Download MBA HRM 4th Semester Compensation Management Notes

Download MBA HRM (Human Resource Management) (Master of Business Administration) 4th Semester Compensation Management Notes




UNIT : I

Lesson 1

Introduction to Job Evaluation



O u t l i n e o f t h e l e s s o n



1.

Terminologies of job evaluation

2.

Concepts of job and evaluation

3.

Objectives of job evaluation

4.

Principles of job evaluation

5.

JOB Evaluation criteria

6.

Job Evaluation process

7.

Computerized job evaluation





L e a r n i n g O b j e c t i v e s





After studying this lesson, you should be able to:



1. Understand the various terms of job evolutions

2. Define the term job evolution

3. Outline the objectives of job evolution

4. List the principles of job evaluation

5. Identify the criteria for job evaluation

6. Observe the process of job evaluation

7. Look into the computerized job evaluation







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Introduction

Once a right candidate is placed on a right job, the person needs to be duly

compensated for the job he/she performs. In the pursuit of equal payment, there

should be established a consistent and systematic relationship among base

compensation rates for all the jobs within the organizations. The process of such

establishment is termed ,,job evaluation. Different jobs in an organization need

to be valued to ascertain their relative worth so that jobs are compensated

accordingly and an equitable wage and salary structure is designed in the

organization. This is necessary for sustaining cordial relations within and

between employees and employer. Hence, there is a need for appreciation of

intricacies of the job evaluation in the modern organizations. This lesson, as a

first steps, dedicated to discuss the various fundamental aspects of job

evolution.



Concept and related terminologies of job evaluation

In the area of job evaluation study, a certain amount of technical terminology is

used in order to facilitate communication. It is therefore desirable to list and

understand allied terms in the job evaluation, as well as some terms that are

related to and often confused with job evaluation (Exhibit. 1.1).



Position: A position is a group of tasks assigned to one individual. There are as

many positions in a firm as there are personnel.



Job: Edwin B.Flippo describes job as a group of positions that are similar as to

kind and level of work. In some instances only one position may be involved,

simply because no other similar position exists. For example, in the typical firm

the position of human resource manager also constitute a job since there is only

one human resource manager in the organizing.



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Job Analysis: It is the process of studying and collecting information relating to

the operations and responsibilities of a specific job. The immediate products of

this analysis are job descriptions and job specifications.



Motion study: This also involves study of the job. Motions study is one of the

ways of studying job. It is a process of analyzing a job to find the easiest, most

effective, and most economical method of doing it. As such, motion study is a

part of the job design function.



Job description: It is an organized, factual statement of the duties and

responsibilities of a specific job. In brief, it should tell what is to be done, how it

is to be done, and why. It is a standard of function, in that it defines the

appropriate and authorized content of a job.



Job specification: It is a statement of the minimum acceptable human qualities

necessary to perform a job properly. It is a standard of personnel and designates

the qualities required for acceptable performance.



Evaluation: Wigley explains evaluation as a data reduction process that

involves the collection of large amounts of data which are analyzed and

synthesized into an overall judgment of worth or merit. The implication here is

that the judgment of worth can be supported by the data. In her review, Foxon

found similar definitions referring to judgments of value or worth.



Job Evaluation: It is a systematic and orderly process of determining the worth

of a job in relation to other jobs. The objective of this process is to determine

the correct rate of pay. It is therefore not the same as job analysis. Rather it

follows the job analysis process, which provides the basic data to be evaluated.



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Exhibit. 1.1

Job evaluation

Measuring

relative worth of a

job

Job specification



Job Analysis



Statement of

Process of

Job

minimum acceptable

collecting job

Human qualities

related data

Job description

Statement of a job

duties and

responsibilities


In simple worlds, job evaluation is the rating of jobs in an organization. This is

the process establishing the value or worth of jobs in a job hierarchy and

compares the relative intrinsic value or worth of jobs within an organization.

Some renounced definitions of job evaluation are described below.



Scott, Clothier and Priegel defines job evaluation as "the operation of

evaluating a particular job in relation to other jobs either within or outside the

organization".



Dale Yoder described job evaluation as "a practice which seeks to provide a

degree of objectivity in measuring the comparative value of jobs within an

organization and among similar organizations".



Edwin B.Flippo defines job evaluation as "a systematic and orderly process of

determining the worth of a job in relation to other jobs".



