Human Resource Management

Unit 9

Unit 9
Structure: 9.1 Introduction Objectives 9.2 Concept of Job Evaluation 9.3 Objectives of Job Evaluation 9.4 Job Evaluation Methods 9.5 Advantages and Limitations of Job Evaluation 9.6 Introduction to Competency 9.7 Promotion & Transfers 9.8 Summary 9.9 Caselet 9.10 Terminal Questions 9.11 Answers

Job Evaluation

9.1 Introduction
Research indicates that 50% of job performance problems are due to people being in the wrong job. And 25% of the on-the-job performance problems are associated with the inability to identify the gaps between the competencies of the person and the job requirements. Given these statistics the need to understand the requirements for performing a job well and what qualities the individual must have to do a good job is critical. This Unit focus on understanding the traditional time-tested approach of Job Evaluation which is still practised in most organizations as well as the emerging competency mapping modern approach, prevalent in the larger MNCs. Some form of job evaluation is invariably part of a formal compensation management programme. The objective of job evaluation is to rank and price the job rather than the man. Job evaluation is concerned with assessing the value of the job in relation to another for it is only when each job has been properly evaluated that a sound compensation structure can be built. And the fundamental concept of job evaluation is to be able to objectively assess the worth of the job w.r.t. the skills and capabilities that is required to execute it. The British Institute of Management has defined job evaluation as the process of analysis and assessment of jobs to ascertain
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reliably their relative worth, using the assessment as a basis for a balanced wage structure. Objectives: After studying this chapter you will be able to: 1. Discuss the concept of job evaluation. 2. State the objectives of job evaluation. 3. Evaluate the job evaluation methods. 4. Summarize the need to transfer or promote the employees. 5. Evaluate the importance of job evaluation.

9.2 Concept of Job Evaluation

All job evaluation systems depend heavily on job analysis and job description. Job analysis indicates the specific duties to be performed by the employee and the circumstances under which these duties are to be performed. A job description is a written record of the duties, responsibilities and conditions of the job. The job description provides ' the essential information on which each job is evaluated. The resulting measures of values are then translated into wage and salary rates. "Job analysis is the process of getting information about jobs; specifically, what the employee does; how he gets it done; why he does it; skill, education and training required; relationships to other jobs; physical demands and environmental conditions". Job analysis and job evaluation do not replace, judgement in the administration of the pay structure. They merely provide facts in so far as facts can be obtained through observation on which management and employees may base their decisions. Self Assessment Questions 1. A _____________ is a written record of the duties, responsibilities and conditions of the job. 2. Job analysis is the process of _________________; specifically, what the employee does; how he gets it done; why he does it; skill, education and training required; relationships to other jobs; physical demands and environmental conditions
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3. Job analysis and job evaluation do not replace, judgment in the

9.3 Objectives of Job Evaluation

The decision to measure or rate jobs should only be made with the intent to reach certain objectives which are important to both management and the employee. Although there are many side benefits of job evaluation, the purpose is to work towards a solution of the many wage and compensation related administrative problems which confront the industry. The belowmentioned are some of the important objectives of a job evaluation programme: 1. Establishment of sound salary differentials between jobs differentiated on the skills required. 2. Identification and elimination of salary-related inequities. 3. Establishment of sound foundation for variable pay such as incentive and bonus. 4. Maintenance of a consistent career and employee growth policy/ guidelines. 5. In organizations with active unions, creation of a method of job classification, so that management and union officials may deal with major and fundamental wage issues during negotiations and grievance meetings. 6. Collection of job facts a) Selection of employees b) Promotion and transfer of employees c) Training of new employees d) Assignment of tasks to jobs e) Improving working conditions f) Administrative organization, and g) Work simplification. There are many established methods to carry out job evaluation in a scientific manner. A four-fold system of classifying evaluation systems is presented here. Two are described as non-quantitative and two as quantitative.

