1. Job-Based Structure and Job Evaluation
Chapter 5

2. Chapter Topics 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

3. Job-Based Structures: Job Evaluation
Job evaluation – process of systematically determining the relative worth of jobs to create a job structure for the organization
The evaluation is based on a combination of:
Job content
Skills required
Value to the organization
Organizational culture
External market

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

5. Defining Job Evaluation: Content, Value, and External Market Links
Content and value
Exchange value
Linking content with the external market
Value of job content is based on what it can command in the external market
“Measure for measure” vs. “Much ado about nothing”

6. Exhibit 5.2: Assumptions Underlying Different Views of Job Evaluation

7. Defining Job Evaluation: Content, Value, and External Market Links (cont.)
“How-To”: Major decisions
Establish the purpose
Supports organization strategy
Supports work flow
Is fair to employees
Motivates behavior toward organization objectives

8. Exhibit 5.3: Determining an Internally Aligned Job Structure

9. Defining Job Evaluation: Content, Value, and External Market Links (cont.)
“How-To”: Major decisions (cont.)
Single versus multiple plans
Characteristics of a benchmark job:
Contents are well-known and relatively stable over time
Job not unique to one employee
A reasonable number of employees are involved in the job
Depth and breadth of job
Refer Exhibit 5.4
Choose among methods

10. Exhibit 5.4: Benchmark Jobs

11. Exhibit 5.5: Comparison of Job Evaluation Methods

12. Ranking
Orders job descriptions from highest to lowest based on a global definition of relative value or contribution to the organization’s success
Simple, fast, and easy to understand and explain
Initially, the least expensive method
Can be misleading
Two approaches
Alternation ranking
Paired comparison method

13. Exhibit 5.6: Paired Comparison Ranking

14. Classification
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

15. Exhibit 5.7: Classifications for Engineering Work Used by Clark Consulting

16. 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

17. 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

18. Step 1: Conduct Job Analysis
Point plans begin with job analysis
A representative sample of jobs (benchmark jobs) is drawn for analysis
Content of these jobs is basis for:
Defining compensable factors
Scaling compensable factors
Weighting compensable factors

19. Step 2: Determine Compensable Factors
Compensable factors – characteristics in the work that the organization values, that help it pursue its strategy and achieve its objectives
Compensable factors play a pivotal role
Reflect how work adds value to organization
Decision making is three-dimensional:
Risk and complexity
Impact of decision
Time that must pass before evidence of impact

20. Exhibit 5.9: Compensable Factor Definition: Decision Making

21. Step 2: Determine Compensable Factors (cont.)
To be effective, compensable factors should be:
Based on strategy and values of organization
Based on work performed
Documentation is important
Acceptable to the stakeholders
Adapting factors from existing plans
Skills, and effort required; responsibility, and working conditions
NEMA, NMTA, Equal Pay Act (1963), and Steel plan

22. Compensable Factors - How Many Factors?
“Illusion of validity” - Belief that factors are capturing divergent aspects of a job and are both important
“Small numbers” - If even one job has a certain characteristic, it must be a compensable factor
“Accepted and doing the job” – 21 factor, 7 factors, 3 factors
Research results
Skills explain 90% or more of variance
Three factors account for % of variance

23. Exhibit 5.10: Compensable Factor Definition: Multinational Responsibilities

24. Exhibit 5.11: Factors in Hay Plan

25. Exhibit 5.12: Hay Guide Chart – Profile Method of Job Evaluation

26. Step 3: Scale the Factors
Construct scales reflecting different degrees within each factor
Most factor scales consist of four to eight degrees
Issue
Whether to make each degree equidistant from adjacent degrees (interval scaling)

27. Step 3: Scale the Factors (cont.)
Criteria for scaling factors
Ensure number of degrees is 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

28. Exhibit 5.13: Factor Scaling – National Metal Trades Association

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

30. Step 4: Weight the Factors According to Importance (cont.)
Select criterion pay structure
Committee members recommend the criterion pay structure
Statistical approach is termed policy capturing to differentiate it from the committee a priori judgment approach
Weights also influence pay structure

31. Exhibit 5.14: Job Evaluation Form

32. Step 5: Communicate the 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
Includes appeals process for employees
Employee acceptance is imperative
Communication

33. Step 6: Apply to Nonbenchmark Jobs
Final step involves applying plan to remaining jobs
Could involve both designers and/or employees trained in applying the plan
Tool for managers and HR specialists once plan is developed and accepted
Trained evaluators will evaluate new jobs or reevaluate jobs whose work content has changed
May also be part of appeals process

34. Step 7: Develop Online Software Support
Online job evaluation is widely used in larger organizations
Becomes part of a Total Compensation Service Center for managers and HR generalists to use

35. Who Should be Involved?
Managers and employees with a stake in the results should be involved
Can include representatives from key operating functions, including nonmanagerial employees
Organizations with unions find including union representatives helps gain acceptance
Extent of union participation varies

36. Who Should be Involved? (cont.)
Design process matters
Attending to fairness of design process and approach chosen likely to achieve employee and management commitment, trust, and acceptance of results
Appeals/review procedures
Inevitable that some jobs are incorrectly evaluated
Requires review procedures for handling such cases and helping to ensure procedural fairness

37. Who Should be Involved? (cont.)
“I know I speak for all of us when I say I speak for all of us”
Procedures should be judged for their susceptibility to political influences

38. The Final Result: Structure
The final result of the job analysis – job description – job evaluation process is a structure, a hierarchy of work
Managerial, technical, manufacturing, and administrative

39. Exhibit 5.15: Resulting Internal Structures – Job, Skill, and Competency Based
See Exhibit 5.15 on page 144

40. Balancing Chaos and Control
Job evaluation changed the legacy of decentralization and uncoordinated wage-setting practices left from the 1930s and ’40s
It must afford flexibility to adapt to changing conditions
Avoids bureaucracy and increases freedom to manage
Reduces control and guidelines, making enforcement of fairness difficult