76 COMPENSATION AND REWARD MANAGEMENT

ii. Pressures from employee groups/ulons.

jri. Scarcity of skills. .

iv: Unsystematic approach to pay-structue.

Job Evaluation as a systematic approach inat brings in better rationalization in the Pay;I
Wage-strucure.

Objectives
Thep.urp.osesthatareservedby]obEvaluationfemulti-foldconsideringtheissuesfacingthe
orgamzationatapointofine.However,theprmayandsecondaryobjectivesIEservesare
as follows:

Primciry Objectives
• To estabnsh wage level of a plant
• To estabtish relative wage level in a plant
• To bring new jobs to their proper relative parity with exischg jobs
• To facihitate wage negotiations

Secondary Obiectives
• To detefnine qualities Gob-specification) for new jobs for employee selection
• To determine criterion for merit rachg and promotions
• To analysewage rates
• ` To find scope of automation and improvement
® To train new supervisors
• To improve working conditions as better compensation in Heu of that

Table 4.2= Aspects of Job Evaluation

5'rsRE#ff lass*k-§#*f f i.:.I.5§§. I .+ .. I ;Hh ~-,RE!J].,A RE tap
` i `- , /b`_````* \+...I-J

cq#If ¥ -' .8 S „ „ - -8. ``sf ac, . `REgrffiasff§di##t. ` _, - er .-a

f>%.-.i---`.-,s€i..ef,_;-ca anREse
RERE `' / • €S' ays !fffffffip, 3
"I ,seen.#L

--gr& '` -I:#-,,,1Sl--.J-L*?-S;--`:i•.I-.-i.-i.,*E--i-

8- n
# , = :I. ¥

a
with External Mark F}#

`#
I
--tt ffn_ ,+ `=.` I ``8 f L-
ti
` ` r`u<<J
=111 -.>Fi+-I
I.t..t#
I ,,11' #'.-,lay a I. iI-F!r..-€/,=f-£
FE% a It ,-di `;

- ,£€¥ ; -Fir,f~:'J<, -

3 -, - - -lrI,-* --# .
 •,`,

CHAPTER 4 lndustry's Compensation Policy (Micro-Level) 77

Job Evaluation Procedure

The general step-wise procedure for job evaluation is as under:
1. Jcfecf zfecgroG¢P a//.ode.. Such as workmen category office staff, supervisory or managerial
as disinct groups.
2. Sturdy the job (job ana,kysis)
i The jobs are studied by (a) Getting information from the employee about his work,
a) Observing the work, and (c) Consulting the supervisors of the employees.
ii. The information gathered from different sources regarding a particular job is
recorded on the Job Analysis Sheet. Full details regarding the content of work,
equipment used, working conditions, qualifications needed to do the work, time
taken to learn the job, supervision received and given, and responsibilities involved
are noted down on the Job Analysis Record.
P"P¢/t7 /.o4-deJcyzpzz.ace -¢4Proo¢/,. On the basis of detailed information^, recorded
in the Job Analysis Sheet, Job descriptions are prepared. These job descriptions state
simply and clearly a comprehensive picture of the job.
Device an euahaation Plan -common characteristics/traits: A set o£ .k!ey E2Lctors
such as education, experience, responsibilities and working conditions are selected and
weightages given to au these factors. Each factor is generally divided into degrees which
indicate the extent to which the factor is required for successful performance of the job.
This constitutes the job evaluation plan. It is known as the point plan as it involves alving
points to each of the jobs to indicate their relative values.
5.
•Establish a committee Of raters and rate / evaluate.. A corrlrirlttee o£ £arf yes .ic;+rrrly
rate the jobs by applying the point plan to the job description. In case of any difference
of opinion among the ratefs, efforts are made to arrive at a conclusion by referring to
facts stated in the job description, the job analysis, and in some cases by going back to the
work spot.
6. Gfro„4 or cdesfGjs/ £fec/.odf.. The point values given to the job on various factors are
totaued up and the 'total points secured by different jobs are classified into grades. The
number of grades into which they can be classified depends upon the poHcies of the
orgrnisation, the view of Management and Union, and the experience and judgement of
the raters.
Convert job grades to mo7eey ualtte along avith Wage Se4rvey.. The pcf" v2[has of
the jobs are converted into money values on the basis of the wage survey results and
finances available for estabfishing a Management are equitable wage differential in the
organis ation. ,r,7

