Job Evaluation

 Identifying a Rational and Orderly

Process for Developing Different Rates
of Pay.
» We begin by identifying a hierarchy of
jobs by worth, using a job evaluation
methodology. (Ch's 8 and 9)
» Next we investigate the "market place" to
identify what other organizations are
paying workers in comparable jobs.
(Ch 10)
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 Job Evaluation

» We will complete the process by

combining job worth data and market
data in some unique manner that results
in an organizational pay structure. (Ch
11)

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 Job Evaluation Defined

 It
is the part of the process in
which the organization finally
decides the relative internal
worth relationships of jobs.

 Itis a method that helps

establish a justified rank order of
jobs.
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 Job Evaluation Defined

 Itis only one of the starting

points for establishing the
relative differentiation of wage
rates

 It
is a systemic procedure
designed to aid in establishing
pay differentials among jobs
within a single employer. 4
 Job Evaluation Rationale

 To establish an orderly, rational, and

systemic structure of jobs based on
their worth to the organization.

 To justify or develop a pay structure

that provides for internal equity.

 To assist in setting competitive pay

rates.
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 Job Evaluation Rationale

 To identify a ladder of progression or

direction of future movement.

 To comply with equal pay legislation

and regulations by determining pay
differentials according to job
content.
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 Job Evaluation Methodologies

 Whole Job  Market Pricing

Ranking
 Maturity Curve
 Position
Classification /  Compensable
Predetermined Factors
Grading

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 Whole Job Ranking

 Comparing the whole job by

determining the overall worth of
jobs or classes as they compare
with one another.

 Works best when comparing jobs in

the same occupation or the same
organizational unit when evaluators
are intimately familiar with all jobs
being ranked. 8
 WHOLE JOB RANKING

 Whole Job Ranking Is The Quickest To

Perform Of All The Methods, But It Has Three
Significant Disadvantages:
» A lack of substantiation data to
justify the final results.
» It provides no yardstick for measuring the
relative value of jobs.
» The personalities of incumbents tend to
get in the way of the evaluators'
judgement.
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 Market Pricing

Organizations recognize that they

must offer competitive rates of pay if
they wish to attract and retain
competent employees.
With this in view two basic methods
were developed to recognize market
wage rates.
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 Market Pricing

Pure Market Pricing

 The organization develops the narratives
that describe job activities and incumbent
requirements.
 These narratives are communicated to
other organizations having employees
who perform similar work assignments in
the same labor market.
 This is the least costly method....It is easy
to explain..…and judicially defensible.
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 Market Pricing

Market Pricing Guide Line Method

This approach permits the influences of

internal equity to interact with existing
market rates when determining the rate of
pay for jobs of an organization.

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 Market Pricing

 Step One:
» Establish a GUIDE LINE
SCALE of salary ranges that
includes a series of salary
grades and a minimum, mid-
point, and maximum rate of
pay for each using a 5% mid-
point differential.
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 Market Pricing

 Step Two:
» Develop realistic job
descriptions that include scope
data that identify benchmark
jobs. (40% to 60% of jobs)

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 Market Pricing

 Step Three:
» Conduct a comprehensive
survey to set market pricing
matching benchmark jobs to
the amount paid by other
employers for comparable jobs.

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 Market Pricing

 Step Four:
» Develop HORIZONAL GUIDE LINE
displays that relate jobs in various
departments where each job
evaluation group conducted the third
step independently of the others.

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 Market Pricing

 Step Four:
» This process relates two or more
vertical guide line displays,
ensuring internal equity within
the pay structure.

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Maturity Curve

 Used principally to establish

rates of pay for scientists and
engineers engaged in technical
work at the professional level.

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Maturity Curve

 Maturity curves frequently

resemble learning curves in
that in the early years the curve
rises rapidly; then it flattens
out and may even bend slightly
downward in it latter stages.

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 Compensable Factors

 Paid-for,measurable qualities,
features, requirements, and/or
constructs that are common
to many different kinds of
jobs.

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 Compensable Factors

 These factors normally do not

represent identifiable job activities,
specific observable behaviors, or
measurable outputs
 They are synthetic.... a composition
or combination of qualities, features,
or requirements of a job that, taken
together, form a coherent whole.
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Compensable Factors

The development and

description of compensable
factors is basically an
artistic endeavor.

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 Compensable Factors

 The Universal Compensable Factors

identified In the equal pay act and
subsequently adoptedby the
government are:
» SKILL - The experience, training,
education, etc, required to perform
the job under consideration.
» EFFORT - measure of the physical
and mental exertion needed to
perform the job.
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 Compensable Factors

» RESPONSIBILITY - The extent to which

the employer depends on the employee
to perform the job as expected.

» WORKING CONDITIONS - The physical

surroundings and hazards of a job.

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 Groups Of Commonly Used
Universal Factors

 BASS  HAY and PURVES

Skill Know-How
Responsibility Problem-Solving
Accountability Working
Conditions

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 Groups Of Commonly Used
Universal Factors

 NEMA - NMTA  EQUAL PAY ACT

» Skill » Skill
» Effort » Effort
» Responsibility » Responsibility
» Job Conditions » Working
Conditions

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 Groups Of Commonly Used
Universal Factors
Factor Evaluation System
 Knowledge  Personal Contacts

 Supervisory Controls  Purpose of Contacts

 Guidelines
 Physical Demands
 Complexity

 Scope and Effect

 Work Environment

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Sub-Set Of Compensable Factors

To facilitate the use of abstract and

general compensable factors within a
job evaluation method it is a
common practice to classify the
factors into three major categories:

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Sub-Set Of Compensable Factors

 Universal Factors
General, relatively abstract, and
complex qualities and features
that relate to all kinds of jobs.
 Sub Factors

Statements that define the

specific attributes of a particular
job more precisely.
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Sub-Set Of Compensable Factors

 Degrees Or Levels
Provide a yardstick, or
measurement scale, that assist in
identifying the specific amount of
the factor required to perform the
job.

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Weighting Compensable Factors

 The point method selected must

provide a sufficient number of points
so that a significant difference in
points can be awarded to jobs that
are of different worth.

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Weighting Compensable Factors

 The total points assigned should

accommodate the wage spread between
the highest and the lowest paid employee
and provide enough points to permit the
most important job to receive an
evaluation that recognizes the full range of
jobs in the organization.

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 Observable / Perceptible
Differences
 When developing factor weights and
measurement scales for determining job
point-score differences, the final result is
an established hierarchy of jobs with
different rates or ranges of pay for each
job.

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 Observable / Perceptible
Differences

In review it appears that there should be at

least 15 percent difference between any
two levels of a factor In the compensation
area before the recognition value is
significant.

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Development Of Rating Scales

 Lott's Point Method

 Benge's Factor Comparison
 Hay's Profile Method
 NEMA Method
 Factor Evaluation System

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