Questions

Does your organization lack a formal job evaluation method?

Is your organization experiencing difficulty in attracting and retaining
competent employee?
Is your organization using more than one job evaluation system for
different groups of employees?
Do employees perceive your job evaluation system and pay practices as
unfair?
Do unions perceive your current system as unfair?
Are there disparities in pay between the same or similar jobs within
your organization?
Is your current job evaluation system unresponsive to the marketplace?
Is your job evaluation system subjective and discriminatory?
Is your current job evaluation method difficult to understand?
Is your current system overly complex and costly to maintain?
 Lecture outline
Factors determining pay
Focal elements of a job evaluation system
Alternative pay systems
Job evaluation
Process of job evaluation
Objectives
Different concepts
Non-Quantitative Approaches
Quantitative Approaches
Advantages and disadvantages
Conclusion
 Factors determining pay
1. Job worth Value of job
2. Market forces Demand and supply of talent
3. Macro Economics , Sectorial /Locational trends
4. Internal equity Economic pattern , growth
considerations cycles , locational variations,
5. Individual merit Cost of living index
Need for compression of pay
6. Legalities
within levels
Individual performance,
talent segmentation, critical
job holders
Statutory requirements
 Alternative Pay Systems
Job evaluation system that supports your classification
philosophy and strategies
Mix of reward versus entitlement (base) pay
Multiple base salary structure(s)
Individual versus group incentives
Performance measurement
Alternative Reward Strategies

Broad Banding
Skill Based Pay
Individual Incentives
Group Based Incentives
 Job evaluation

It is formal & systematic comparison of jobs to

determine the worth of one job relative to another.
 Process of job evaluation
Preparation of a Job evaluation Plan
Creating job Evaluation committee
(Usually a job evaluation committee consisting of
experienced employees, union representatives and HR
experts)
Job description & job specification
Selecting the method of evaluation
Selection of job dimensions
Classification of jobs
Implementation of evaluation
Maintenance
Principles
Job evaluation must attempt to rate the job and not the man.

(b) Elements of job selected for the job must be common to most of the
jobs, few in number and simple to identify and easy to understand.

(c) Clean definition of elements and consistency of degrees of such

elements, improve accuracy of job evaluation.

(d) Secure willing co-operation and support of supervisors on job

evaluation. This is obtained by selling this idea among them and
obtains this participation in the process.

(e) Secure co-operation and participation from employees.

(f) Minimize number of wage rate within each grade.

 Objectives
To systematically establish the relative value of
jobs within an organization
Impose a structured approach to determining job
value that is objective (to the extent possible) and
documented
Provide a basis for pay determination
To clarify the responsibility & authority attached
with each job
To avoid discrimination of any kind in wage
administration
Equity theory of J .S Adams (1963)

External Equity

Internal Equity

Individual Equity

Procedural Equity
 Uses
Determining pay and grading structures
A fair and equal pay system
Comparing rates against the external market
Changes in the job content
Clarifying career paths and succession planning
Harmonization of pay and conditions with one pay
spine
Technological and organizational change
 Establishing Pay Rates
Conduct a salary survey of what other employees are
paying for comparable jobs.
Determine the worth of each job in your organization
through job evaluation.
Group similar jobs into pay grades.
Price each pay grade by using wave curves.
Fine tune pay rates
 Salary survey
Salary.com - provides information on salary by job and
adapts national averages by applying local cost of living
differences
Am I paid what should I Get?
Job star job star .org Profession specific surveys

Pay check India

www.paycheck.in
To determine what equitable pay ranges are for the
following job.
 Different concepts

Job evaluation - Assesses the relative worth of jobs

Job analysis complete study of job

Performance Appraisal - Assesses the performance of individual

employees in the conduct of specific job duties.

Position Allocation - Determines the appropriate classification for

each position/employee

Job complexity It refers to the amount of judgment , initiative,

ingenuity & complex data analysis that doing the job requires.
 Non-Quantitative Approaches
Whole job ranking

Single Factor Ranking

Paired comparison

Relative ranking

Job classification or Grading

Market Pricing
 Quantitative Approaches

Attempt to establish relative worth

Give the illusion of being more precise than non-
quantitative approaches
Easier to defend to employees and managers
Tool should be tailored to job classification philosophy
Point Factor
Factor Comparison method
Scored Questionnaires
Decision Band
 Job classification or grading
Jobs placed at different levels , grades which are
clearly defined
Analyzing the org structure
Determining the job dimensions/factors for defining
grades
Using inputs from employees & TU representatives
regarding the number of grades & grade description
and job classification.
freezing the grades & assigning monetary values
 JOB CLASSIFICATION
Following is a brief description of classification in an
office:
Class 1- Executives: Office manager, deputy office manager,
department supervisor, etc.

Class 2- Skilled workers: Purchasing assistant, cashier,

receipts clerk, etc.

Class 3- Semiskilled workers: Stenotypists, machine

operators, switchboard operator, etc.

Class 4- Semiskilled workers: file clerks, office boys, etc.

