1. Job-Based Structures and Job Evaluation
Chapter 5
Job-Based Structures and Job Evaluation
© 2014 by McGraw-Hill Education.  This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner.  This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 

2. Learning Objectives Job-based structures: Job evaluation
Defining job evaluation: Content, value, and external market links
“How-to”: Major decisions
Job evaluation methods
Who should be involved?
The final result: Structure
Balancing chaos and control
5-2

3. Job-Based Structures: Job Evaluation
Systematically determines the relative worth of jobs
Creates a job structure for the organization
Is based on a combination of:
Job content
Skills required
Value to the organization
Organizational culture
External market
5-3

4. Exhibit 5.1 - Many Ways to Create Internal Structure
5-4

5. Defining Job Evaluation: Content, Value, and External Market Links
Content: What work is performed and how it gets done
Structure based on content orders jobs on the basis of the
Skills, duties, and responsibilities of the jobs
Job value
Structure based on job value orders jobs on the basis of the
Relative contribution of the skills, duties, and responsibilities to the organization’s goals
5-5

6. Defining Job Evaluation: Content, Value, and External Market Links
Linking content with the external market
Value of job content is based on what it can command in the external market
Skill level and nature of customer contacts
Useful criteria for establishing differences among jobs
Higher skill levels or working closely with customers commands higher wages
5-6

7. Defining Job Evaluation: Content, Value, and External Market Links
Technical and process dimensions
Job evaluation may be judged according to technical standards
Work can be evaluated based on:
Skills, effort, responsibilities, and working conditions
5-7

8. Exhibit 5.2 - Assumptions Underlying Different Views of Job Evaluation
5-8

9. Exhibit 5.3 - Determining an Internally Aligned Job Structure
5-9

10. “How-To”: Major Decisions
Establish the purpose
Supports organization strategy
Supports work flow
Is fair to employees
Motivates behavior toward organization objectives
Single versus multiple plans
Use different evaluation plans for diverse work content
5-10

11. “How-To”: Major Decisions
Benchmark jobs:
Include all relevant aspects of work in the evaluation
Characteristics of benchmark jobs
Contents are well-known and relatively stable
Job is not unique to one employer
A reasonable proportion of the work force is employed in this job
5-11

12. Exhibit 5.4 - Benchmark Jobs
5-12

13. “How-To”: Major Decisions
Diversity in the work can be thought of in terms of :
Depth (vertically)
Breadth (horizontally)
Number of job evaluation plans used hinges on:
How detailed an evaluation is required to make pay decisions
How much it will cost
Choose among job evaluation methods
5-13

14. Exhibit 5.5 - Comparison of Job Evaluation Methods
5-14

15. Job Evaluation Methods
Ranking
Orders job descriptions from highest to lowest
Based on a global definition of relative value
Types of ranking
Alternation ranking: Orders job descriptions alternately at each extreme
Paired comparison: Uses a matrix to compare all possible pairs of jobs
Disadvantages
Criteria is poorly defined
Requires evaluators who are knowledgeable about every job under study
5-15

16. Exhibit 5.7 - Paired Comparison Ranking
5-16

17. Job Evaluation Methods
Classification
Series of classes covers the range of jobs
Job description is compared to the class descriptions to decide the class it fits
Greater specificity of the class definition improves the reliability of evaluation
Limits the variety of jobs that can easily be classified
Jobs within each class are considered to be equal work and will be paid equally
5-17

18. Job Evaluation Methods
Point method- common characteristics:
Compensable factors - Based on:
The strategic direction of the business
How work contributes to the direction and strategy
Factor degrees numerically scaled
Weights reflect relative importance of each factor
5-18

19. Job Evaluation Methods
To design a point plan:
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
5-19

20. Step 1: Conduct Job Analysis
Representative sample benchmark jobs is drawn for analysis
Content of these jobs is basis for:
Defining compensable factors
Scaling compensable factors
Weighting compensable factors
5-20

21. Step 2: Determine Compensable Factors
Work characteristics that:
The organization values
Help the organization pursue its strategy and achieve its objectives
Based on the strategy and value of the organization
Reinforce the organization’s culture, values, business direction
May be eliminated if they no longer support the business strategy
5-21

22. Step 2: Determine Compensable Factors
Based on the work itself
Acceptable to the stake holders
Adapt form existing plans
How many Factors
Illusion of validity- Belief that factors capture divergent aspects of a job
Small numbers- If even one job has a certain characteristic, it is used in the entire work domain
5-22

23. Exhibit 5.11 - Hay Group Guide Chart—Profile Method
5-23

24. Exhibit 5.12- Factors in Hay Plan
5-24

25. Step 3: Scale the Factors
Scales reflecting different degrees within each factor are constructed
Most scales consist of four to eight degrees
Include undefined degrees such as plus and minus around a scale number
Interval scaling: Making each degree equidistant from the adjacent degrees
5-25

26. Step 3: Scale the Factors
Criteria for scaling factors:
Determine number of degrees necessary to distinguish among jobs
Use understandable terminology
Anchor degree definitions with benchmark-job titles and/or work behaviors
Make it apparent how degree applies to job
5-26

27. Step 4: Weight the Factors According to Importance
Different weights reflect differences in importance attached to each
Determination of factor weights
Advisory committee allocates 100 percent of the value among factors
5-27

28. Step 5: Select Criterion Pay Structure
Recommend by committee members
Uses statistical modeling techniques to determine the weight for each factor
Statistical approach is termed policy capturing:
To differentiate it from the committee a priori judgment approach
Is influenced by weights
5-28

29. Exhibit 5.15 - Job Evaluation Form
5-29

30. Step 6: Communicate the Plan and Train Users
Manual is developed to:
Describe job evaluation method
Define compensable factors
Provide information to distinguish varying degrees of each factor
Users require training and background information on the plan
Appeals process may be included
Communication is required to build employee acceptance
5-30

31. Step 7: Apply to Nonbenchmark Jobs
Involves applying plan to remaining jobs
Plan becomes a tool for managers and HR specialists
5-31

32. Step 8: Develop Online Software Support
Online job evaluation is widely used in larger organizations
Can be used by managers and HR generalists
5-32

33. Who Should be Involved?
Managers and employees with a stake in the results
Committees, task forces, or teams that include:
Representatives from key operating functions
Union representatives
Compensation professionals
5-33

34. Who Should be Involved? Design process matters
Fairness of the design process helps achieve:
Employee and management commitment, trust, and acceptance of results
Appeals/review procedures
Ensure procedural fairness
Procedures should be judged for their susceptibility to political influences
5-34

35. The Final Result: Structure
Final result of the job analysis – job description – job evaluation process:
Structure- A hierarchy of work
Organizations commonly have multiple structures:
Derived through multiple approaches
Applicable to different functional groups or units
5-35

36. Exhibit 5.17 - Resulting Internal Structures – Job, Skill, and Competency Based
5-36

37. Balancing Chaos and Control
Complex procedures and bureaucracy can diverge focus on objectives
Allow flexibility to adapt to changing conditions to:
Avoid bureaucracy
Increase freedom to manage
Flexibility without guidelines increases chaos
Balanced guidelines ensure that employees are treated fairly
5-37