Chapter Seven Building Internally Consistent Compensation Systems

Chapter Seven

Building Internally Consistent Compensation Systems

Example of Internally Consistent Compensation Structure

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$60,000

$50,000

$40,000

$30,000

$20,000

Job Worth (skill, effort, responsibility, working conditions)

Benefits Counselor I($20,000)

Benefits Counselor II($26,000)

Benefits Counselor III($40,000)

Manager of Benefits ($58,000)

There is a positive relationship between job worth and salaries!

Example of Internally IN-Consistent Compensation Structure

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$60,000

$50,000

$40,000

$30,000

$20,000

Job Worth (skill, effort, responsibility, working conditions)

Benefits Counselor I($32,000)

Benefits Counselor II($45,000)

Benefits Counselor III($28,000)

Manager of Benefits ($39,000)

There is no relationship between job worth and salaries!

Figure 7-1

Internally Consistent Compensation Structure (2 of 3)

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 or other personnel.

Benefits Counselor II» Provides skilled counseling services to employees

concerning specialized benefits programs or complex areas of other programs. Also completes special projects or carries out assigned phases of the benefits counseling service operations. Works under general supervision from Benefits Counselor IIIs or other personnel.

Figure 7-1

Internally Consistent Compensation Structure (3 of 3)

Benefits Counselor III» Coordinates the daily activities of an employee benefits

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

Manager of Benefits» Responsible for managing the entire benefits function from

evaluating benefits programs to ensuring that Benefits Counselors are adequately trained. Reports to the Director of Compensation and Benefits.

Aspects of Job EvaluationJob Evaluation is: Assumption

A measure of job Content has an innate value outside of external market. content

A measure of relative Relevant groups can reach consensus on relative value value.

Link with external Job worth cannot be specified without external market market information.

Measurement device Honing instruments will provide objective measures.Negotiation Puts face of rationality to a social / political process. Establishes rules of the game.

Invites participation.

Figure 7-1

Phases of the Job Evaluation Process

Choose & train the job evaluation committee. Select benchmark jobs. Choose compensable factors. Define factor degrees. Determine point values for each factor. Validate factor degrees and point values. Evaluate all jobs.

Table 7-1

Units of Analysis in the Job Analysis Process (1 of 3)

1. An element is the smallest step into which it is practical to subdivide any work activity without analyzing separate motions, movements, and mental processes involved. Inserting a diskette into floppy disk drive is an example of a job element.

2. A task is one or more elements and is one of the distinct activities that constitute logical and necessary steps in the performance of work 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.

Table 7-1


3. A position is a collection of tasks constituting the total work assignment of a single worker. There are as many positions as there are workers. John Smith’s position in the company is clerk typist. His tasks, which include keyboarding text into memo format, running a spell check on the text, and printing the text on company letterhead, combine to represent John Smith’s 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 to justify their being covered by a single analysis. There may be one or many persons employed in the same job. For example, Bob Arnold, John Smith, and Jason Colbert are clerk typists. With minor variations, they essentially perform the same tasks.

Table 7-1


5. A job family is a group of two or more jobs that call for either similar worker characteristics or similar work tasks. File clerk, clerk typist, and administrative clerk represent a clerical job family because each job mainly requires employees to perform clerical tasks.

6. An occupation is a group of jobs, found at more than one establishment, in which a common set of tasks are performed or are related in terms of similar objectives, methodologies, materials, products, worker actions, or worker characteristics. File clerk, clerk typist, administrative clerk, staff secretary, and administrative secretary represent an office support occupation. Compensation analyst, training and development specialist, recruiter, and benefits counselor represent jobs from the human resources management occupation.

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

CHOOSE A JOB-ANALYTIC METHODOLOGY

Nature of the job

Time & resource constraints

Type of data: work vs. worker

Method of data collection: interview, survey, observation

Level of detail

Source of data: incumbents, supervisor, prior job description

Your choices depend on the kind of job & available resources!

Testing your applied knowledge:Method of Data Collection

Scenario: You need to analyze the three jobs listed below. Due to budget constraints, you can only use one method of data collection for each job analysis: interview, survey, or observation. Take the nature of each job into account and match them to their most suitable method of data collection.

Roofer Interview

Chief Financial Officer Survey

Senior R&D Scientist Observation

Testing your applied knowledge:Method of Data Collection

Answer: The physical nature of the roofer job lends itself to observation; the intangible nature of the CFO, together with his/her scarce time available, lend themselves to an interview; the Senior Scientist is used to describe complex issues in writing, works with lots of complex documents, and therefore should be able to describe his/her job through a survey.

Roofer Interview

Chief Financial Officer Survey

Senior R&D Scientist Observation

THE TASK INVENTORYDEFINITION: A LIST OF ACTIVITIES OR TASKS CARRIED OUT

ON THE JOB

EACH TASK MUST HAVE THREE BASIC ELEMENTS:

VERB, OBJECT, PURPOSE UPDATES TRANSFERS MASTER FILE TO

FACILITATE THE PRODUCTION OF HUMAN RESOURCE REPORTS AT THE PLANT.

