7 Joban+Eval

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Chapter Seven

Building InternallyConsistentCompensationSystems


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Parcel Plus Case

Company strategy and strategy change

Current employees:- 8 customer service reps (5.50 - $6.50/hour)

- Asst. manager ($8.50) Manager ($10)

New position: Driver/customer service rep Applicant thinks $6.50 is too low

Manager, customer service reps object


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Internal Consistency

Establishes equal pay for work of equalworth and acceptable pay differentials forwork of unequal worth

Includes fairness of procedures used to

establish pay structure, organizationaldesign, and flow of work


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Goals of Internal Consistency

Design procedures and establish pay structures

that:

Assist to achieve organizational objectives

Are acceptable to employees and managers

Comply with laws and regulations


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Pay Structure

Array of pay rates for different work or skills

within a single organization: levels, differentials,criteria.

Number of levels

Pay differentials among levels

Criteria used to support the structure

Egalitarian vs. Hierarchical


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Consequences of Structures

Undertake training

Increase experience Reduce turnover

Facilitate career progression

Facilitate performance Reduce pay-related grievances

Reduce pay-related work stoppages


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Exhibit 7-1 Internally Consistent Compensation

Structure

AverageAnnualS

alary

$60,000

$50,000

$40,000

$30,000

$20,000

Degree of Responsibility

Benefits Counselor I($20,000)

Benefits Counselor II($26,000)

Benefits Counselor III($40,000)

Manager of Benefits($58,000)


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Structure

Benefits Counselor I

Provides basic counseling services to employees and assistance

to higher-level personnel in more-complex benefits activities.Works under general supervision of higher-level counselors orother personnel.

Benefits Counselor II

Provides skilled counseling services to employees concerningspecialized benefits programs or complex areas of otherprograms. Also completes special projects or carries outassigned phases of the benefits counseling service operations.Works under general supervision from Benefits Counselor IIIs orother personnel.


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Benefits Counselor III

Coordinates the daily activities of an employee benefits

counseling service and supervises its staff. Works underdirection from higher-level personnel.

Manager of Benefits

Responsible for managing the entire benefits function fromevaluating benefits programs to ensuring that BenefitsCounselors are adequately trained. Reports to the Director ofCompensation and Benefits.


Structure


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Job Analysis

n The systematic process of collecting

relevant, work-related information relatedto the nature of a specific job.

n Why?

Internal consistency

Compensation

Other reasons


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Job Analysis - What Info?

n For compensation: INFO TO DECIDE VALUE

n Job info: to ID, define, describe

n Job title, importance, place in organization

n Task or work data

n Methods and techniques

n Products, services that result

n Worker data

n Behavioral data

n Abilities data


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Job Analysis - Formats

n Standardized

n Functional Job Analysis Data, people, things

Methods and techniques employed

Materials, products, servicesn Position Analysis Questionnaire

Info input, mental processes, work output,relationships with others, job context, job

characteristics, general dimensions


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Job Analysis - Formats

n Non-standardized

n Task Lists or Inventories

Lists of tasks

Frequency and importance

Usually self-report

n Abilities data

Psychomotor

Physical proficiency abilities

Cognitive abilities


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Job Analysis - How?

n Questionnaire

n Checklistn Diary

n Observation

n Activity samplingn Activity matrix

n Critical incidents


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Job Description

n Summary of job analysis

Job title, description, purpose

Job tasks, responsibilities, duties

Essential functions, non-essential functions

n Includes: Job Specifications (KSAOs)

Knowledge, skills, abilities, other qualificationsnecessary for the job

Used to determine entry level skills

Minimum for compensation purposes


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Exhibit 7-2Units of Analysis in the Job Analysis Process (1of 3)

1. An element is the smallest step into which it is practical tosubdivide any work activity without analyzing separate motions,

movements, and mental processes involved. Inserting a diskette intofloppy disk drive is an example of a job element.

2. A task is one or more elements and is one of the distinct activitiesthat constitute logical and necessary steps in the performance ofwork by the worker. A task is created whenever human effort,

physical or mental, is exerted to accomplish a specific purpose.Keyboarding text into memo format represents a job task.

Source: US Dept. of Labor, The revised handbook for analyzing jobs(Washington, DC: US

Government Printing Office, 1991).


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Exhibit 7-2Units of Analysis in the Job Analysis Process (2

of 3)

3. A position is a collection of tasks constituting the total workassignment of a single worker. There are as many positions as there

are workers. John Smiths position in the company is clerk typist. Histasks, which include keyboarding text into memo format, running aspell check on the text, and printing the text on company letterhead,combine to represent John Smiths position.

4. A job is a group of positions within a company that are identical

with respect to their major or significant tasks and sufficiently alike tojustify their being covered by a single analysis. There may be one ormany persons employed in the same job. For example, Bob Arnold,John Smith, and Jason Colbert are clerk typists. With minorvariations, they essentially perform the same tasks.

Source: US Dept. of Labor, The revised handbook for analyzing jobs(Washington, DC: USGovernment Printing Office, 1991).