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1. Non-quantitative evaluation measures, a. The ranking system. b. The job-classification system. 2. Quantitative evaluation measures. a. The point system. b. The factor-comparison system. Activity 1 Look at people around you that you come in contact with from 6am in the morning to 10am. List the jobs these individuals do. Now spend a few minutes to quickly write down 5 attributes that are required to do the job Use this information to rank order the jobs You must be having an idea of what their monthly income might be(ask them if you can) Now compare the job ranking you did with the earnings What are your observations? Self Assessment Questions 4. ______________________ is the purpose is to work towards a solution of the many wage and salary administrative problems which confront the industry. 5. _______________________ systems are the ranking system and the job-classification system. 6. Quantitative job evaluation measures are _______________________.

9.4 Job Evaluation Methods

Ranking Method: Jobs are compared one with another and arranged or valued in the order of their importance or their difficulty or their value to the firm. It is a highly subjective method and depends upon the experience of the people doing the ranking. Grade Description Method: This method depends upon recognition that there are differences in the levels of duties, responsibilities and skills required for the performance of different jobs. These differences, once recognized, can be expressed as grades or levels. These grades can then
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be defined and jobs classified by the selection of a particular grade or each job to correspond to its worth. Point Method: Jobs show characteristics which are common to all or most. These characteristics, called factors, generally fall under the four headingsskill, effort, responsibility and conditions. To each factor is attached a number of points, the number varying according to the 'degree' of the factor involved. The sum of all the points for a job permits its comparison with other jobs and thus a scale of pay is arrived at. Factor-Comparison Method: This is associated with the name of E.J.Benge. Each factor (as in the point method) is ascribed a money value. Key jobs, representing the various levels or grades are ranked factor by factor and upon this ranking, a scale of pay/money value is prepared. The sum of the values for each factor is taken to be the money value of job. Time-Span Method: It was propounded by Professor Jaques that the higher in the hierarchy of organizational structure of jobs the longer the period before the results of a decision are scrutinized for adequacy. An analysis of time-spans for different jobs yields a scale of pay felt to be fair. Guide-Chart Profile Method: This is associated with the name of Dr. E.N.Hay. Three factors, know-how (education/experience), problemsolving, and accountability (responsibility) are each divided into eight degrees or levels and these, qualified by a second, or 'breadth' dimension, each factor and breadth being concerned with some aspect of decisionmaking. Points are awarded for each degree as it is qualified, and the sums for different jobs are compared. Self Assessment Questions 7. The __________________________ depends upon recognition that there are differences in the levels of duties, responsibilities and skills required for the performance of different jobs. 8. In the _______________________, each factor (as in the point method) is ascribed a money value. 9. In the _____________________to each factor is attached a number of points, the number varying according to the 'degree' of the factor involved.
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9.5 Advantages and Limitations of Job Evaluation

Advantages: 1. Job evaluation is a logical and an objective method of ranking jobs relatively to each other. It may thus help in removing inequities in existing wage structures and in maintaining sound and consistent wage differences in a plant or an industry. 2. The method replaces accidental factors occurring in less systematic procedures of wage bargaining by more impersonal and objective standards, thus establishing a clearer basis for negotiation. 3. The method may lead to greater uniformity in wage rates and simplify the process of wage administration. 4. Information collected in a process of job description and analysis can be used for improvement of selection, training, transfer and promotion, procedures on the basis of the comparative job requirement. Limitations: 1. Though there are many ways of applying job evaluation in a flexible manner, rapid changes in technology and in the supply of and demand for particular skills, create problems of adjustment that may need further study. 2. When job evaluation results in substantial changes in the existing wage structure, the possibility of implementing these changes in a relatively short period may be restricted by the financial limits within which the firm has to operate. 3. When there are a large proportion of incentive employees, it may be difficult to maintain a reasonable and acceptable structure of relative earnings. 4. The process of job rating is, to some extent, inexact because some of the factors and degrees can be measured with accuracy. 5. Job evaluation takes a long time to complete, requires specialized technical personnel and is quite expensive. Self Assessment Questions 10. _______________ is a logical and an objective method of ranking jobs relatively to each other.