 Market Pricing
Not a formal job evaluation methodology
Often used by smaller organizations
Employees and managers tend to support market
based systems
If administered fairly, will take into consideration both
increases and decreases in market conditions. This is
often not well received by employees and labor
organizations.
Requires considerable market data. Typically, at least
50% of all jobs need to be priced to defend values for
related jobs
 Point rating method
Method introduced by Merrill R.Lott
Different scales may be required to evaluate different jobs
Define the job factors or compensable factors
Determine the sub-factors specific to the job being
evaluated
Define degree statements -specific requirements for each
job
Assign points to factors ,sub factors & degrees
Preparation of a chart
Applying the point system
Point Factor Plans
1. Skill - experience, training, education and ability
measured in terms of the jobs performance
2. Effort - physical or mental exertion needed for job
performance
3. Responsibility - accountability
4. Working Conditions - surroundings and hazards
encountered
The system is perceived as valid by its users
Although the system is dependable & documented
,this method is time taking ,involves high costs & a lot
of clerical work
Subjective assessment needed to establish point range
for salary grades
Compensable Factors
Skill Effort
Physical demands
Mental exertion
Knowledge (education/training)
Experience needed
Credentials or licenses required
Manual dexterity required
Analytical ability required
Interpersonal communications
Working Conditions
Hazardous/dangerous environment
Adverse conditions/Travel
Hay methodology
a methodology used by corporates and organizations to map out their
job roles in the context of the organizational structure.

It provides clarity in result areas and accountabilities in the processes

of the organization
Enabling salary and benefit grading or benchmarking due to
standardization of job levels
Improved succession planning or mobility within the organization
Creation of more useful and focused job descriptions.

Applying the Hay methodology to a position results in two profiles

being produced which are called long and short profiles. The long
profile provides a view on aspects of the role and a score. The short
profile refers to the nature of the job (e.g. scientist vs. sales manager)
and acts as a check on the long profile.
 Mercer International Position
Evaluation
Compensable factors :
Impact-- Size of Organization ,Contribution
Communication
Innovation
Knowledge - Teams Breadth (Application of
knowledge)
Working Conditions- High Risk
 Global Grading System

Functional Knowledge
Business Expertise
Problem Solving
Leadership
Area of Influence
Nature of Influence
Communication / Interpersonal Skills
 The Process includes
Degrees that define the factor range and its respective intervals,
along with point values, are established. For example, Education
might be divided into the following degrees:
No formal education required
Requires reading and writing at the 8th grade level
Requires High School diploma or equivalent
Requires a Bachelors degree
Requires a Masters degree
Requires a Ph.D. degree
Factor Comparison method
E.J.Benge
A refinement of whole job ranking
No detailed criteria
Based on principles of point ranking and
ranking
Each factor can be weighted
Jobs are ranked within each factor
Labor intensive - involves numerous judgments
in order to build ranking ( jobs titles X factors =
number of individual decisions needed)
Final step in factor comparison
After comparison,
it is found that toolmaker skill
is similar to electrician (5),
mental requirements to welder (10)
Physical requirements to again electrician (12),
working conditions to mechanist (24)
and responsibility also to mechanist (3).
Thus, the wage rate for the job of toolmaker will be Rs.
54 (Rs.5 + Rs. 10 + Rs. 12 + Rs.24 + Rs.3).
 Steps to be followed
Define specific factors -- four or seven
Each job is ranked several times for each compensable
factor selected.
Identify key jobs or benchmark jobs
These jobs are compared and ranked factor comparison
Ranking of each job is made individually & then a meeting
is held to develop a consensus.
The factors are then assigned values factor valuation
Remaining jobs are then evaluated based on benchmarked
jobs.
 Pros /cons
Analytical & quantitative method & is reliable
Easy to explain this method to supervisors and union
members
Relative value is easily understood
Cons:
Cumbersome & complex
Needs to be re-established each time a new job is
added to the structure or an existing job changes since
these actions will affect the overall rankings
 Decision Band Method
Originally developed by Professor Emeritus Thomas t .
Paterson in the 1970s & refined by Ernst & young
compensation specialist for application in client
organization
Single band analytical job evaluation method
Value of job depends on decision making
requirements of the job
Looks at essential duties of the job
Level of each duty is determined
Highest banded duty determines the Band of the job
 Steps to be followed
Step 1 Emphasized on 6 levels of decision making or
decision bands (Band F highest ,Band A - lowest in
decision making )
Step 2 Grading according to the difficulty involved in
supervisory responsibilities
Step -3 sub grading based on ranking which can be
three for lower ones and two for highly responsible
Review
 Advantages/Disadvantages
Less complex than other methods, resulting in less cost to
administer
Can be applied to either individual positions or broad job
classes
Requires comprehensive job description and reporting
system
Disadvantages
Non-traditional approach
Results not as narrowly defined as other methods which
may cause employee concerns
 To Conclude
DBM is most appropriate & point factor is widely applied
Method should be selected wisely
Determine whether the JE method is to be used within only
a single job family or bargaining unit or across the whole
organization
Involve the stakeholders so they understand why you are
using a particular method
Provide a basic understanding of the tool to those affected
Review ratings with stakeholders to identify issues
Validate job descriptions is questions about ratings result
since all methods are tied to the job descriptions
Work Measurement approach
Its an emerging Approach
Enables & integrates multiple human capital processes
& empowers the HR function to perform
Three primary areas where work measurement adds
value:
a. Work alignment
b. Work fit
c. Work Value