Hay Associates developed a job evaluation system called the Hay System to help Megalith determine equitable compensation. The Hay System evaluates jobs based on three factors: know-how, problem solving, and accountability. It provides a systematic approach to measure relative job content and compare compensation based on job content rather than titles. While it helps establish clear career paths and pay structures, it is also complicated, emphasizes management know-how, and may be biased or not address team-based roles. Megalith used the Hay System to analyze its finance group and address issues around compensation not matching performance.

1. Megalith case
Study
SLIDES

2. Introduction to Megalith
inc.
Manufacturer of printing
equipments, publisher and suppliers
of office equipments
After world war 2, it diversified into
publishing
Company failed to compete IBM
and Xerox.
John – VP Finance group
Frank – VP HR

3. Hay
Associates
INTRODUCTION

4. Introduction Of Hay
Associates
 Founded at Philadelphia in 1978
 Leading company major focuses on
measuring job contents and providing HR
solutions to businesses.
 They providing services of issues related to:
 Strategic compensation
 Corporate culture
 Performance planning and its measurement
 Outplacement

5. Introduction Of Hay
Associates
• Approach to solve issues:
Understand organizational issues
and their corporate culture
Then develop design to solve it.
• They having Data base that hold all
market and industrial data about
salary practices. Helps them to check
external equity.

6. Megalith And Hay
Associates
 Megalith issue:
 Valuable employees leave organization because of
bureaucratic salary system.
 They fails to develop good compensation system as they
do not understand how to access employees
performance and talent.
 Hay solutions:
 Measure internal equity based on job contents.
 Measure External equity
 After this they will be able to understand
 each job its roles and accountability level
 Helps them to differentiate between best performer and
average performers.
 Based on job roles they can pay them.

7. Megalith Finance Group
 In 1976 Whitefield, decided to focus more on the
Megalith Finance group that’s why he
appointed John Boyd as senior vice president for
Finance
 Finance Group will be responsible for end result
in area of strategy, planning, policy and control.
 Boyd had hired 630 employees which were
previously 350.
 Due to this huge expansion, he required new
personnel who could respond to a challenge.
 They design chart for rating jobs
 They revised there job description

8. Continued
 Boyd hired four key people which
performed beyond their imagination and
expectations.
 All four received every possible promotion,
salary increase and incentive bonuses.
 Boyd decided to drop two important
person just due to not able to providing
them proper benefits.
 Edmund played a major role in retaining
those competitive people by giving
proposal of changing there compensation
policy.

9. Expected Outcomes
 Contribution towards corporate profit and
growth.
 Provide timely and accurate information
 Awareness of financial result to top
management
 Significant contribution to financial group
management continuity and competence.
 To provide effective management information
services
 To provide an effective integrate group
operations and evalutions.

10. Lonny and george
I THINK THAT EXCEPTIONS MUST BE MADE IN THE CASE
OF BOTH THE TOP PERFORMING MANAGERS OF THE
FIRM.

11. continued
The company should pay more to the
high performing employees who have
set a bechmark for others to follow
them into their footsteps.
This increase in the pay of both the
employees is directly related to their
performance rather than their seniority
or high positions within the company.

12. …………………
This can be a source of inspiration
and motivation for other employees
to work hard for the wellbeing of the
company to be rewarded like both
the managers.In this way the
company performance as well as
the interest of the employees will
increase more when associated with
a high pay.

13. ……………….
 The thing which is of much significance for
the company is retai ing both the key players
lonny and george due to the reason of their
contribution and devotion as well as their
knowledge, skills and abilities enthrusted
within the company and its other members.
 Doing so will eventually make the perception
of the company to be performance oriented
in terms of pay rather being dependent on
other discriminating factors.

14. Assessment of
Hay System of
salary
determination

15. Hay system
 It is a scheme which is based on the "points factor"
approach.
 It is based on comparative analysis of base salary and
benefits and develop the job description
 A description of the job is made including such things
as: expertise required, accountabilities, experience
required, functions performed, financial impact of the
job, freedom to decide and act, number of staff
supervised, pre-eminence of the position, influence of
the position within the company etc.
 It provides a systematic approach to relative job
content measurement

16. components
 In the Hay system there is a point score
for each of "Know How", "Problem
Solving" and "Accountability". These
factor points are then used to
calculate a total "points factor" score
for that job. This task is repeated for all
jobs within the company.
 Compensation is compared on the
basis of job contents rather than job
title

17. 1. Knowhow:
Knowhow:
1. technical and practical
knowledge
2. human relation skills
 basic (courtesy)
 intermediate (get along well)
 critical (motivate people)

