Job Evaluation

Components of Remuneration

Base compensation Incentives Fringe benefits Perquisites Non Monetary incentives

Challenging work environment Growth prospects Flexitime etc

Determination of wages –The sequence

Job Analysis

Job Descriptions &Specifications

Performance Standards

Job Evaluation

Wage Surveys

Wage Structure

Administration

Of Wage Structure

Performance Standard

WagePayments

MinimumWageLaws

Job Analysis

It is the process of collecting job related information.Such information helps in the preparation of job description and Job specification

JOB ANALYSIS

Job Description Job Specification

Job Analysis

A statement containing items like Job title Location Job summary Duties Machines ,tools ,Equipment Materials & forms used Supervision given or received Working conditions

Job Specification A statement of human qualifications

necessary to do the job . Education Experience training Initiative Physical effort Responsibilities Communication Skills Emotional characteristics

Use of a Job Analysis Human resource planning Recruitment and selection Training and development Job evaluation Remuneration Performance appraisal Personnel information Safety and health

Job Evaluation

It is the process of analysing and assessing the various jobs systematically to ascertain their relative worth in an organization It is the jobs that are being rated not the job

holders It is to establish the salary differentials

Methods of Job Evaluation

Job Evaluation

Analytical Methods

• Point Ranking Method

• Factor Comparison

Method

Non AnalyticalMethods

• Ranking Method

•Job Grading Method

Methods of Job Evaluation

Ranking method Simplest one and the most inexpensive Evaluation committee assess the worth of

each job on the basis of the title or its contents

Job not broken down into factors or elements

Job grading method

In the job grading method, each job is assigned a grade according to it's match with a standard description.

Each job description is compared with the standard "grading" description.

JOB GRADING EXAMPLE

GRADE STANDARD DESCRIPTION

1Work is simple and highly repetitive; with close supervision, requiring minimal training and little responsibility or initiative

2

Simple and repetitive work done under close supervision and requiring some training or skill. Employee is expected to assume responsibility or exhibit initiative only rarely

3

Work is simple, with little variation; done under general supervision. Training or skill required. Employee has minimum responsibilities and must take some initiative to perform satisfactorily

4

Work is moderately complex, with some variation; done under general supervision. High level of skill required. Employee is responsible for equipment or safety; regularly exhibits initiative

5

Work is complex, varied, done under general supervision. Advanced skill level required. Employee is responsible for equipment and safety; shows high degree of initiative

Job Evaluation:The Point Method

List the types of jobs to be evaluated Determine the list of compensable factors like

skill.efforts etc Determine the number of degrees to be allocated to

each factor and prepare a suitable definition for each

Assign points to each degree of each factor Select a certain number of jobs ,say 10 –15 and

evaluate each in terms of the scale so constructed Design the wage structure

Job Evaluation:The Point Method

Example: Software Engineer Job Description

The Software Engineer designs, develops, tests and maintains one or more of our products or internal applications. The software engineer works as a member of an engineering team developing, designing, and maintaining one or more of our products or internal applications. This position reports to the appropriate Project Manager.

Job Specification Bachelor's or undergraduate degree in Computer Science,

Information Systems, Electrical Engineering or equivalent experience. Masters or graduate degree is desirable. Understand Intranet and Internet technologies: http, firewall.

Job Evaluation:The Point Method

Develop a list of compensable factors… A set of standards the organization uses to

distinguish among jobs for pay purposes Examples of commonly used compensable factors:

Degree of responsibility, supervision Knowledge needed to perform the job Discretion in performing the job, independent judgment Job conditions Effort Hazard Consequence of error

Job Evaluation:The Point Method

Factors - Degrees 1st 2nd 3rd 4th 5th 6th

Job Knowledge 25 100 175 250Judgment & Decision Making 10 33 55 78 100Independent judgment 25 100 175 250Accountability 20 65 110 155 200Working conditions 5 20 35 50Mental 15 42 69 96 123 150

Job Evaluation:The Factor comparison Method

This method determines the relative rank of the job to be evaluated in relation to the monetary scale

Commonly used for white collar jobs ,executive cadre etc

It is a combination of ranking and point system

Job Evaluation:The Factor comparison Method

Steps Select the factors and define them clearly

Mental requirements Physical requirements Skills set Working conditions

Select a bench mark job ( job that is satisfactory enough ) which will serve as standard for other jobs

