Transcript Exhibit 5.1: Many Ways to Create Internal Structure

Exhibit 5.1: Many Ways to Create Internal
Structure
What Is Job Evaluation?
Process of systematically
determining the relative worth of
jobs to create a job structure for
the organization. Evaluation is
based on a combination of job
content, skills required, value to
the organization, organizational
culture and the external market.
Assumptions Underlying
Different Views of Job Evaluation
Aspect of Job Evaluation
Assumption
Assessment of job
content
Content has intrinsic value outside external market.
Assessment of
relative value
Stakeholders can reach consensus on relative
value.
External market link
Value cannot be specified without external market.
Measurement
Honing instruments will provide objective measures.
Negotiation
Puts face of rationality to a social / political
process; establishes rules of the game and invites
participation.
Major Decisions
 Establish
purpose
 Single vs. multiple plans
 Choose among methods
 Obtain involvement of relevant stakeholders
 Evaluate plan’s usefulness
Characteristics of Benchmark Job
 Contents
are well-known and
relatively stable over time
 Job
is common across several
different employers
 Sizable
proportion of work
force employed in job
Ranking Method
 Orders
job descriptions from highest to
lowest based on a global definition of relative
value or contribution to the organization’s
success
 Two
approaches
 Alternation
 Paired
ranking
comparison method
Classification Method
 Uses
class descriptions that serve as the
standard for comparing job descriptions
 Classes
include benchmark jobs
 Outcome
 Series
of classes with a number of jobs in each
Point Method
 Three
common characteristics of point methods
 Compensable
 Factor
factors
degrees numerically scaled
 Weights
reflect relative
importance of each factor
 Most
commonly used approach
to establish pay structures in U.S.
 Differ
from other methods by making explicit the
criteria for evaluating jobs -- compensable factors
Designing a Point Plan:
Six Steps
1.
Conduct job analysis
2.
Determine compensable factors.
3.
Scale the factors.
4.
Weight the factors according to importance.
5.
Communicate the plan, train users, prepare
manual.
6.
Apply to nonbenchmark jobs.
Generic Compensable Factors
Skill
Effort
Responsibility
Working
conditions
Compensable Factors - How Many?

“Illusion of validity” - Belief that factors are
capturing divergent aspects of a job

“Small numbers” - If even one job has it, it
must be a compensable factor

“Accepted and doing the job” - 21, 7, 3

Research results

Skills explain 90% or more of variance

Three factors account for 98 - 99% of variance
Step 3: Scale the Factors



Construct scales reflecting different degrees within
each factor
 Most factor scales consist of 4 to 8 degrees
Issue - Whether to make each degree equidistant
from adjacent degrees (interval scaling)
Criteria for scaling factors
 Limit to number necessary to
distinguish among jobs
 Use understandable terminology
 Anchor degree definitions with benchmark job titles
 Make it apparent how degree applies to job
Step 4: Weigh the Factors
 Different
weights reflect differences in
importance attached to each factor
 Determination
 Advisory/JE
 Statistical
of factor weights
committee
analysis
 Criterion
pay structure
Job Evaluation Form
Overview of the Point System
Degree of Factor
Job Factor
Weight
1
2
3
4
5
1. Education
50%
100
200
300
400
500
2. Responsibility
30%
75
150
225
300
3. Physical
effort
12%
24
48
72
96
4. Working
conditions
8%
25
51
80
120
Method Comparison
Method
Advantages
Disadvantages
Ranking
Fastest and easiest, inexpensive,
best suited to small organizations
where a hierarchy will suffice
Not suited for a large number of
positions or comparisons between
jobs are needed
Classification
Easy to understand, well accepted
by employees, easy to modify as
duties change. Best suited to large
organizations with many jobs and
limited resources
Only looks at whole job; no audit
trail is provided
Point Factor
Reasonable objective results,
provides good documentation, best
for organizations that want a
system for evaluating each job
Time consuming, complex to
develop and maintain, difficult to
justify to employees
Step 5: Communicate Plan and Train
Users
Involves
development of manual containing
information to allow users to apply plan
 Describes
 Defines
job evaluation method
compensable factors
 Provides
information to permit users to distinguish
varying degrees of each factor
Involves
Include
training users on total pay system
appeals process for employees
Step 6: Apply to Nonbenchmark
Jobs
Final
step involves applying plan to remaining
jobs
 Benchmark
jobs were used
to develop compensable
factors and weights
Trained
evaluators will evaluate
new jobs or reevaluate jobs
whose work content has changed
Who Should be Involved?

Committees, task forces,
or teams of key
representations

Design process matters

Appeals/review
procedures

“I know I speak for
all of us when . . .”
Final Result: Structure
Outcome
 Ordered
list of jobs based on
their value to organization
 Hierarchy of work
 Structure supporting a
policy of internal alignment
Information
 Which
provided by hierarchy
jobs are most
and least valued
 Relative amount of
difference between jobs