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

2. 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.

3. 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

4. Major Decisions Establish purpose Single vs. multiple plans
Choose among methods
Obtain involvement of relevant stakeholders
Evaluate plan’s usefulness

5. 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

6. 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

7. 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

8. 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

9. 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.

10. Generic Compensable Factors
Skill
Effort
Responsibility
Working conditions

11. 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 % of variance

12. 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

13. 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

14. Job Evaluation Form

15. 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

16. 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

17. 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

18. 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

19. 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 . . .”

20. 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