Job Evaluation:The Factor comparison Method

Allocate wage for each key job to different factors

Develop a job comparison scale and insert key jobs in them

Evaluate the job in question factor by factor in relation to the bench mark job on a job comparison scale

Design ,adjust and operate the wage structure

Matrix for factor comparison

JobHourly Rate

Pay for Skill

Pay for Effort

Pay for Responsibility

Pay for Working Conditions

Secretary Rs 90 4.5 2 2 0.5Admin Assistant Rs 110 5.5 2.5 2.5 0.5

Supervisor Rs 150 6 3.5 4 1.5

Manager Rs 210 9 3.5 7 1.5

PERFORMANCE LINKED PAY

WAGE PAYMENT

Two methods of wage payment Time wage system

Worker is paid for the amount of time spent in the factory Non variable method Wages = Number of hours worked * Rate per hour

Piece wage system Worker is paid on the basis on the output of the work . He is

paid according to the amount of work completed or thenumber of units turned out irrespective of the time spent

Wages = Number of units produced * rate per unit

When to use time wage system ?

Difficult to fix the standard time Quality of work is of utmost importance Job relates to office or clerical job Collective effort of a group of person is

required Where mental work is involved Where production process is complicated

and needs higher order skills

When to use piece wage system ?

When methods of production are standardized and repetitive in nature

Productivity of the worker s increased Job involves more physical work than

mental work Work does not require personal skills of

higher order Where output can be measured

Incentives

Incentives are the variable component of pay where the pay is tied with some measure of individual ,group or organisational performance

Incentive plans provide offer an attraction of extra payment for efficiency or more production

Advantages of incentive plans

Focus employee efforts on specific performance targets

Incentive compensation is directly related to operating performance

It fosters team work and unit cohesiveness when payments to individuals are based on team results

It is a means to reward or attract top performers

Requirements for a successful incentive plan

Incentive programs should be linked to valued behaviour

It should be fair enough Productivity or quality standards should be

challenging but achievable Payout formulas should be simple and

understandable

Types of incentive plans

Individual Group Enterprise

Time based Plans Team compensation Profit sharingProductivity based plans Rucker plan Stock options

Bonuses Improshare Employee stock ownership Plans

Merit pay

Lumpsum merit pay

Incentive awards

Sales incentives Incentives for professional employees Executive compensation

Time based plans

Halsey premium plan Rowan plan Emerson plan Bedeaux plan

Time based plans

Halsey premium plan It is a combination of speed and time bases of

payment For eg ;

Standard time (S) = 12 Hrs Time taken by a worker (T) = 8 Hrs Rate of wages (R) = Rs 9 /Hr Bonus (P) = Wages for the 50 % of the time saved Total wages = TX R +50% Of (S-T) * R Total wages = 8 * 9 + 50/100 * 4 *9 =90

The percentage is fixed by the employer

Time based plans

Rowan plan Is a modification of the Halsey plan Bonus is paid on the basis of the time saved For eg ;

Standard time (S) = 12 Hrs Time taken by a worker (T) = 8 Hrs Rate of wages (R) = Rs 9 /Hr Total wages = T*R +(T*R *(Time saved /Std Time )) Total wages = 8 *9 +(8*9 *(4/12)) =96

Bonus will be paid at a diminishing rate if they save more than 50% of the time

Time based plans Emerson plan

Guaranteed wage payment to all the workers on time rate basis In addition bonus or extra payment is suggested For Eg ; CASE 1

standard output = 80 units Actual performance = 60 units Efficiency = 75 % (Bonus =20 %)

CASE 2 standard output = 80 units Actual performance = 90 units Efficiency = 112.5 % (Bonus = 30%)

Bonus will be paid to workers whose efficiency is more than 66.67 % . The rate of the bonus will increase with efficiency

Time based plans Bedeaux plan

Standard time for a job is determined Each minute of the allowed time is called a point or B Bonus paid is 75% of the wages for time saved and the

remaining 25% to the supervisor Calculation

Standard Bs = 10*60 =600 Actual Bs =8*60 = 480 Rate per hour = Rs 1 Bs Saved = 120 Bonus = 75 % of Time saved +S * R Bonus = (75/100) * (120/60) *1 +8 = 9.50

References

Human Resource Management ;Snell & Bohlander ,India Edition

Human Resource Management Concepts and Cases ;T N Chabbra

Human Resource Management: Text and Cases,K Aswathappa.