Chapter 5 - Job Evaluation

T or F: Organizations do not have multiple structures derived through multiple approaches that apply to different functional groups or units.

false; Organizations commonly have multiple structures derived through multiple approaches that apply to different functional groups or units.

One drawback with multiple plans is...

the difficulty of explaining how the relative value of jobs is determined across the resulting multiple job hierarchies to employees

What is job evaluation?

the process of systematically determining the relative worth of jobs to create a job structure for the organization

T or F: Job evaluation has provided work-related and business-related order and logic. History suggests that when flexibility without guidelines exist, chaotic and irrational pay rates too frequently results. Removing inefficient bureaucracy is important, but balanced guidelines are necessary to ensure that employees are treated fairly and that pay decisions help the organization achieve its objectives.

true

What are multiple plans?

(job family approach): use different job evaluation plans for different job families; resulting in multiple pay structures

How do external markets influence job evaluation and their assumptions:

Aspects of job content take on value based on their willingness to work more closely with customers usually commands higher wages in the labor market, then skill level and nature of customer contacts become useful criteria for establishing differences among jobs Value of a job CANNOT be determined without an external market

What are the cons of the point method?

Bureaucratic Rule-bound Requires more training of committee members

What is classification?

Compares jobs with a predetermined standard Creates job categories with descriptions of each and jobs slotted into them based on descriptive matches Evaluate benchmark jobs first, then non-benchmark jobs

What is the point method?

Each job's relative value is determined by total points Employs compensable factors, factor degrees are numerically scaled, weights reflecting the relative importance of each factor The total points determine the job's value and its location in the pay structure

What is the criteria for scaling factors:

Ensure the number of degrees/levels is necessary to distinguish jobs. Use understandable terminology. Anchor definitions with benchmark job titles and work behaviors. Make it apparent how the degree applies to the job.

How does job evaluation promote fairness?

Fair to employees = workable, agreed-upon structure that reduces the role of chance, favoritism, and bias in setting pay

How does job evaluation support workflow?

Fits workflow = integrates job's pay with relative contributions to the organization and helps set pay for new, unique, or changing jobs

Job evaluation serves three purposes:

Helps set pay Matches jobs to a comparable job of similar value in a market pay survey, which is necessary to identify the market pay for the company job. Pays job based on importance

How does job content job evaluation and their assumptions:

Internal alignment based on content orders jobs on the basis of skills required for the jobs and the duties and responsibilities associated with the jobs Content matters, but it's not the only basis for pay

Who should be involved in the job evaluation?

Managers and employees with a stake in the results should be involved in the process of designing the plan Use committees, task forces, or teams that include representatives from key operating functions, including non-managerial employees Compensation professionals are primarily responsible for job evaluation of most jobs.

How does job evaluation motivate behavior?

Motivates behavior = Creates a network of rewards (promotions, challenging work)

To be useful, compensable factors must be selected that satisfy certain criteria:

Must be acceptable to all parties involved Must validly distinguish among all jobs Must be relevant to all jobs being evaluated Jobs must vary on the factors chosen Must be measurable Must be independent of each other

How does relative value influence job evaluation and their assumptions:

Orders jobs on the basis of the relative contribution of the skills, duties, and responsibilities of each job to the organization's goals Value added by the same work may be more or less in one organization than in another

Why do orgs that use market pricing still need job evaluation?

Organizations use market pricing still need job evaluation since it is usually not possible to directly match all jobs to market survey jobs; so we need to use point or point factor approaches

What are three job evaluation methods?

Ranking Classification Point Method

What is the final result of the job analysis-job description-job evaluation process?

STRUCTURE, the hierarchy of work. It translates the employers' internal alignment policy into practice.

What are the benefits of the point method?

Shows what is valued Stable Valid, reliable, and perceived as equitable

What are the cons of ranking?

Subjective Criteria can be poorly defined Can require difficult and potentially expensive solutions because it doesn't tell employees and managers what it is about their jobs that is important

It's rare to evaluate all jobs at one time. Many design different plans for different types of work because they believe that...

The work content is too diverse to be usefully evaluated by one plan.

Why are benchmark jobs important in job evaluations?

They exist across the range of jobs being evaluated Contain a large number of positions Have the same content across many organizations Content is relatively stable Helps to ensure accuracy of the decisions based on job evaluation

Point methods have three common characteristics:

They have compensable factor Factor degrees are numerically scaled Weights reflect the relative importance of each factor

What are single plans?

They use ONE job evaluation plan for all jobs; resulting in a single pay structure

Many companies choose market-based evaluation methods because...

They wish to assign job pay rates that are neither too low nor too high relative to the market.

What are benchmark jobs?

a job used as a reference point for making pay comparisons in a company

may also be included so that employees who feel their jobs are unfairly evaluated have some recourse Employee acceptance of the process is crucial. In order to build this acceptance, communication to all employees whose jobs are part of the process used to build the structure is required. This communication may be done through informational meetings, websites, or other methods.

appeals process

Common types of compensable factors include...

education, experience, responsibility, nature of supervision, consequences of making errors on the job, etc.

What are the two forms of diversity in work?

depth and breadth

Setting pay rates too low will make it difficult to recruit talented candidates, whereas setting pay rates too high will result in an excessive cost burden for the employer. Compensation professionals rely on WHAT to determine prevailing pay rates of jobs in the relevant labor market?

Compensation surveys

Overall Steps In the Design of Point Plans:

Conduct job analysis Determine compensable factors Scale factors Weight the factors according to importance Select criterion pay structure Communicate the plan and train users Apply to non-benchmark jobs Develop online software support

Describe each of the major decisions in job evaluation:

Describe each of the major decisions in job evaluation Establish the purpose of the evaluation Job evaluation Decide whether to use single or multiple plans Choose among alternative approaches Obtain involvement of relevant stakeholders Evaluate plan's usefulness

Factors That Influence Job Evaluation Are:

Design process - (The process will reflect success in balance technical standards and acceptance/fairness) Involvement Decisions Safe-guards

How does job evaluation support org strategy?

Support org strategy = adding value

T or F: There is a one-to-one correspondence between internal job value and pay rates.

false; There is not necessarily a one-to-one correspondence between internal job value and pay rates.

What are the pros to classification?

greater specificity with descriptions improves reliability Groups wide range of work

What is paired comparison ranking?

involves comparing all possible pairs of jobs under study; when all comparisons have been completed, the job most frequently judged "more valuable" becomes the highest-ranked job and so on

What is alternation ranking?

involves ordering the job description alternately at each extreme; agreement is reached on which is the most valuable and least valuable

what is market pricing?

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

What are compensable factors?

job attributes that provide the basis for evaluating the relative worth of jobs inside an organization ( must be work, business related and acceptable to parties involved)

What is job evaluation based on?

job content, skills, value, organizational culture, and the external market

What are the benefits of ranking?

simple, fast, and easy to understand and explain to employees; it is also the least expensive method, at least initially.

T or F: Research suggests that attending to the fairness of the design process and the approach chosen (job evaluation, skill/competency-based plan, and market pricing), rather than focusing solely on results (the internal pay structure), is likely to achieve employee and management commitment, trust, and acceptance of the results.

true

What are the cons to classification?

trying to include a diverse set of jobs in one class can result in vagueness of job descriptions, leaving a lot of room for "judgement" Room for manipulation