ASSIGNS PERSONNEL TO THE DIFFERENT WORK SHIFTS TO MAINTAIN A WORK FORCE THAT SUITS PRODUCTION LEVELS.

HOW MANY TASKS SHOULD A TASK INVENTORY HAVE?

THE ANSWER DEPENDS ON THE KIND OF JOB UNDER CONSIDERATION.

NORMALLY, EVERY JOB CAN BE DESCRIBED WITHIN A RANGE OF 30 TO 100 TASKS.

IN MILITARY OCCUPATIONS OR UNIFORMED JOBS (FIREFIGHTERS, POLICE), INVENTORIES HAVE HUNDREDS OF TASKS.

IN GENERAL, EXTREMELY LONG INVENTORIES ARE TEDIOUS AND CAN PROVOKE DISTORTED RESPONSES DUE TO FATIGUE.

Testing your applied knowledge: Writing Task statements

1. Prepares architectural plans for all types of buildings and City projects.

2. Extends blueprint on desk to study its content3. Writes electrical work specifications to prepare

architectural projects.

Scenario: You are putting together a job description based on a number of interviews, observations, and surveys. You are wondering about the level of detail at which you should write the task statements for this job description. Which one of the following statements provides the most practical level of detail for job evaluation purposes?

Answer: It is at times difficult to distinguish between tasks and more general activities such as responsibilities, and also between tasks and simpler activities such as elemental movements.. Tasks are written at an intermediate level of detail; enough to make a valid judgment about the job, but at the same time broad enough not to become obsolete quickly.

1. Prepares architectural plans for all types of buildings and City projects. [this is too broad & does not convey the true nature of the job]

2. Extends blueprint on desk to study its content [this is too specific & it will be a very long and tedious job description]

3. Writes electrical work specifications to prepare architectural projects [this intermediate level is most practical]

PHASES OF TASK ANALYSIS

INTERVIEW WITH SMEs. REVIEW OF NOTES AND PREPARATION OF TASK

INVENTORY DRAFT. VERIFICATION OF INVENTORY WITH SMEs. SCALE SELECTION. CONSTRUCTION OF STRUCTURED INVENTORY. GATHER RATINGS. COMPUTE MEANS AND STANDARD DEVIATIONS

FOR EACH TASK. IDENTIFICATION OF MOST IMPORTANT TASKS.

THE JOB ANALYSIS INTERVIEWPresentation

INTRODUCE YOURSELF SPECIFYING THE DEPARTMENT OR CORPORATION THAT YOU ARE REPRESENTING.

CLARIFY THE PURPOSE OF THE INTERVIEW; REMEMBER THAT THE INTERVIEWEE IS PROBABLY FEELING THREATENED.

GIVE EXAMPLES OF APLICATIONS OF THE INFORMATION TO BE GATHERED. THESE EXAMPLES WILL HELP REDUCE RUMORS ABOUT THE JOB ANALYSIS PROJECT.

GIVE EXAMPLES OF THINGS THAT WILL NOT BE DONE WITH THIS INFORMATION.

EMPHASIZE THE IMPORTANCE OF OBTAINING ACCURATE INFORMATION ABOUT THE JOB.

INDICATE THAT THE INFORMATION GATHERED WILL BE SUBJECT TO VERIFICATION BY OTHER SOURCES AND INFORMANTS.

THE JOB ANALYSIS INTERVIEWCore Interview

ASK THE INTERVIEWEE TO DESCRIBE HIS/HER ACTIVITIES ON A TYPICAL DAY AT WORK, FROM BEGINNING TO END.

INSIST ON A SEQUENTIAL DESCRIPTION OF ACTIVITIES SO THAT THE ORDER OF TASKS IS CLEAR.

LET THE INTERVIEWEE KNOW THAT YOU WILL KINDLY INTERRUPT HIM/HER WHEN S/HE DESCRIBES ACTIVITIES THAT ARE NOT CLEAR TO YOU. INTERRUPT ONLY WHEN NECESSARY.

DO NOT LET THE INTERVIEWEE TALK FOR LONG PERIODS OF TIME; ASK QUESTIONS SO THAT THE INTERVIEWEE UNDERSTANDS THAT YOU WISH TO OBTAIN AN OBJECTIVE AND DETAILED DESCRIPTION OF THE JOB.

THE JOB ANALYSIS INTERVIEWCore Interview

REMEMBER THAT THE GOAL OF THE INTERVIEWEE IS TO GENERATE A LIST OF JOB TASKS; THUS, ASK FOR CLARIFICATION WHEN THE ACTION (VERB), OBJECT , OR PURPOSE OF THE ACTION ARE UNCLEAR.