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Arthur A. Sloane described job evaluation as "any formalized system that

attempts to determine the relative worth of different jobs in the organization so

that jobs of greater value can be rewarded by greater pay".



According to the International Labour Organization (ILO), "job evaluation is

an attempt to determine and compare the demands which the normal

performance of a particular job makes on normal workers, without taking into

account the individual abilities or performance of the workers concerned".



The British Institute of Management defines "job evaluation as the process of

analysis and assessment of jobs to ascertain reliably their negative worth using

the assessment as the basis for a balanced wages structure".



Wendell French defines job evaluation as "a process of determining the relative

worth of the various jobs within the organization, so that differential wages may

be paid to jobs of different worth. The relative worth of a job means relative

value produced. The variables which are assumed to be related to value

produced are such factors as responsibility, skill, effort and working

conditions".



Objectives of job evaluation

The main objective of job evaluation is to ensure equitable remuneration for

relative worth of a job. As per the ILO Report, the aim of the majority of

systems of job evaluation is to establish, on agreed logical basis, the relative

values of different jobs in a given plant or machinery, i.e., it aims at determining

the relative worth of a job. The principle upon which all job evaluation schemes

are based is that of describing and assessing the value of all jobs in the firms in



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terms of a number of factors, the relative importance of which varies from job to

job".

The objectives of job evaluation, to put in a more systematic manner are to:

1. Establish a standard procedure for determining the relative worth of

each job in an organization;

2. Ensure equitable wage for a job and reasonable wage differentials

between different jobs in a hierarchical organization;

3. Determine the rate of pay for each job which is fair and equitable with

relation to other jobs in the plant, community or industry;

4. Eliminate wage inequalities;

5. Use as a basis for fixing incentives and different bonus plans;

6. Promote a fair and accurate consideration of all employees for

advancement and transfer;

7. Provide information for work organization, employees selection,

placement, training and other similar purposes;

8. Provide a benchmark for making career planning for the employees in

the organization and;

9. Ensure that like wages are paid to all qualified employees for like

work.



Principles of job evaluation

The job evaluation has certain principles. These principles are supposed to be

kept in the mind of the job evaluators. These principles are not only directives

of proper job evaluation but also provide clarity in the process of evaluation.

According to Kress, these principles are:

1. Rate the job and the jobber. Each element should be rated on the basis of

what the job itself requires;



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2. The elements selected for rating purposes should be easily explainable in

terms and a few in numbers as will cover the necessary requisites for

every job without any overlapping;

3. The elements should be clearly defined and properly selected;

4. Any job rating plan must be sold to foremen and employees. The success

in selling it will depend on a clear-cut explanation and illustration of the

plan;

5. Foreman should participate in the rating of jobs in their own

departments;

6. Maxim mum co-operation can be obtained from employees when they

themselves have an opportunity to discuss job ratings and;

7. Too many occupational wages should not be established. It would be

unwise to adopt an occupational wage for each total of point values.



Job Evaluation Criteria

The system of job evaluation utilises a total of eight measurement factors.

The various factors analyse a position in relation to the skills and

experience required for competent performance, the demands made on the

job and the overall structure and responsibility/accountability involved. A

point rating is derived for each factor and the sum of these points represents

the total points value of the job.



Basic Evaluation Rules: The basic rules for evaluating each position are:

1. The current position is evaluated without being influenced by what the

job is likely to be in the future or what it may have been in the past.

2. The position is evaluated and not the job holder. The assessment

of each factor is based on the job being performed competently. The

assessment of the job holders own performance against the standard



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required is a quite separate exercise which is outside the scope of the

job evaluation rating.



The Job Evaluation Factors: The job evaluation system comprises the following

factors: In some cases minor changes to the wording are used to define

factors and levels made in order to better align the methodology with

the clients culture and environment. Where this is done, great care is

taken to ensure inter-organisation consistency is not compromised. The

primary factor in determining compensation is an evaluation of work performed.

The internal worth of a job is evaluated based upon factor like - Know-How,

Problem Solving, and Accountability, Education, Experience, Complexity

involved in the job, Scope of job, Supervision received and, Authority

Exercised.

1. Know-How ? The knowledge, skill and experience required for

standard acceptable performance. It considers the requirement for

technical and professional skills, expertise and experience, the amount

of planning and organising required and the requirement to work with

and through others. The three dimensions of Know-How are listed below

exhibit.1.2.

