COMPENSATION

MANAGEMENT
Compensaiion Managemeni
Dctcvmining Pay Ratcs
O c Sa!avy Suvvcy
O Job Eva!uation
O Gvouping Jobs into Pay Gvadcs
O Pvicing oI Jobs Using Wagc Cuvvcs
ob Evaluaiion
O c Sa!avy Suvvcy
O Ii is difficuli io sei pay iaies if you don'i lnow wlai
oileis aie paying, so salaiy suiveys play a big iole in
piicing jobs.
O Of all ile wage ciiieiia, mavkct vatcs oi ile going
vatcs iemain ile mosi impoiiani siandaid foi
deieimining pay.
ob Evaluaiion
Salaiy suiveys lelp ensuie cxtcvna! cquity in
deieimining ile compensaiion siiuciuie.
Salaiy suiveys aie aimed ai deieimining pievailing
wage iaies in a specific indusiiy, iegion oi ile
economy as a wlole.
ob Evaluaiion
O Salaiy suiveys can be foimal oi infoimal. Howevei, a
foimal salaiy suivey is moie piefeiable as ii yields
moie specific and compielensive infoimaiion.
O Tle suiveys may be puiclased, ouisouiced io a
consuliing fiim, oi be conducied by ile oiganizaiions
iiself.
ob Evaluaiion
O Job Eva!uation
O ob evaluaiion is a sysiemaiic pioceduie of
deieimining ile relotive wortb of a job. Ii is used as
a basis foi aciual pvicing of ile job.
O In sloii, job evaluaiion seels io ianl all jobs in ile
oiganizaiion in a lieiaicly ilai ieflecis ile ielaiive
woiil of eacl job. Ii lelps io ensuie intcvna!
cquity in deieimining ile compensaiion siiuciuie.
ob Evaluaiion
O Ii is impoiiani io noie ilai ilis is o ronkinq of jobs,
not people.
O Tle basic piinciple belind job evaluaiion is ilai jobs
ilai iequiie gieaiei qualificaiions, moie
iesponsibiliiy, and moie complex job duiies slould be
paid moie liglly ilan jobs wiil lessei iequiiemenis.
ob Evaluaiion
O Tle basic pioceduie is to compore tbe jobs in ielaiion
io one anoilei on a sei of compensoble foctors, sucl
as, slills, effoii, iesponsibiliiy and woiling
condiiions.
ob Evaluaiion
O ob evaluaiion is mosily a judgmenial piocess, one
demanding close coopeiaiion among supeivisois, HR
specialisis, and employees and union iepieseniaiives.
O Tle iasl is usually undeiialen by a commiiiee wiil
adequaie iepieseniaiion fiom supeivisois, HR
peisonnel and employees.
ob Evaluaiion
O Ii's a pieiequisiie ilai ile commiiiee slould consisi of
people wlo aie familiai wiil ile jobs in quesiion.
O Having employee iepieseniaiives on ile commiiiee
can lelp io ensuie gieaiei accepiance of ile job
evaluaiion iesulis.
ob Evaluaiion
Job Eva!uation Mctods
O vdcving]Ranking Mctod Tle oideiing
meilod oi ianling meilod is ile simplesi of all
evaluaiion meilods.
O Ii involves ianling eacl job ielaiive io all oilei
jobs, usually based on some oveiall facioi lile job
Jifficulty.
ob Evaluaiion
O In paiiiculai, ile sequence of sieps in a iypical job
evaluaiion by ianling meilod could include:
O btaining job inIovmation
O Sc!ccting and gvouping jobs
O Ranking jobs
O Combining vatings
ob Evaluaiion
O C!assiIication Mctod Tle classificaiion
meilod involves evaluaiing jobs based on pie-
deieimined job giades.
O Tle classificaiions aie cieaied by ideniifying some
common denominaioi slills, iesponsibiliiies,
lnowledge io cieaie disiinci classes oi giades of
jobs.
ob Evaluaiion
O Once ile classificaiions aie esiablisled, iley aie
ianled in an oveiall job oidei oi impoiiance
accoiding io ile ciiieiia closen, and eacl job is
placed in iis appiopiiaie classificaiion.
O Foi example, ile giading could include unslilled,
slilled, iouiine, adminisiiaiive, execuiive, policy
maling eic.
ob Evaluaiion
O actov Compavison Mctod Tle facioi
compaiison meilod is aciually a iefinemeni of ile
ianling meilod in wlicl jobs aie ianled noi on
ile basis of a single facioi bui on a combinaiion of
diffeieni faciois.