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Exhibit 7-2

Units of Analysis in the Job Analysis Process (3 of 3)

5. A job family is a group of two or more jobs that call for either similarworker characteristics or similar work tasks. File clerk, clerk typist, and

administrative clerk represent a clerical job family because each jobmainly requires employees to perform clerical tasks.

6. An occupation is a group of jobs, found at more than oneestablishment, in which a common set of tasks are performed or arerelated in terms of similar objectives, methodologies, materials,products, worker actions, or worker characteristics. File clerk, clerk

typist, administrative clerk, staff secretary, and administrativesecretary represent an office support occupation. Compensationanalyst, training and development specialist, recruiter, and benefitscounselor represent jobs from the human resources managementoccupation.

Source: US Dept. of Labor, The revised handbook for analyzing jobs(Washington, DC: USGovernment Printing Office, 1991).


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Exhibit 7-5EEOC Interpretive Guidelines for Essential Job

Functions under the Americans with Disabilities Act

The reason the position exists is to perform the function.

The function is essential or possibly essential. If other

employees are available to perform the function, the functionprobably is not essential.

A high degree of expertise or skill is required to perform thefunction.

The function is probably essential; and,

Whether a particular job function is essential is a determinationthat must be made on a case-by-case basis and should beaddressed during job analysis. Any job functions that are notessential are determined to be marginal. Marginal job functionscould be traded to another position or not done at all.

Source: From the text of the Americans with Disabilities Act, Federal Register 35734 (July 26, 1991).


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Exhibit 7-6

Department of Labor Worker Functions

REF NO.

012345

6

DATA

SynthesizingCoordinatingAnalyzingCompilingComputingCopying

Comparing

REF NO.

012345

6

78

PEOPLE

MentoringNegotiatingInstructingSupervisingDivertingPersuading

Speaking-signalingServingTaking

instructions-helping

REF NO.

01

2

3

456

7

THINGS

Setting upPrecision

workingOperating-

controllingDriving-

operatingManipulatingTendingFeeding-

offbearingHandling


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Exhibit 7-11

Department of Labor Aptitudes

Source: U.S. Dept. of Labor, The revised handbook for analyzing jobs(Washington, D.C.: U.S.Government Printing Office, 1991).

G General learning ability

V Verbal aptitudeN Numerical aptitudeS Spatial aptitudeP Form perceptionQ Clerical perceptionK Motor coordinationF Finger dexterityM Manual dexterityE Eye-hand-foot coordinationC Color discrimination


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Exhibit 7-18

Characteristics of Benchmark Jobs

The contents are well known, relatively stable over time, andagreed upon by the employees involved.

The jobs are common across a number of different employers.

The jobs represent the entire range of jobs that are beingevaluated within a company.

The jobs are generally accepted in the labor market for the

purposes of setting pay levels.

Source: G.T. Milkovich and J.M. Newman, Compensation 5th ed. (Homewood, IL: Richard D. Irwin, 1996).


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Exhibit 7-21Federal Government Factor Evaluation System

(1 of 2)

1. Knowledge required by the position

a. Nature or kind of knowledge and skills needed

b. How the skills and knowledge are used in doing the work

2. Supervisory controls

a. How the work is assigned

b. The employees responsibility for carrying out the work

c. How the work is reviewed

3. Guidelines

a. The nature of guidelines for performing the work

b. The judgment needed to apply the guidelines or developnew guides

Source: US Civil Service Commission, Instructions for the factor evaluation system( Washington,

D.C.: US Government Printing Office, 1977).


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Exhibit 7-21Federal Government Factor Evaluation System

(2 of 2)

4. Complexity

a. The nature of the assignment

b. The difficulty in identifying what needs to be done c. The difficulty and originality involved in performing the work

5. Scope and effect

a. The purpose of the work

b. The impact of the work product or service

6. Personal contacts

7. Purpose of contacts

8. Physical demands

9. Work environmentSource: US Civil Service Commission, Instructions for the factor evaluation system( Washington,

D.C.: US Government Printing Office, 1977).


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Exhibit 7-4FLSA Exemption Criteria for Executive, Administrative,

and Professional Employees (1 of 2)

Executive Employees

Primary duties include managing the organization

Regularly supervise the work of two or more full-time employees

Authority to hire, promote, and discharge employees

Regularly use discretion as part of typical work duties

Devote at least 80 percent of work time to fulfilling the previousactivities

Source: 29 Code of Federal Regulations, Sec. 541.3 29; Sec. 541.1.


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Exhibit 7-4FLSA Exemption Criteria for Executive, Administrative,

and Professional Employees (2 of 2)

Administrative Employees

Perform non-manual work directly related to management

operations Regularly use discretion beyond clerical duties

Perform specialized or technical work, or perform specialassignments with only general supervision

Devote at least 80 percent of work time to fulfilling the previousactivities

Professional Employees Primary work requires advanced knowledge in a field of science or

learning, including work that requires regular use of discretion andindependent judgment, or

Primary work requires inventiveness, imagination, or talent in arecognized field or artistic endeavor

Source: 29 Code of Federal Regulations, Sec. 541.3 29; Sec. 541.1.