Exhibit.1.2

Technical

Measures levels ranging from learning basics work to

Know-How

specialized techniques and knowledge to professional

mastery of scientific theory.

Managerial

Measures the jobs requirements to integrate diversified

Know- How

types of supervisory or managerial activities.

Human

Measures the degree to which the job requires practical

relation

person to-person skills in persuasion, motivation, and

Know-how

selection of people.



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2. Problem Solving ? the thinking required for analysing, evaluating,

creating, reasoning, arriving at and drawing conclusions; the extent

to which this thinking is covered by precedents or circumscribed by

standards; and the degree of creativity or original thought required. The

two dimension of problem solving are presented below.

Exhibit.1.3

Thinking

The degree of structure provided by the job in solving

environment problems.

Thinking

It is the complexity of the problems in the job assignment

Challenge

and the amount of thinking required to solve job-related

problem.

3. Accountability ? The degree to which the employee is held accountable for

taking action and for the consequences of that action. It is the measured

effect of the job on end results. The freedom to act measured through the

existence or absence of constraints by managers, committees and

procedures and the impact of that action on the organization. The three

dimensions of accountability are depicted in below exhibit.

Exhibit.1.4

Freedom to act

Measures the relative degree to which decisions can

be made, the level of authority which is needed, or

the precedents, policies, and procedures which must

be considered before an employee can take action.

Magnitude

It is the degree of influence a position has on the

organizational operations.

Impact

It is the degree to which the job affects the

organizational operations. Some jobs are directly

responsible for actions while others provide counsel

and advice, which is used by others to take action.



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4. Education - The level of formal education required to perform the

functions required of a position. There is often an overlap between

education and experience, and for this reason it is often advisable to

consider the education level that would be expected of a new incumbent

recruited externally.

5. Experience - The length of practical experience and nature of

technical/managerial familiarity required. This experience is in addition

to formal education.

6. Complexity ? measured in terms of: (a) the time taken to learn and adjust

to specific job requirements, (b) the level to which the job functions are

defined and follow established and predictable patterns and, (c) the

thinking challenge required to adapt to rapidly changing

circumstances and innovative or conceptual thinking needed to initiate

new corporate direction.

7. Scope of Job - The complexity and scope of work factors tend to be

related to the education and experience level required of a position. The

calculation of points for each of these factors is based on the application

of a percentage rating of the sum of the points derived in the evaluation

of Education and Experience.

8. Supervision Received -The extent of supervision, direction or guidance

imposed on the job holder and the freedom the executive has to take

action.

9. Authority Exercised - Authority level expressed in terms of routine

expenditure, capital expenditure and investments, granting of loans,

hiring and firing staff, etc.









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Job Evaluation Process

Job Evaluation is a technique to rank jobs in an organization on the basis of

the duties and responsibilities assigned to the job. The job evaluation process

results in a job being assigned to a pay grade. The pay grade is associated with

a pay range that is defined by a minimum and a maximum pay rate. A model of

job evaluation process with the following steps is presented bellow (Exhibit

1.5).



Step One -Job Description - The position supervisor assigns duties and writes the

job description. If there is an incumbent employee, s/he reviews it, and they

both sign it. Instructions and additional assistance are available from

Human Resources, if needed. The job description is a snapshot of the job as

it presently exists, reflecting the current duties and responsibilities of the job

and/or the incumbent.



Step Two ? Approval - The vice president reviews job descriptions and, if s/he

concurs, approves the responsibilities, requirements, and depart-mental

organization contained within a job description presented for new evaluation,

and signs it. If the vice president does not concur with the contents of the

description, it is returned to the supervisor for changes.



Step Three ? Review- Human Resources reviews the job description as

submitted with the supervisor prior to evaluation by the Job Evaluation

Committee (Step 4). Human Resources help ensure that there is consistency

and equity in the job descriptions and titles by editing them for clarity and

format. If the Human Resources Office makes changes, the job description is

returned to the supervisor and vice president for signature prior to being

presented to the Job Evaluation Committee (Step 4).



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Step Four ? Evaluation - The Job Evaluation Committee (JEC) is a multi-

member committee, the members of which are appointed by the Staff Salary

Administration Committee (SSAC), representing employees throughout

organization. JEC ensures equity among jobs through the use of established,

consistent criteria for evaluation and prevents escalation of the jo

This post was last modified on 14 March 2022