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11. Information collected in a process of _______________ can be used for improvement of selection, training, transfer and promotion, procedures. 12. When there are a large proportion of incentive employees, it may be difficult to maintain a reasonable and acceptable structure of __________________.

9.6 Introduction to Competency

First popularised by Boyatiz, competency is defined as A capacity that exists in a person that leads to a behaviour that meets the job demands within parameters of organizational and that in-turn bring about the desired results; An underlying characteristic of a person results in effective and/or superior performance on the job. Competency can be thought of a as a tool that can be used to map best-inclass performance the best performer is always called the competent performer. Competencies are based on Knowledge information accumulated in a particular area of expertise, Skills the demonstration of the expertise, Motive the recurrent thought that drives behaviour, Attitudeself-concept, value and self image, Traits a general disposition to behave in a particular way. There are two sets of competencies: Threshold competencies they are the characteristics that any job holder needs to have to do that job effectively, but do not differentiate between average and superior performer; Differentiating competencies are characteristics which superior performers have but is not present in average performers. This thinking holds the key to differentiate employees based on competencies they possess and there compensation and growth within the companies in modern companies. There are therefore competency frameworks that define the competency requirements that cover all the jobs in an organization. These consist of the both work specific as well as behavioural competencies. Each job in the organization is profiled for the competencies needed and these are then placed on to a common framework. Depending on the value of that competency, the number of competencies, the proficiency level of the competency and the competencys uniqueness, the job worth can be assessed in a comparative manner.
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Organizations need to invest significantly and usually outsource the activity of competency mapping. But done it remains relevant and in active use for the next 4-5 years unless there is a significant change in the way the company conducts its business and its operating practices. Once established a competency framework helps: 1. One universal set of competencies for all positions and employees in these positions 2. Builds a common language and frame of reference for everyone 3. Merit of each positions / individual 4. Makes it easier to compare positions and employees across the job functions in the organization 5. It helps align everyone towards a common culture and can support any culture change process Activity 2 Use the work you did as Activity 1. For each job list the competencies that are required. Create a grid of all competencies for all of the positions, as one column each, dont repeat common competencies List the jobs along the rows Now check box the jobs with the competency and the proficiency Now place the earning for each job in the last column What does this data tell you about the jobs and the way they are paid? Linking Competency to HR Systems One of the key benefits of the competency based management approach is its usage to build all of the other HR systems such as recruitment, performance management, training and development, career development, compensation management and Succession planning. Lets study them one by one. Recruitment and selection: The Competency profile for a job serves as the reference for the candidate hunt for the position. It is used at multiple stages in the recruitment and selection process Job Description and competency profile shared with the recruitment consultant as well as hosted on the company intranet and internet site for prospective applicants to view
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Use the competencies to design the appropriate selection tests and other methods Assessment forms for interviewers to contain the competency list and specify the desired proficiency levels

