Exhibit 5.1: Many Ways to Create Internal Structure See Exhibit 5.1, text page 121

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 Content has intrinsic value outside external market. Stakeholders can reach consensus on relative value. Value cannot be specified without external market. Honing instruments will provide objective measures. Puts face of rationality to a social / political process; establishes rules of the game and invites participation. Assessment of job content Assessment of relative value External market link Measurement Negotiation

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 ranking Paired 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 factors Factor 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 Conduct job analysis Determine compensable factors. Scale the factors. Weight the factors according to importance. Communicate the plan, train users, prepare manual. 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 of factor weights Advisory/JE committee Statistical analysis Criterion pay structure

Job Evaluation Form

Overview of the Point System Job Factor Weight 1 2 3 4 5 1. Education 50% 100 200 300 400 500 2. Respon s- ibility 30% 75 150 225 3. Physical effort 12% 24 48 72 96 120 4. Working conditions 8% 25 51 80 Degree of Factor

Method Comparison Method Advantages Disadvantages Ranking Job Evaluation Methods 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 job evaluation method Defines compensable factors Provides information to permit users to distinguish varying degrees of each factor Involves training users on total pay system Include 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 provided by hierarchy Which jobs are most and least valued Relative amount of difference between jobs