Obtain approval froin Union and Management

ESJtzb/G.sfe tl f"G.Jtz4de grz.c#¢cecc Procccz„rer A report on the job evaluation containing
fun details regarding the wbrk,, done and a set of recommendations is prepared for use,
at the time of impleinentation and in dealing with any appeals from the employees.
78 COMPENSATION AND REWARD MANAGEMENT

•:. METHODS AND SYSTEMS OF JOB EVALUATION`

The methods and systems of ]ob Evaluation are divided, into different categories which are as
follows:
A. CoceoG„Jg.oae¢/.. A variety of job evaluation systems are in use and all of them are
modifications of four basic systems. These are the ranking system, the grading system,
the factor comparison system, and the point system. All of them are similar to each
other in certain respects and are applicable to all types of 'jobs at all levels.
I Non-quantitative
a. Ranking method
b. Classification method
11 Quantitative
a. Points Ratingmethod
b. Factor comparison method
8. J„acoai4Jde/Noce-Cocec/cac#.oce¢Z. These systems are quite innovative and use concepts
of management decision-making and related aspects as factors for estabhshing internal
equity. These are:
1. Time span of Discretion method
2. Decision Band method
3. Direct consensus method
4. Guide chart profile method
5. Urwick orr profile method

Ranking Metliod

In this method, simple and easy job-descriptions are made and sotted in the sequential order
of their worth as a whole. The jobs common in various organizations are checked and are
ranked/rated by interpolation. All the jobs in an organization are ranked in the order of
complexity, responsibility and demands they make on the respective employees. Ranking of au
the jobs is made easier by flrst identifying those that come at two extreme ends of the scale and
locating the rest in the middle-redon. A committee carried out this ranking more than once
and the results of repeated ranking are pooled to arrive at the final ranking. Wherever there is
significant discrepancy in fankings by members of the Evaluation Committee, the matter is
setded by mutual discussion. The final ranking of jobs is based on the average.ranking of au
members and the times ranked.

Advcinrdges
• It is simplest of all procedures.
• Itis less time-consuming.
 I,.

CHAPTER 4 lndustry's Compensation Policy (Micro-Level) 79

• It leaves more room for unions to bargain disadvantages.

• Sometimes equal differentials are assessed to adjacent ranks.
• None of the committee member is likely to be familiar with all jobs.

Classification Method

This method is sometimes called as predetermined grading method. A lirnited number of job
grades are established on the basis of knowledge about the existing jobs in the organisation.
Each of these grades is defined in terms of general functions and qualfications required. This
is followed by development of job descriptions, which briefly state the nature of duties of
each job. These global job descriptions are matched with the grades, and jobs are classifled
into one or the other grades.

Advcmtages
• It is comparatively an easier method.
• Itisless time-consuming.

Disadvantages
• It is irrational in absence of loalc, and nearby jobs are sometimes put in different classes.
• It is very hard to determine the pre-requisites of classes.

Point Rating Method

In this method, the whole job is analysed through 5-8 factors and over 20-50 sub-factors
based on requirements. Thes_e factors/sub-factors are given points which total out as the
overau posidon of the jobs. Though it is not scientific it is systematic method. It is the most
popular method in use today in judalng the relative of worth of jobs factors. The steps
involved in this system so far described are:
a. Job analysis through interview/questionnaire and actual observations.
b. Writing the job description from the data collected through job analysis and checking
them up with departments supervisors concerned for accuracy.
Thenextimportantstepistheselectionofanappropriateplanforthejobstobeevaluated.
Aplanshouldcontainsuchjobcharacteristicsorfactorsdividedintoanumberofdegrees
which would provide suitable scales for measuring the extent of a pardcular characteristic
present in the job being evaluated. Further, a plan should be developed or adopted in
such a way as to cover the types of jobs which are to be evaluated, thus, a plan for clerical
employees is not suitable for factorty operatives. In such a plan, the inclusion of the
factor of physical effort may not be necessary because of the sedentary nature of the
job, but physical effort is an important factor in almost all factory jobs. After factors that
havebeendecideduponshouldbedefinedtomaketheirmeaningsclearandunambiguous.
80 COMPENSATION AND REWARD MANAGEMENT