Performance Management: Increasingly the focus in most organizations using competency frameworks is to build competency based performance assessment processes. The employees performance is assessed on the core tasks and results as well as on the competencies required for the job he/she is doing. If there are gaps between the desired proficiency and the current proficiency of the employee the employee is reviewed for development initiatives to improve the competency. If the employee has competencies above the desired proficiency he is potential talent and needs to be nurtured for other roles and higher responsibilities. Training Needs: as explained above the information on gaps in competencies are collated for employees across the organizations and suitable training interventions are designed. The methodology used for competency improvement is usually action learning based. Focus is on internalising the learning by ensuring workplace application projects and activities. Manager support in making competency training useful is important. Career Planning: Competency assessments are popularly used for helping an employee discover his strength competencies and therefore serve as effective means for the employee to identify what roles/jobs can be best for the competencies the employee possesses. Most career planning assessment and activities are built on enhancing the employees strength areas and indentifying jobs that match the strengths. Compensation philosophy: while there is significant work done in researching competency based compensation, the practical application of competency based compensation system is not as easy. The competency framework provides a common benchmarking of all jobs across the organization on the competencies required and the proficiency level for the competency. This framework is then mapped to levels or grades that create a job to level mapping. The levels have ranges of compensation that can be paid for any job at a specific level. For example if there are 25 job clusters in a company. Each job cluster can have anywhere between 5 to 17 jobs.
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Each job in the job cluster is mapped to a level in the company. So if a particular job cluster has 5 jobs each job has a set of competencies and proficiency and this determines the level of the job and let us assumes it maps to Level 42 in the compensation system. All Level 42 jobs are mapped to compensation range with a Minimum salary of Rs.45,000 and a maximum salary of Rs.1,20,000. This range specifies the recommended salary range for a employee in this job. Ideally a new employee being hired to this job should be paid not less than the minimum specified for this job. A employee doing a extremely good job in the role and has been in the role for close to 3 years should be getting a salary closer to the maximum in the range. Succession Planning: competency based management is most effective in succession planning initiatives. Competency assessment is a widely used to identify and nurture talent in organizations. Most succession planning decisions use the competency assessment data for the employee and this along with the career planning data are used to ascertain employee readiness and inclination for new roles and responsibilities in the critical roles identified for succession planning. Self Assessment Questions 13. Competencies are underlying characteristic of a person which results in effective and/or ____________performance on the job 14. There are two sets of competencies, ___________________________ and __________________________. 15. The _________________________for a job serves as the reference for the candidate hunt for the position. 16. The competency framework provides a common benchmarking of all jobs across the organization on the ____________________________ and __________________________________________.

9.7 Promotions and Transfers

From a general point of view, selection involves the following types of problems: 1. Selection from within or outside the company 2. Hiring new employees from outside the company.

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3. Promotion within the company 4. Discharge of old employees. Promotion: A few companies do have a clear cut policy while certain organisations issue circulars as and when they need. Many companies develop policies over a period of time through settlements and agreements with the employees/unions. In promoting employees consideration should be given for establishment of the horizontal or vertical promotion. The desirability of securing assistants who complement rather than supplement their superiors is the major point in a successive plan which is an integral part of manpower planning. Let us understand only two types of promotion Vertical & Horizontal promotion. In Vertical Promotion, employees are promoted from one rank to the next higher rank in the same department or division. This is based on the belief that this leads to effective utilization of experience gained in the same department. It also gives an opportunity to the employees to go up while increasing their specialization in their area of operation. However, it has got one disadvantage. The vacancies may be very few in a department. E.g. In a big University, a Lecturer working in a particular Department may not become a Professor or the Head of the Department unless his superiors die/retire/resign. This makes the person frustrated. Besides, this type of promotion limits a person's contact with other departments and does not permit him to enhance his knowledge/expertise with each year's experience. Because his experience would be one or two year's knowledge multiplied by 10 to 15 years rotation. If he does not get his promotion at the right time since the room at the top is limited he will also start disliking his job / organisation. As a result, he becomes counter-productive. Horizontal promotions are considered an alternative to this by certain organisations. Under this policy, an employee may be transferred from a position in one department to a position of higher rank in another department or to the same rank in a different department if the transfer gives him an opportunity to acquire greater knowledge and wider experience. E.g. if a Senior Lecturer cannot get promotion in a particular Department for obvious reasons, he may be transferred as Registrar of the University or as Controller of Examinations or Director of Distance Education. However, there is one difficulty. Unless the person is quite dynamic and intelligent, he
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may find the new assignment a tough one and irksome. To some, it may be a cause for frustration. However, for many, Horizontal promotion even if it is only a paper promotion is a challenge since it allows them job rotation. The Next question to be answered is the type of man to be promoted. There is a natural tendency for an executive to select as his assistant one who has the same or similar abilities as his own. This may not result in most efficient combination. It is often observed that the assistant may imbibe the weaknesses of the Boss. Promotion is a part of the general problem of selection. Promotion is also closely linked with Training, Post-training Placement, development and incentives. Promotions and transfer make employees flexible. Definitions of promotion: 1. PIGORS & MEYERS: Define promotion as "the advancement of an employee to a better job - better in terms of greater respect of pay and salary. Better houses of work or better location or better working conditions-also may characterize the better job to which an employee seeks promotions, but if the job does not involve greater skill or responsibilities and higher pay, it should not be considered a promotion." This definition takes into consideration only a Vertical promotion. 2. DALE YODER: According to Dale Yoder, it is a "movement to a position in which responsibilities and presumably the prestige are increased. Promotion involves an increase in rank ordinarily; promotion is regarded as a change that results in higher earnings, but increased earnings are essential in a promotion." This definition talks of both vertical and horizontal promotions. 3. KOONTZ O'DONNEL observed that promotion is "a change within the organisation to a higher position with greater responsibilities and used for more advanced skills than in previous position. It usually involves higher status and increase in pay." Promotions can be from within or can be from outside depending upon the need of the organisation as both have certain advantages and disadvantages. So also are the arguments for and against the concept of

