs
Ranking is the system used primarily in smaller, simpler
organizations
The evaluator rank-orders whole jobs, from the simplest to the most
challenging through job analysis.(or job specifications)
If an organization has many jobs, this system is clumsy to use and the ratings
may be unreliable
One way can be to group jobs and then rank them.(by deptt. Or clusters)
Select compensable factors.
Ranking is the least frequently used method of job evaluation
6. Classification or Grading System
Classification or grading groups a set of jobs
Sets are then ranked by difficulty or sophistication
Bases ranking on compensable factors such as judgment, originality, qualification,
difficulty, originality ,experience making grade definitions.
The evaluator first decides how many classifications the job structure has to
be broken into
Then, definitions are written for each class
After the classes are defined, job are compared with the definition and placed into the
proper classification
C l a s s I C o m p u t e r w o r k , n o m a n a g e r i a l r e s p o n s i b i l i t y
C l a s s I I C o m p u t e r w o r k , n o m a n a g e r i a l r e s p o n s i b i l i t y , t e a m i n v o l v e m e n t
C l a s s I I I C o m p u t e r w o r k o f m e d i u m c o m p l e x i t y , n o m a n a g e r i a l r e s p o n s i b i l i t y , t e a m
r e s p o n s i b i l i t i e s
C l a s s I V C o m p u t e r w o r k o f m e d i u m c o m p l e x i t y , m a n a g e r i a l r e s p o n s i b i l i t y , t e a m a u t h o r i t y
C l a s s V C o m p l e x c o m p u t e r w o r k , m a n a g e r i a l r e s p o n s i b i l i t y , t e a m l e a d e r s h i p
7. Point System
The greatest number of job evaluation plans use the point
system
Identify compensable factors
Assign weights to them.
Calculate the net worth of the job.
Requires evaluators to assign points on the basis of:
Skill required
Physical and mental effort needed
Degree of dangerous/unpleasant working conditions
Amount of responsibility
When these are summed, the job has been evaluated
D e g r e e s
F a c t o r W e i g h t 1 s t 2 n d 3 r d 4 t h 5 t h
1 . E d u c a t i o n 5 0 % 5 0 1 0 0 1 5 0 2 0 0 2 5 0
2 . E x p e r i e n c e 2 5 1 2 1 2 2 4 3 6 4 8
3 . C o m p l e x i t y o f j o b 1 2 1 2 2 4 3 6 4 8 6 0
4 . R e l a t i o n s h i p s w i t h o t h e r s 8 8 2 4 4 0
5 . W o r k i n g c o n d i t i o n s 5 1 0 1 5 2 0 2 5
8. Factor Comparison
Method:
Define a set of compensable factors
Select a set of benchmark (key) jobs
Jobs with well-known, stable job content
Jobs that are common in many organizations
Jobs that represent the full range of jobs being evaluated
Jobs that represent the range of each compensable factor
Example: jobs with various skill levels, effort levels, etc.
Jobs for which market pay data is available
9. Factor Comparison
Method:
Rank the benchmark jobs on the basis of each compensable
factor
Example: Rank the jobs from least skilled to most skilled
Collect market pay data for the benchmark jobs
For each benchmark job, allocate market pay across the
compensable factors
Example: If market pay for a benchmark job is $15, how much of that $15
is for skill, how much for effort, how much for responsibilities, and how
much for working conditions?
10. Factor Comparison
Method (more)
Slot all the non-benchmark jobs into their proper places on the
pay scale for each compensable factor
Determine the pay for each job by adding up the pay from each
compensable factor
Example: Pay = pay from skill + pay from effort + pay from
responsibility + pay from working conditions
Example: Fisher, Schoenfeldt, & Shaw (2006),Table 11.7, p. 498
Job 4: Pay = $3.50 for skill + $2.50 for effort + $3.75 for
responsibilities + $1.25 for working conditions = $11.00
11. Pay Classes, Rate Changes, Classifications
The pay-structure process is completed by
establishing:
Pay curves
Pay classes
Rate ranges
Job classifications
12. The Pay Curve
All jobs within a given labor class receive the same rate of pay
In this example, pay classes are determined by the point value
that was set through job evaluation
A pay class (pay grade) is a grouping of jobs that are similar in
terms of difficulty and responsibility
13. The Pay Curve
P o in t s
P a y
c la s s e s
1 0 0 1 2 5 1 5 0 1 7 5 2 0 0 2 2 5 2 5 0 2 7 5 3 0 0 3 2 5 3 5 0
P a y c u rv e
C l a s s 1 C la s s 2 C la s s 3 C la s s 4 C la s s 5
$
$ 3 5 0 0
$ 3 2 0 0
$ 3 1 0 0
$ 2 9 0 0
$ 2 7 0 0
$ 2 5 0 0
$ 2 3 0 0
$ 2 1 0 0
$ 1 9 0 0
M o n t h ly
P a y
14. The Pay Curve
The next slide shows how data from a wage and
salary survey are combined with
A compensation trend line is derived by establishing the
general pay pattern
The trend line can then be determined
The pay rate for any job can be ascertained by calculating the
point value of the job and then locating that value on the trend
line
Minimum and maximum limit lines can be set by
setting a percentage above or below the trend line
15. The Pay Curve
P o in t s
P a y
c la s s e s
$
$ 6 2 5 0
$ 6 0 0 0
$ 5 7 5 0
$ 5 5 0 0
$ 5 2 5 0
$ 5 0 0 0
$ 4 7 5 0
$ 4 5 0 0
$ 4 2 5 0
$ 4 0 0 0
$ 3 7 5 0
$ 3 5 0 0
$ 3 2 5 0
$ 3 0 0 0
0 5 0 01 0 0 1 5 0 2 0 0 2 5 0 3 0 0 3 5 0 4 0 0 4 5 0
C la s s 1 C la s s 2 C la s s 3 C la s s 4 C la s s 5 C la s s 6 C la s s 7 C la s s 8
M o n t h ly
P a y
F ig . 1 0 . 8
16. Delaying and Broad banding
Broad banding:
More emphasis on individual performance
Multiple salary grades and ranges are collapsed into a few wide
levels (bands)
Entry-level employees start at the range minimum; movement
upward is based on performance (merit)
Allows managers to reward top performers while saving money
on mediocre employees
When shifting pay decisions to managers, the firm must guard
against abuse: favoritism can result in unfair use
17. Pricing Managerial and Professional Jobs
Base
Pay
Executive
Benefits and
Perks
Short-term
Incentives
Long-Term
Incentives
Compensating Executives
and Managers