Due weightage should be given to them. Here again, one has to be careful in judalng the
relative weightage of factors. Thus in a sophisticated` process Plan the factor of mental/
visual effott will have a higher weightage than the facto'r of physical effort, because the
job of the operator is mainly to keep a watch ori instruments and meters at the control
panel father than to go for heavy physical exertion. Factors are then divided into a
suitable number of degrees between their extremes land each degree is defined to make
its meaning clear. Thus the factor of education may, in a plan to evaluate factory operatives,
have three degrees between the lowest (which may be defined as ability to follow
instructions) and the highest (a certificate of proficiency in trade from an institution).
Point values are then assigned to each degree. Summing up, it may be stated that this step
would involve:
c. Development of an appropriate plan which involves:-
i. Selection and deflnition of factors and giving due weightage to them.
ri. Deciding on the number of degrees and defining them, and
iii. Assigning point values to degrees.
An example of the factors, degrees and points used in a job evaluation plan for the daily-
rated workers of a paper mill is given below:

Table 4.3: Job Evaluation plan for DailylRated Workers

S`r;#ij
#?H,;f`i!
# RE
(¢i RIi
ilj!;i; i' S
#mif!z
+ \+!- us + rs
f!,i.t ;I(,!1,S i4a
un
§ RE` #8

*".
un X,

& s i D
I, I 2
.'e S I r
s I E

V.,

s it I;

lS k. ,

•:. FACTORS AND DEGREES DEFINED FOR EDUCATION

This factor appraises the educational requirerhent considered necessary to perform the job
satisfactorily. A formal education or schooling may not be essential, but such requirement is
expressed in terms of equivalent years of schooling. The knowledge might have been acquired
by self.-study or practical knowledge.
i. Dcgrt?c.' Ability to fonow verbal instructions in local language for performing manual
tasks of either repetitive or closely supervised non-repetitive nature and also to count
numbers.
 CHAPTER 4 lndustry's Compensation Policy (Micro-Level) 81

Degree.. Aunty to read and write words in English and to perform simple arithmetical
calculations.Sometradeknowledgeinpaper-making finishing,etc.,equivalenttoprimary
school education.
iri. Degree.. AbiHty to read and write simple English, perform arithmetical calculations
involving use of fraction, decimals, etc; use shop tools and understand simple drawings,
good trade knowledge in beating, chalk mixing, etc., equivalent to class VIII standard in
high school.
1V. Dcgree.. Ability to read and write; perform mathematical calculations; understand detaled
sketches and pfofitiency in a trade like fitting, welding, etc., equivalent to matriculation
standard.
DGgree.. Background education suitable for understanding all aspects
V'j, of a trade which
may be considered equivalent to a certificate course from Industrial Training Institute or
a first-class ceftiflcate of competency from a goverrment department.
Similarly, factor and degree definitions are prepared for all other factors in the plan.
The next step in the process is the actual evaluation of jobs. Appropriate degree for each
factor is determined for each job, and point values are assigned to each degree. The total of
these point values represents the worth of an individual job. All types of jobs covered by the
plan (daily-rated in the example) are thus evaluated and finauy grouped into classes according
totherangesofvaluesbetweenjobshavingminimumandmaximunvaluesandtheirclustefing.
Continuing with the illustration cited earlier, two jobs are evaluated below:

Table 4.4: Evaluation of Jobs

`!ltryS .!