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promotion on seniority or merit. A wise policy which is followed by many organizations is a proper blending of both. Opposite to promotion is demotion. It is more as a punishment. In certain cases it can be on cost reduction considerations. Transfers: PIGORS & MEYERS Consider transfer as "the movement of an employee from one job to another on the same occupational level and at about the same level of wages or salary" No appreciable change in task or responsibility is expected, SCOTT and others define transfer as the movement of an employee from one job to another. It may involve a promotion, demotion or no change in job status other than moving from one job to another." Types of Transfer: Transfers are of many types. It may be a reward transfer or a punishment transfer. Transfers can be classified as production transfers, Replacement transfers, Versatility transfers, shift transfers or remedial transfers. They can be temporary or permanent. However, it is better to have a clear-cut and flexible transfer policy. Otherwise, it may lead to a lot of heart- burning among the affected employees.

9.8 Summary
The term wage is commonly used for those employees whose pay is calculated according to the number of hours worked. A job is defined as a collection or aggregation of tasks, duties, and responsibilities that, as a whole, is regarded as the reasonable assignment to an individual employee. Job satisfaction is determined by a set of personal and job factors. The word 'salary' is defined in the Oxford Dictionary as fixed periodical payment to a person doing other than manual or mechanical work. According to Subsistence theory, wages tend to settle at a level just sufficient to maintain the employees and his family at minimum subsistence levels. Francis A.Walker propounded Residual claimant theory. According to him, there are four factors of production/ business activity viz., land, labour, capital and entrepreneurship.
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Purchasing power theory holds that the prosperity, productivity and progress of industry depend on there being sufficient demand to ensure the sale of its products and pocketing of reasonable profits. A minimum wage has been defined by the Committee as "the wage which must provide not only for the bare sustenance of life, but for the preservation of the efficiency of the employee. Fair Wage is the wage which is above the minimum wage but below the living wage". Living Wage is "one which should enable the earner to provide for himself and his family not only the bare essentials of food, clothing and shelter but a measure of frugal comfort, including education for his children, protection against ill-health, requirements of essential social needs and a measure of insurance against the more important misfortunes, including old age". Job evaluation is concerned with assessing the value of the job in relation to another. Job analysis is the process of getting information about jobs.