O Ii is a quantitativc mctod of job evaluaiion.
ob Evaluaiion
O Tle basic undeilying assumpiion belind ile
facioi compaiison meilod is ilai ileie aie five
ciiiical univeisal job faciois:
O Mcnta! vcquivcmcnts
O Pysica! Rcquivcmcnts
O Ski!! Rcquivcmcnts
O Rcsponsibi!itics
O Wovking Conditions
ob Evaluaiion
O In ilis meilod, ile evaluaiion commiiiee cieaies a
moneiaiy scale, coniaining eacl of ile five
univeisal faciois, and ianls jobs accoiding io ileii
value foi eacl facioi.
O Ii las many vaiiaiions and appeais io be ile mosi
accuiaie, ile mosi complex, and one of ile mosi
widely used meilods of job evaluaiion.
ob Evaluaiion
O Tle iypical sieps involved in ile piocess of
evaluaiing jobs by facioi compaiison meilod
could include:
O Obiain job infoimaiion
O Seleci ley benclmail jobs
O Ranl ley jobs by faciois
ob Evaluaiion
O Disiiibuie wage iaies by faciois
O Ranl ley jobs accoiding io wages assigned io eacl
facioi
O Consiiuci ile job compaiison scale
O Use ile job compaiison scale
ob Evaluaiion
O Point Compavison Mctod Tlis meilod
involves biealing down jobs based on ideniifiable
ciiieiia and ile degiee io wlicl ilese ciiieiia exisi
on ile job.
O Tle ideniifiable ciiieiia could be slill, effoii,
iesponsibiliiy eic. wlicl aie allocaied specific
poinis in a job.
ob Evaluaiion
O Ii iequiies ideniifying seveial compensable faciois,
eacl wiil seveial degiees, and also ile degiee io
wlicl eacl of ilese faciois is pieseni in ile job.
O In ilis meilod, iaiei assign numeiical values io
specific job faciois and ile sum of ilese values
piovides a quaniiiaiive assessmeni of a job's
ielaiive woiil.
ob Evaluaiion
O Tlai is, appiopiiaie weiglis aie given by ile iaieis,
depending on ile impoiiance of eacl ciiieiion io
peifoiming ile job, poinis aie summed, and jobs
wiil similai poini ioials aie placed in similai pay
giades.
O Tlis meilod of job evaluaiion is consideied io be a
moie ieliable meilod ilan ile oileis.
ob Evaluaiion
O Tle iypical sieps involved in ile piocess of
evaluaiing jobs by poini compaiison meilod could
include:
O Deieimine clusieis of jobs io be evaluaied
O Colleci job infoimaiion
O Seleci compensable faciois
O Define compensable faciois
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O Define facioi degiees
O Define ielaiive values of faciois
O Assign poini values io faciois and degiees
O Wiiie ile job evaluaiion manual
O Raie ile jobs
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Estab!ising Pay Gvadcs
O A pay giade is ile giouping of similai jobs io
simplify piicing jobs. E.g, ii is mucl moie
convenieni foi ile oiganizaiions io piice i pay
giades ilan :oo sepaiaie jobs.
O Ii's similai io a college's piaciice of giouping giades
of o-ioo inio an A caiegoiy, o- inio B and so
on.
ob Evaluaiion
O A pay giade is compiised of jobs of appioximaiely
equal difficuliy oi impoiiance as esiablisled by job
evalauiion.
O Ploiiing jobs on a scaiiei diagiam is ofien useful
foi manageis in deieimining ile appiopiiaie
numbei of pay giades foi a company.
ob Evaluaiion
Dvawing tc Wagc Cuvvc
O Once ile pay giade las been deieimined, ile nexi
siep is io diaw a wage cuive. A wagc cuvvc is
obiained by fiiiing of ploiied poinis io cieaie a
smooil piogiession beiween pay giades.
O Tle line of besi fii may be siiaigli oi cuived.
Howevei, wlen ile poini sysiem is used, a siiaigli
line is ofien ile iesuli.
ob Evaluaiion
Dcvc!oping Pay Rangcs
O In oidei io decide wleilei all individuals
peifoiming ile same job will ieceive equal pay oi
wleilei you slould use diffeieniial paymenis, ii's
ofien useful io develop some pay ianges.
ob Evaluaiion
O Tle pay iange is a seiies of sieps oi levels wiilin a
pay giade, usually based upon peifoimance
measuie oi yeais of seivice oi boil.
O Ii includes a minimum and maximum pay iaie
wiil enougl vaiiance beiween ile iwo io allow foi
a significani pay diffeience.
ob Evaluaiion
O Pay ianges aie geneially piefeiied ovei single iaies
because iley allow a fiim io compensaie
employees accoiding io ileii peifoimance and
lengil of seivice.