5€H ¥#
fj `._-I ``--+-:-I---`-=
t>#ELalREENREf5E!REfR5#.F jt± 5 I. SF#5.RT , Hfy #y` H±d#.
a_ i --Jd -

+ +
unB y€. ae #ENiRI#all /i.i/ L
_____ff__inF9,

Iy
i

* *rii+,,i. `1

|i,I -,** ti

o
`fi

- . 11, I+I

According to the classification in`.dic?ted below, the above jobs fall in classes A and D
respectively.
82 COMPENSATION AND REWARD MANAGEMENT

Table 4.5: Classifical:ion

/`

`'-,: ;* I,11J`it`uL`,`1`1

The point values finally arrived at are then covered to monetary values for determining the
wage rates of the jobs. A minimum wage rate can be decided upon (may be after negotiation
with union) for jobs having the lowest point values and a maximum rate for those with highest
point values. Wage rates for all jobs can be fixed between this rate range. Similady, suitable
wage grades or scales can be worked out for other classified jobs after evaluation. The
resulting wage structure will reflect the true differential in the worth of jobs.
It may be stated that though at times criticisms are leveued against job evaluation, as the
process involves certain amount of subjective judgement, nevertheless, this is perhaps the best
technique evolved so far to reduce wages inequities.

Advonfages
• It is the most sophisticated system.
• All the outcome is in hard fact numbers.

Disadvantages
• Itis time-consuming.
• Satisfying benchmark jobs for the degrees are required to be put forth for rating effectively.

Factor Comparison Method

This method was ori developed in 1926 as an offshoot point rating. This method
therefore incorporates of the principles of point rating but differs substantially from it
in its use of benchmar :#s
/
and its method of comparing jobs and fixing wage rates.
The first task in applying this method is to select and describe clearly the factors to be used.
The choice of factors is generauy much more limited than in point rating. For manual workers,
the following factors are generauy recommended:
1. Mental requirements;
2. Skmrequirements;
3. Physicalrequirements;
4. Responsibilities;
5. Working conditions.
 ',I

CHAPTER 4 lndustry's Compensation Policy (Micro-Level) 83

For clerical, technical and supervisory staff, all the factors mentioned above except working
nditions are generally recommended.
ie factor comparison method involves the following steps:
Selecting benchmark jobs;
Ranking benchmark jobs by factors;
Allocating money values to factors;
Ranking the other jobs, and wage fixing.
Jcfec#.cog 4caccfe„g¢rfe/.ode.. The jobs selected as benchmafk jobs must satisfy a number
of conditions. First, they should be capable of clear descriptions and analysis in terms of
the factors used; second, they must be representative of the hierarchy, third, when the
rates for the benchmafk jobs are to be used as the standard for fixing the wages, these
rates should be regarded as appropriate by all concerned.
R4cefe¢.ng bececfeee¢rfe /.ode dy/#ctorf.. Once a number of benchmark jobs are chosen,
they are ranked successively by reference to each of the factors chosefl. When the ranking
is done by a committee, each member must make his own ranking and the results then
being averaged. A typical example of ranking of jobs by factors under the comparison
method is given in Table 4.6.

Table 4L6: Ranking Jobs by Factors under tlie Factor Comparison Method
- -+ . ,-`--H#usRESB I-7' 4#'£Ir#-RE:E.#7'`?Iy`.ii#ffiEN,S`«#@,I`'' ,J|,Ii
RE, 'fi.g€:+59-ill+
!# >-#i`tt' itE1 ^f~ '®-I,".q`®"6 l , RE
\ . , , .` " -.I•.-,`fi"-_._#REREREENRE* 'Hfni,,

•S I I ,g I /%E7t#;#ars
iS

34 •, " I r--#E .--}`•1IllII1.,

I//s;

` -A ` ,

!,`,E•'(,
J5

i'/
-.