9.9 Caselet
The need for competency mapping By Sheetal Srivastava The economic downturn has made companies sit up and recognise the need to have the best quality manpower working with them if they are to tide over the financial crisis looking large over the industry. This is where competency mapping has risen high up in the priority list for many organisations. Lets find out Finding the right fit for the right job is a matter of concern for most organisations especially in todays economic crisis. As meeting an individual's career aspirations are concerned, once the organisation gives an employee the perspective of what is required from him/her to reach a particular position, it drives them to develop the competencies for the same. Competencies enable individuals to identify and articulate what they offer regardless of the job. Competency mapping is a process of identifying key competencies for a particular position in an organisation, and then using it
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for job-evaluation, recruitment, training and development, performance management, succession planning, etc. Introduction of competency mapping has also involved introducing skill appraisals in performance appraisals. Need of the hour The slowing economy around the world has put new and increased pressure on an organisations capability to get more out of the available resource they have, and this often translates into pressure on the individual employees. That is where it is important to correlate performance result with competencies. It is therefore imperative to define a set of core competencies which corresponds the organisations key market differentiator, says Gyanendra Acharya, manager human resources, Hughes Systique Corporation. The current economic downturn has created a situation for companies to scale down various overhead costs to meet their growth requirements. Competency modeling identifies the precise set of competencies and proficiency levels needed for every role in the organisation. This system helps identify specific areas of training and maps employee growth to strategic business needs. During a difficult economic situation, it becomes particularly important for organisations to sustain their competitive edge in the industry by investing in learning and development programs that will empower employees to build on their strategic career objectives, notes Narendra Raje, director learning and development, Unisys. Competency mapping An important HR tool Companies have long realised the importance of competency mapping as an important HR function. This is especially relevant in this recessionary environment where human capital is one of the most important assets of an organisation and needs to be nurtured. According to Ajay Trehan, founder, CEO, AuthBridge There is always a need to have the best quality manpower. More and more companies are using competency mapping tools to screen and hire people with specific competencies. There might be a need for a person with excellent writing skills or an excellent creative mind. When individuals must seek new jobs, knowing ones competencies can give one a competitive edge in the market.

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Professional Aptitude Council, a global talent mapping organisation, through its assessment tests for competency mapping helps companies understand their employees better. PAC has a set of modules used to help organisations assess their existing talent pool. These tests assess a person on the basis of Aptitude, Domain Skills, Communication Skills and Personality and Psychometric fit. "This involves making crucial decisions as to place which employee in which project, identify core competency area of employees etc. These tools that PAC uses help organisations plan their traning requirements in the long run," notes Naveen Manjunath, managing director (India) Professional Aptitude Council. Unisys India has a comprehensive career management framework that helps employees map their growth paths, lateral or vertical. Each role has a defined set of competencies aligned to it. Employees are expected to first acquire the competencies defined for the current role and then focus on the competencies for a growth role before they are considered eligible for movement. Unisys University facilitates the mapping of specific learning activities for each competency required for a role in the organization and has over 4000 training programs, both e-learning and instructor-led to help bridge any gaps in employee competencies, adds Raje. Adding further to this he says, Unisys India has a robust and transparent Internal Job Posting (IJP) process to enable employees to get a complete picture of the opportunities available within the company. With this information, employees are better equipped to make informed career decisions and equip themselves with the knowledge and skills they require to move up the career ladder. CBay Systems has the advantage of employees delivering and exceeding requisite performance levels since the former has mapped out competencies that are required to perform specific roles. New hires are pegged against these that are required for the role before being hired to ensure they fit as per their deliverables. Existing employees are periodically reviewed with the help of assessment tools and based on the gap analysis we provide them necessary training and development to hone the requisite competency. The action plans for the competency development outcome based on such assessments are finalised and the entire initiative is

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institutionalised, confirms Sanjay Shanmugaum, vice president - human resources, CBay Systems. Competency mapping not only helps know your competencies but also your weak areas which can be worked upon. Besides increasing employee morale and enhancing productivity, it induces fresh thinking, fosters innovation and thereby aims to provide an enriching job experience. Source : Times Ascent , July 27, 2009 at 12:41:33 PM

9.10 Terminal Questions

1. What is job satisfaction? What are the pre-requisites for job satisfaction? 2. Discuss two popular Job Evaluation methods. 3. Briefly discuss Promotions and how it serves as a job satisfaction method.

9.11 Answers
Answers to Self Assessment Questions 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. Job description Getting information about jobs Administration of pay structure Job evaluation Non-quantitative job evaluation The point system and the factor-comparison system Grade Description Method Factor-Comparison Method Point Method Job evaluation Job description and analysis Relative earnings Superior Threshold competencies Differentiating competencies Competency profile, competencies required, the proficiency level for the competency

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Answers to Terminal Questions: 1. Refer to 9.2 & 9.3 2. Refer to 9.4 3. Refer to 9.6 & 9.7 Reference: 1. Human Resources Management by Fisher, Schoenfeldt and Shaw

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