Chapter 5: Job-based Structures and Job Evaluation

National Metal Trades Association (NMTA) plan

A point factor job evaluation plan for production, maintenance, and service personnel.

National Electrical Manufacturers Association (NEMA) plan

A point factor job evaluation system that evolved in to the Nation Position Evaluation Plan sponsored by NMTA associates

Paired comparison

A ranking job evaluation method that involves comparing all possible pairs of jobs under study

Scaling

Determining the intervals on a measurement instrument

Compensable factors

Job attributes that provide the basis for evaluating the relative worth of jobs inside an organization. Characteristics in the work that the organization values, and those that help it pursue its strategy and achieve its objectives A compensable factor must be work related, business-related, and acceptable to the parties involved. The generic groups into which the compensable factors used in existing, standardized point plans usually fall. 1) Working conditions 2) Skills required 3) Effort required 4) Responsibility

Job-based structure

Structure that relies on work content: tasks, behaviors, responsibilities

Job evaluation

The process of systematically determining the relative worth of jobs to create a job structure for the organization The evaluation is based on a combination of job content, skills required, value to the organization, organizational culture, and the external market. Its ultimate use is to help design and manage a work-related, business-focused, and agreed-upon pay structure.

Relative value of jobs

The relative contribution of jobs to organizational goals, to their external market rates, or to some other agreed-upon rates

Criterion pay structure

A pay structure to be duplicated with a point plan

8 Steps in the design of a point plan

1) Conduct job analysis 2) Determine compensable factors 3) Scale the factors 4) Weight the factors according to importance 5) Select criterion pay structure 6) Communicate the plan and train users 7) Apply to non-benchmark jobs 8) Develop online software support

Criteria for scaling factors

1) Ensure that the number of degrees is necessary to distinguish among jobs 2) Use understandable terminology 3) Anchor degree definitions with benchmark-job titles and/or work behaviors 4) Make it apparent how the degree applies to the job

Decisions in Job Evaluation

1) Establish the purpose of evaluation 2) Decide whether to us single or multiple plans 3) Choose among alternative approaches 4) Obtain involvement of relevant stakeholders 5) Evaluate the plan's usefulness

Importance of documentation of compensable factors

1) It helps gain acceptance by employees and managers. 2) It is easier to understand. 3) It can withstand a variety of challenges to the pay structure.

Characteristics of Benchmark Jobs

1) Its contents are well known and relatively stable over time 2) The job is common across a number of different employers. It is not unique to a particular employer. 3) A reasonable portion of the workforce is employed in this job

3 most common job evaluation methods

1) Ranking format 2) Classification 3) Point (factor) method

Functions of a job evaluation

1) Support organization strategy 2) Support work flow 3) Be fair to employees 4) Motivate behavior toward organization objectives

Factors that form the basis for job evaluation

1) The external market 2) Organizational culture 3) Skills required 4) Job content 5) Value to the organization

5 Steps to determining an internally aligned job structure

1) Work relationships within the organization 2) Job analysis 3) Job description 4) Job evaluation 5) Job structure

Structure

A hierarchy of work

Point (factor) method

A job evaluation method that employs (1) compensable factors, (2) factor degrees numerically scaled, and (3) weights reflecting the relative importance of each factor. Once scaled degrees and weights are established for each factor, each job is measured against each compensable factor and a total score is calculated for each job. The total points assigned to a job determine the job's relative value and hence its location in the pay structure. The compensable factors used in the designing of a point plan are based on the strategic direction of business and the way in which the work contributes to the strategy

Alternation ranking

A job evaluation method that involves ordering the job description alternately at each extreme. All the jobs are considered. Agreement is reached on which is the most valuable and then the least valuable. Evaluators alternate between the next most valued and next least valued and so on until the jobs have been ordered.

Interval scaling

A particular numerical point difference has the same meaning on all parts of a scale

Position Analysis Questionnaire (PAQ)

A structured job analysis technique that classifies job information into seven basic factors: information input, mental processes, work output, relationships with other persons, job context, other job characteristics, and general dimensions. The PAQ analyzes jobs in terms of worker-oriented data.

Ranking format

A type of performance appraisal format that requires that the rater compare employees against each other to determine the relative ordering of the group on some performance measure Simply orders the job descriptions from highest to lowest, based on a global definition of relative value or contribution to the organization's success It is simple, fast, and easy to understand and explain to employees It is the least expensive (at least initially)

Committee a priori judgment approach

Compensable factor importance weights are assigned by a committee based on a priori judgment

Policy capturing

Compensable factor importance weights are inferred using statistical methods such as regression analysis Differentiates it from the Committee a Priori Judgment Approach

Benchmark (key) jobs

Ensures accuracy of the decisions based on the job evaluation. A prototypical job, or group of jobs, used as a reference point for making pay comparisons within or without the organization. They have well-known and stable contents; their current pay rates are generally acceptable, and the pay differentials among them are relatively stable. A group of benchmark jobs, taken together, contains the entire range of compensable factors and is accepted in the external labor market for setting wages.

Job evaluation committee

Group that may be charged with the responsibility of (1) selecting a job evaluation system, (2) carrying out or at least supervising the process of job evaluation, and (3) evaluating the success with which the job evaluation has been conducted. Its role may vary among organizations, but its members usually represent all important constituencies within the organization.

Job content (job value)

Information that describes a job. May include responsibility assumed and/or the tasks performed

National Compensation Survey (NCS)

Is a U.S. Bureau of Labor Statistics program that comprehensively describes pay and benefits information in U.S. companies. Uses as compensable factors, knowledge, job controls/complexity, contacts, and physical environment, and can be applied to a wide range of jobs

Classification

Job evaluation method that involves slotting job descriptions into a series of classes or grades that cover the range of jobs and that serve as a standard against which the job descriptions are compared Outcome: A job structure with a sequence of classes, each having a number of similar jobs

Factor weights

Measures that indicate the importance of each compensable factor in a job evaluation system. Weights can be derived through either a committee judgement or a statistical analysis. Different weights reflect differences in importance attached to each factor by the employer

Factor scales

Measures that reflect different degrees within each compensable factor. Most commonly 4 to 8 degrees are defined. Each degree may be anchored by typical skills, tasks and behaviors, or key job titles.

Appeals process

Mechanisms are created to handle pay disagreements. They provide a forum for employees and managers to voice their complaints and receive a hearing.

Market pricing

Setting pay structures almost exclusively through matching pay for a very large percentage of jobs with the rates paid in the external market.

3 useful features of compensable factors

Should be: 1) Based on the strategy and values of the organization 2) Based on the work performed 3) Acceptable to the stakeholders affected by the resulting pay structure

Hay Group Guide Chart-Profile Method

The most widely used point factor methodology that considers work to be a process in which knowledge/skill/ability is applied to various issues and challenges in order to create an output that is of value to an organization Compensable factors: 1) Know-how 2) Accountability 3) Problem solving

Content

The work performed in a job and how it gets done (tasks, behaviors, knowledge required, etc.)

Cost containment

an attempt made by organizations to contain benefit costs, such as imposing deductibles and coinsurance on health benefits or replacing defined benefit pension plans with defined contribution plans