'',-,I Ill I

-, :r~;ir.`tti

`;(Ji-#

#
- I
AJJocf!fe.acg eeoceey „¢/34cf Jo/zzcforf.. The factor comparison method may also be used
for fixing up wages in money units by ranking the jobs according to a procedure different
from the one shown above. The wage fate for each benchmark job is broken down and
distributedamongthefactofsintheproportionsinwhichtheseareconsideredtocontribute
to the total price paid for each benchmark job in the form of its wage rate. For example,
if tool-making is a benchmafk job and its wage rate is 20 money units, it may be decided
to assign nine of these to skill, five to mental requirements, two to physical requirements,
three to responsibility and one to working. conditions. Similady, if the wage rate for
another benchmark job, for example that of a first grade machinist, amounts to 18
money units, eight of these may be allotted to skin, three to working conditions, and so
on. When the rates for all benchmark jobs have been divided in this way the jobs have
imphcitly been ranked again with respect to each of the factors. In the example given, the
 •j;

4 COMPENSATION AND REWARD MANAGEMENT

toolmakerranksabovethemachinistasregrrdsslallrequirements,butbelowthemachinist
if the jobs are ranked on the basis of working conditions.
After the results have been averaged by a committee in the manner described above, the
allocation of wage rates and the ranking by factors of the jobs covered for Table 4.6
might work out as indicated in Table 4.7.
The two rankings of the benchmark jobs are undertaken independently of each other
and need not coincide. Their respective results as illustrated by Tables 4.6 and 4.7 arc
compared in Table 4.8.
Itwi]lbenotedthattherearedifferencesinrankingrevealedinTable4.8.Thesedifferences
have to be removed either by increasing or decreasing the money value of the differen=
factors for the jobs concerned or by examining the job contents again. If it is mT
possible to reconcile the ranking of a particular job, it is eliminated from the hssS trf+
benchmark jobs.
I. R4„faG.ng ofrfeGr/.ode.. On the basis of job descriptions, each job is analysed and compara=
with the benchmark jobs in terms of each of the factors separately.
Table 4E7= Allocation Of Money Values to tlle Different Facl:ore and Ranking Of
Jobs under the Factor Comparison Method

Table 4.8

Different results obtained from ranking by factor and by money value.

 CHAPTER 4 lndustry's Compensation Policy (Micro-Level) 85

Advantages and Disadvantciges

Adeautages
a) Factor comparison method permits a more systematic comparison of jobs than the
non-analytical method s.
b) Evaluation is easier than by the point method, as a set of similar jobs are compared and
ranked against each other.
c) Analysis of benchmark jobs is very comprehensive.
d) In a scheme that incorporates money values, determination of wage rates is automatic.
e) Reliance of the method on benchmark jobs guarantees that the scheme is i-aifor-made
and that the ranking necessarily reflects the actual structure while elininating anomalies.
Disadeantages
a) Factor comparison method permits a more systematic comparison of jobs than the
non-analytical methods.
b) . The wage rates for the benchmark jobs are presumed to be correct and deflnidve and all
other rates are determined by reference to them.
c) It goes against the common belief that the procedures of evaluating jobs and fixing their
wages should be kept separate.

The Urwick Orr Profile Method

This method was orialnated by the Bridsh fifm of management consultants, Urwick Orr and
Partners. It is another high hybrid method that combines the features of point rating and
ranking methods. In a sense, this method is a simprification of point rating that uses paired
comparison to determine weightings. The principal disadvantages of this method are that it
uses a simple breakdown of factor degree-for securing purposes and it stresses the importance
of full participation by workers' representatives at various stages.

The Direct Consensus Method

ThismethoddevelopedbythefirmoflnbuconAIC,reliesonthepairedcomparisontechnique.
An important feature of this method is that members of the valuation panel record their
individual assessments of whole job rankings and these assessments are fed into a computer.
In cases where the assessors do not agree on the job rankings, the computer programme
establishesthebestpossiblecorrelationbetweentheirassessmentswithouttheneedforprolonged
discussion in committee to reach a consensus.

Comparative Merits of Faolor Comp?rison'and Point Systems

• Both the systems are fundamentally analytic.al and quantitative in their approach. Unlike
therankingandgradingsystenys,thesearebasedondetailedanalysisofjobsandassessment
of the different fact6fs of th'e job.