Chapter 5Job-Based Structures and

Job EvaluationMcGraw-Hill/Irwin Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.

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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

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Job-Based Structures: Job Evaluation

Job evaluation is the 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

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Job-Based Structures: Job Evaluation (cont.)

Organizational culture External market

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Exhibit 5.1: Many Ways to Create Internal Structure

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Defining Job Evaluation: Content, Value, and External Market Links

Content and value A structure based on content orders jobs

on the basis of the skills, duties, and responsibilities associated with the jobs

A structure based on job value orders jobs on the basis of the relative contribution of the skills, duties, and responsibilities of each job to the organization’s goals

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Defining Job Evaluation: Content, Value, and External Market Links (cont.)

Linking content with the external market Aspects of job content take on value

based on their relationship to market wages

Aspect not related to the external labor market may be excluded in the job evaluation

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Defining Job Evaluation: Content, Value, and External Market Links (cont.)

“Measure for measure” versus “Much ado about nothing” Job evaluation may be judged according

to technical standards If participants agree that skills, effort,

responsibilities, and working conditions are important, then work is evaluated based on these factors

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Exhibit 5.2: Assumptions UnderlyingDifferent Views of Job Evaluation

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Exhibit 5.3: Determining an Internally Aligned Job Structure

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“How-To”: Major Decisions

Establish the purpose Supports organization strategy Supports work flow Is fair to employees Motivates behavior toward organization

objectives

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“How-To”: Major Decisions (cont.)

Single versus multiple plans Different evaluation plans are used when

the work content is too diverse to be evaluated by one plan

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“How-To”: Major Decisions (cont.)

To be sure that all relevant aspects of work are included in the evaluation, an organization may start with a sample of benchmark jobs Contents are well-known and relatively stable

over time Job is not unique to one employer A reasonable proportion of the work force is

employed in this job

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Exhibit 5.4: Benchmark Jobs

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“How-To”: Major Decisions (cont.)

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

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Exhibit 5.5: Comparison of Job Evaluation Methods

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Ranking

Orders job descriptions from highest to lowest based on a global definition of relative value or contribution to the organization’s success Alternation ranking orders job

descriptions alternately at each extreme Paired comparison method uses a matrix

to compare all possible pairs of jobs

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Ranking (cont.)

Disadvantages: Ranking criteria are usually poorly defined Evaluators must be knowledgeable about every

job under study

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Exhibit 5.7: Paired Comparison Ranking

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A series of classes covers the range of jobs

A job description is compared to the class descriptions to decide which class is the best fit

Classification

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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

Classification (cont.)

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Exhibit 5.8: Classifications for Engineering Work Used by Clark Consulting

Source: Clark Consulting. Used by permission.

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Point Method

Common characteristics: Compensable factors Factor degrees numerically scaled Weights reflect relative importance of

each factor

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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

Point Method (cont.)

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Step 1: Conduct 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

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Step 2: Determine Compensable Factors

Compensable factors are those characteristics in the work that the organization values, that help it pursue its strategy and achieve its objectives

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Step 2: Determine Compensable Factors (cont.)

Based on strategy and values of organization Reinforce the organization’s culture, values,

business direction, and nature of work May be eliminated if they no longer support

the business strategy

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Step 2: Determine Compensable Factors (cont.)

Based on the work itself Documentation must support the choice of

factors

Acceptable to the stakeholders

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Step 2: Determine Compensable Factors (cont.)

Adapting factors from existing plans Skills and effort required, responsibility, and

working conditions National Electrical Manufacturers Association

(NEMA), National Metal Trades Association (NMTA), Equal Pay Act (1963), and Steel plan

The Hay Guide Chart-Profile Method

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Exhibit 5.12: Factors in Hay Plan

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Exhibit 5.13: Hay Guide Chart – Profile Method of Job Evaluation

Source: Hay Group, “The Hay Guide Chart-Profile Method of Job Evaluation: An Overview,” http://www.haygroup.com/ww/services/index.aspx?ID=1529.

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Step 2: Determine Compensable Factors (cont.)

How many factors? “Illusion of validity” - Belief that factors

capture divergent aspects of a job and both are important

“Small numbers” - If even one job has a certain characteristic, it is used in the entire work domain

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Step 3: Scale the Factors

Scales reflecting different degrees within each factor are constructed

Most scales consist of four to eight degrees Also include undefined degrees such as

plus and minus around a scale number Major issue: Interval scaling

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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

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Exhibit 5.14: Factor Scaling – National Metal Trades Association

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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

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Step 4: Weight the Factors According to Importance (cont.)

Select criterion pay structure Committee members recommend the

criterion pay structure Statistical modeling techniques are used

to determine the weight for each factor Statistical approach is termed policy

capturing to differentiate it from the committee a priori judgment approach

Weights also influence pay structure

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Exhibit 5.14: Job Evaluation Form

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Step 5: Communicate the Plan and Train Users

A manual is developed Describes job evaluation method Defines compensable factors Provides 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

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Step 6: Apply to Nonbenchmark Jobs

Final step involves applying plan to remaining jobs

Plan becomes a tool for managers and HR specialists

Trained evaluators will evaluate new jobs or reevaluate jobs whose work content has changed

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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

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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, including nonmanagerial employees

Including union representatives helps gain acceptance

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Who Should be Involved? (cont.)

Compensation professionals are primarily responsible for most job evaluations for most jobs

Design process matters Attending to the fairness of the design

process and approach chosen is likely to achieve employee and management commitment, trust, and acceptance of results

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Who Should be Involved? (cont.)

Compensation professionals are primarily responsible for most job evaluations for most jobs

Appeals/review procedures Inevitable that some jobs are incorrectly

evaluated Requires review procedures for handling

such cases and helping to ensure procedural fairness

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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

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The Final Result: Structure

The final result of the job analysis – job description – job evaluation process is a structure, a hierarchy of work

Organizations commonly have multiple structures derived through multiple approaches that apply to different functional groups or units

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The Final Result: Structure (cont.)

Internal alignment is most influenced by fair and equitable treatment of employees doing similar work in the same skill/knowledge group

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Exhibit 5.17: Resulting Internal Structures – Job, Skill, and Competency Based

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Balancing Chaos and Control

Job evaluation changed the legacy of decentralization and uncoordinated wage-setting practices of the 1930s and 1940s

Must be flexible to adapt to changing conditions Avoids bureaucracy and increases

freedom to manage Also reduces control and guidelines,

making enforcement of fairness difficult