Job Evaluation

• Job Evaluation is a systematic way of determining thevalue/worth of a Job in relation to other jobs in anorganization. It tries to make a systematic comparisonbetween jobs to assess their relative worth for thepurpose of establishing a rational pay structure.

• Job evaluation needs to be differentiated from JobAnalysis. Job Analysis is a systematic way ofgathering information about a job. Every jobevaluation method requires at least some basic jobanalysis in order to provide factual information aboutthe jobs concerned.

Principles of Job Evaluation

• Definition: Identifiable & Easily Distinguishable.

• Evaluation: A Job evaluation scheme, used as a

standard.

• Job Understanding: Job Evaluators need to have

deep insights into the Job Design Process.

• Concern: Concerned with Job not Person

• Assessment: By Competent People

Job Evaluation – Methods

Non –Analytical Methods

Ranking

Classification

Analytical Methods

Factor Comparison

Point

Employee Remuneration

• Employee Remuneration refers to the reward orcompensation given to the employees for their workperformances. Salaries constitute an important sourceof income for employees and determine theirstandards of living.

• “If you pick the right people and give them theopportunity to spread their wings - and putcompensation and rewards as a carrier behind it - youalmost don’t have to manage them.” — Jack Welch

Methods of Remuneration

• Time Rate Method:

• Remuneration is directly linked with the time spent.

• A Pre-decided amount hourly, daily, weekly or monthly.

• Time Rate method leads to quality output.

• Piece Rate Method:

• Remuneration is linked with pieces produced.

• Emphasis is more on quantity output.

• The per unit cost of production is low.

Components of Remuneration

• Job Description

• Made up of responsibilities, functions, duties, location of the job and the other factors like environment, etc.

• Job Evaluation

• Factors like Experience, Qualifications, Expertise and Need of the company.

• Salary Surveys

• Different companies in the same industry are paying for similar roles ? ? ?

Factors Affect Compensation

• Macroeconomic Situation

• Firm's Performance Vs. Performance of the

Economy.

• Demand –A Particular Skill

• Premium skills like Consulting and Accountancy.

• Position of the Company in the Business Cycle

• ESOP’s or Employee Stock Option Plans.

• Urgency of the Firm

• Wants Employees to come on board as quickly as

possible.

Wages

• According to Prof. Benham, “A wage may be definedas a sum of money, paid under contract by anemployer to a worker for services rendered.” Thus,remuneration or reward of a labourer engaged inproduction for the physical or mental work is knownas wage in Economics.

Determination of Wage

Demand for labour & Supply of Labour

Wage Structure

• Skill Based

• Competency Based

Wages – Concepts

• Minimum wage:

• For the nourishment of the worker’s family, for hisefficiency, for the education of his family members,for their medical care and for some amenities.

• Fair Wage depends upon:

• Productivity of labour & Prevailing rates of wages

• Level of the national income & its distribution

• Living Wage:

• Not only the food, clothing and shelter but ameasure of economical comfort, includingeducation for his children, protection against ill-health, and a measure of insurance.

Real Wage

• The income of an individual or group after taking intoconsideration the effects of inflation on purchasingpower. For example, if you received a 2% salary riseover the previous year and inflation for the previousyear was 1%, then your real income only rose 1%.Conversely, if you received a 2% raise in salary andinflation stood at 3%, then your real income would haveshrunk 1%.

• Real Wage = Nominal Wage

Price Level