18. 2. Problem solving:
Problem solving:
1. thinking environment(strictly
routine to abstractly defined)
2. thinking challenge of the
job(repetitive choice making to
creative concept formation)

19. 3.Accountability:
Accountability:
1. Position`s freedom to act(totally
prescribed to unconstrained)
2. Impact on end result(indirect to
direct)
3. dollar magnitude of area

20. Working of hay system in
Megalith
Hay system help by giving
information and an analysis of
system`s strength and weaknesses
and their suggestion for changing
the system
Their numbers data showed
Megalith`s current salary practice
compared with the practice of
broad industrial spectrum

21. assessment
We found out that hay system used
three major factors for the salary
determination which are
knowhow, problem solving and
accountability .they did not use
experience which was very
important factor for megalith as they
don’t want to lose their experienced
and capable finance manager

22. Strength of Hay System
Topic No: 6

23. Strengths of Hay System
Understanding of relative accountabilities of all roles –
HQ, business, function and category
 Clarify how matrix structures are (supposed to be) working
 Establish clear, effective career paths, useful in
determining career moves and development programs
 Design internally equitable pay structures

24. Strengths of Hay System
(cont’d)
 Meet requirements of ‘equal value’ legislation
 Make accurate market competitiveness assessments
through ‘measured job-size’ surveys
 Analyze job and organization design efficiency and
effectiveness
 Determine the best job/person match.

25. Weaknesses Hay System
Topic No: 5

26. Weaknesses
• COMPLICATED SCORING MATRIX (TRANSPARENCY).
• EMPHASIS ON MANAGEMENT KNOW HOW.
• BIAS REFLECTS HIERARCHYAND BUDGET HOLDING.
• UNSUITED TO COLLEGIAL AND TEAM-BASED NATURE OF
EDUCATION SECTOR..
• IS NOT CONCERNED WITH HOW RESPONSIBILITIES ARRIVED AT –
SNAPSHOT SYSTEM.
• GENDER BIASNESS DISCRIMINATION.
• FINANCIAL ISSUES.
• ACCOUNTABILITY.
• RISK FACTOR.
• LACK OF COORDINATION.

27. Megalith, Inc. – Hay associates (B)
TOPIC NO: 7

28. Introduction
• Contain two exhibits
• Data based on 57 items
• Climate survey
• Questionnaires
• 48 employee ( 7 top managers , 41 other employees)
• Finance group

29. Exhibit 1
SHOWS RESPONSE OF SEVEN
QUESTIONS
RESPONSES HAVE BEEN SCALED AS
PERCENTILES

30. A)To what extent does the current reporting structure
facilitate or hinder implementation of the organization
strategies
greatly hinders 1 2 3 4 5 6 7 greatly facilitates
T= 72%
G=62%
B) to what extent are people in this organization free to
take independent actions that are necessary to carry out
their duties
to A very great extent
to A very little extent
T=42%
G=38%

31. C) to what extent are the goals in this organization
truly challenging?
To a very great extent
to a very little extent
T=22%
G=48%
D) relative to it competition this organization is
A follower
A pacesetter
T=43%
G=65%

32. E) Considering The Work You Do, How Would You
Describe You Present Compensation?
Very unsatisfactory
Very satisfactory
T=62%
G=40%
E1) In relation to your performance
T=30%
G=50%
E2) in relation to others jobs of similar size and know
how requirement within the organization
T-65%
G=60%
E3) in relation to comparable jobs in other companies
T=60%
G=50%

34. Exhibit 2
CLIMATE PROFILE BASED UPON
ANSWERS TO ALL 57 QUESTION.
EIGHT DIMENSIONS CREATED BY
MATHEMATICAL TECHNIQUE CALLED
FACTOR ANALYSIS.

36. Dimensions
• ORGANIZATION CLARITY : STRUCTURES,
FUNCTIONAL PATTERNS AND MANAGERIAL
INTENTION
• DECISION MAKING STYLE: TIMELY, RATIONAL
MANNER, LONG TERM EFFECT
• ORGANIZATIONAL INTEGRATION: SUBUNITS
COOPERATE AND COMMUNICATE
• MANAGEMENT STYLE: OWN INTUITION, FEEL FREE,
SUPPORT FROM HIGHER LEVEL

37. •PERFORMANCE ORIENTATION : INDIVIDUAL
ACCOUNTABILITY FOR CLEARY DEFINE END
RESULT , HIGH PERFORMANCE
•ORGANIZATION VITALITY: ORG. AS DYNAMIC
ONE, INNOVATION OF ITS DECISIONS AND
RESPONSIVENESS TO CHANGE CONDITIONS
•COMPENSATION: SYSTEM IS EQUITABLE
, COMPETITIVE, RELATED TO PERFORMANCE

38. THANKYOU