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JOB EVALUATION

That part of a compensation system where a

firm determines the relative value of one job

compared to another


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Steps in Job Evaluation

l Preliminary Planning

l Select Method

- Point Plan - Classification -Market pricing

- Ranking - Knowledge/skill-based plan

l Develop Planl Implement Plan - Evaluate Jobs


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Point Method

Parts-of-job technique

Uses Compensable Factors

Those aspects of job we plan to pay for

Choose and weight compensable factors tosuit jobs, organization, and strategy

Points assigned determine value of job

Example of one completed factor:


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Example Job Factor

Education: Measures the basic trades, training, orknowledge, or scholastic contact essential as

background or training preliminar to learning the jobduties. This job knowledge or background may havebeen acquired either by formal education or by training on

jobs of lesser degree or by combination of theseapproaches.

Total points = 200

Level 1 50 Technical degree of two years

Level 2 100 Bachelor of Science degree

Level 3 150 Masters degree

Level 4 200 Ph.D.


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Point Method Steps

1. Choose and define compensable factors

2. Build levels within factors--definitions, anchors 3. Determine total points for plan

4. Weight and assign points to factors by theirimportance.

5. Determine points for levels in factors

6. Apply to each job, add up points

7. Array jobs according to total points


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Examples of

Compensable Factors

Accountability

Communication

Contacts:Internal, External

Decision Making

Effort Required

Experience Hazards

Impact onCompanys

Objectives

l Initiative &Ingenuity

l Job Complexity

l Knowledge

l Latitude

l Mental Demandsl Multinational

Responsibilities

l No. Subordinates

l Physical Demand

l Problem solving

l Responsibility formaterial, product,equipment

l Specialized Skills

l Teamwork reqdl Type of

supervision

l Visual Demands

l Working


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Other Job Evaluation Types

Classificationu Ranking

u Market Pricing u Knowledge-based plan


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Ranking

Whole job technique

Rank jobs high to low

Easy, inexpensive, informal

Effective when: few, similar jobs

Popular with small companies

Subjective, non-specific

May be hard to defend

Simple, Alternative, Paired

Comparison


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Classification

Whole job technique

Slot jobs into labeled classes Classify jobs by similarity to prototypical/benchmark job,

label, and factor evaluation

Common in public sector

Used for wide variety of dissimilar jobs

Inexpensive, simple, flexible

Difficult to build classes, generic

classes, vague descriptions

Difficult to justify, lawsuits


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Job Classification Schedule

GS 9 Includes all classes of positions the duties of which are

(1) to perform, under general supervision, very difficult andresponsible work along special technical supervisory, or administrative

experience which has (A) demonstrated capacity for soundindependent work, (B) thorough and fundamental knowledge of aspecial and complex subject matter, or of the professional, art, orscience involved, and (C) considerable latitude for the exercise ofindependent judgment; (2) with considerable latitude for the exerciseof independent judgment, to perform moderately difficult work

requiring (A)...College degree... (B)...additional

training or experience...; or (3) to perform other work

of equal importance, difficulty, and responsibility,

and requiring comparable qualifications.


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Market Pricing

Determines market rate for each job

Pays market rate Ignores internal consistency in favor of

external competitiveness

Rates may be unrelated to relative value ofskills, responsibility, value within the firm


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Person-Based Evaluation

Knowledge/Skill Based Pay

Pay based on knowledge or skill, not the job performed

Employee carries the wage, regardless of the tasksperformed

Pay increases are linked to knowledge/skills, not promotions

Assess and values skills, not jobs

Advantages include flexibility, reduced work force Disadvantages include topping out, pay unrelated to work

performed


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KBP--Multi-Skill System

$7.00 $7.35 $7.70 $8.05

Base Rate Level 2

RateLevel 3

Rate

Level 4

Rate

Filter

Assembly

Filter

Assembly

Filter

Assembly

Filter

AssemblyMaterial

Handling

Material

Handling

Material

handling

Final assembly Final assembly

Polish/QC

Mastery of 1

job

Mastery of 2

jobs

Mastery of 3

jobs

Mastery of 4

jobs


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KBP--Increased Knowledge Systems:$7.00 $7.35 $7.70 $8.05

Base Rate Level 2

RateLevel 3

Rate

Level 4

Rate

Safety/

Housekeeping

Safety/

Housekeeping

Safety/

Housekeeping

Safety/

Housekeeping

PreventiveMaintenance



Product

Knowledge

Product

Knowledge

SPC

1Job Function+1 know. cell

1 Job Function+3 know. cells

1 Job Function+know. cells

1 Job Function+2 know. cells


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Borg Warner Auto Assembly Classifications

nChain measurer

nChain checker

nUltrasonic tester

nInspect/repair

nChain cleaner/oiler

nChain Packer

nRiveter

nAssembler hand machine

nAuto assembler

nCell Operator C

nCell Operator B

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7 Joban+Eval