PAY SPECIAL ATTENTION TO THE USE OF VERBS THAT INDICATE A HIGH LEVEL OF MENTAL ACTIVITY (E.G., COORDINATE, DIRECT, RATIONALIZE); IT IS OFTEN EASY TO FIND A SIMPLER VERB THAT BETTER REFLECTS THE TRUE NATURE OF THE TASK.

INVENTORY VALIDATION

NORMALLY, A MEETING IS HELD WITH A GROUP OF SUBJECT MATTER EXPERTS (SMEs).

EACH EXPERT RECEIVES A COPY OF THE PRELIMINARY INVENTORY AND IS ASKED TO (a) ADD NEW TASKS OR TASKS THAT ARE NOT PRESENT IN THE INVENTORY, (b) ELIMINATE OBSOLETE OR INACCURATE TASKS, (c) CHANGE TASKS THAT HAVE CHANGED.

THE GOAL IS TO REACH AN AGREEMENT AMONG THE EXPERTS REGARDING THE FINAL

INVENTORY.

DEVELOPMENT OF A STRUCTURED QUESTIONNAIRE

ONCE THE INVENTORY IS DEVELOPED, IT IS NECESSARY TO OBTAIN INFORMATION ABOUT THE MOST IMPORTANT TASKS, THE MOST DIFFICULT TO LEARN TASKS, ETC. THIS INFORMATION IS OBTAINED THROUGH THE RATINGS PRODUCED BY THE SMEs ON A STRUCTURED INVENTORYTHE STRUCTURED INVENTORY SHOULD BE DEVELOPED SO THAT IT IS EASY TO COMPLETE. THE PROCESS OF RATING FORMATION MUST BE CLEARLY DEFINED, AND AT LEAST AN EXAMPLE SHOULD BE PROVIDED.

Now, please rate the following tasks using the time spent and importance scales previously described by circling the appropriate number. Leave tasks that you do not perform blank:

Example:

Review newspapers to identify 1 2 3 4 5 6 7 1 2 3 4 5 6 7

business communications and events.

TASKS Time spent Importance

________________________________________________________________

ADMINISTRATIVE TASKS

1. Plan calls to key accounts. 1 2 3 4 5 6 7 1 2 3 4 5 6 7

2. Document daily sales information on

computer system. 1 2 3 4 5 6 7 1 2 3 4 5 6 7

SAMPLE OF STRUCTURED QUESTIONNAIRE

IDENTIFICATION OF TASKS OF INTEREST

IT IS NECESSARY TO COMPUTE THE MEAN AND STANDARD DEVIATION FOR THE RATINGS

ACROSS ALL THE INVENTORY RESPONDENTS:

The mean helps us identify the tasks with the highest scores (most important, most difficult to learn, etc.)

The standard deviation helps us evaluate to what extent there is an agreement on the importance or

difficulty of learning the task.

WHICH ONES OF THE FOLLOWING TASKS WOULD YOU CONSIDER MOST IMPORTANT?

task mean Std. deviation

Decide on the kind of strategy most likely to result in the client’s absolution.

6.5 2.5

Review witnesses’ depositions and police reports to determine inconsistencies.

3.5 3.0

Present witness and evidence on behalf of the client.

6.5 .5

Testing your applied knowledge: Task inventory

Answer: The first task is important on the average, but its large standard deviation indicates that SMEs do not agree on how important it really is. In contrast, the third task is important and every SME agrees that is the case (see its small standard deviation):

task mean Std. deviation

Decide on the kind of strategy most likely to result in the client’s absolution.

6.5 2.5

Review witnesses’ depositions and police reports to determine inconsistencies.

3.5 3.0

Present witness and evidence on behalf of the client.

6.5 .5

KSAO

Knowledge, Skill, Ability, Other Characteristic.

Every KSAO should have three basic elements:

1. What is it? (K, S, A, O)2. In what context is it needed?3. At what level or degree of precision is it

needed?

Scenario: During a job analysis interview, a job incumbent tells you that his job requires a great deal of “writing ability” and of “communication skills.” Would you use these terms in the list of KSAOs required for this job?

Testing your applied knowledge: Good KSAO Writing

Did I already mention that my job requires the ability to walk on water?

Answer: Terms such as “writing ability” and “communication ability”are too broad and misleading; they are missing the basic KSAO elements: “what is it, in what context, and to what level/degree/precision.” They should be specified in more concrete terms such as for instance:

Ability to register information in a standardized manner so that it can be understood by others. Ability to put together clear and concise sentences and paragraphs when preparing a written report.

Ability to take notes describing an event so that others are able to interpret them later.

Ability to transcribe alphanumeric information in an accurate manner.

Testing your applied knowledge: Good KSAO Writing

KSAO Inventory

To identify KSAO requirements, try to answer the following questions:

1. Describe the characteristics of the good and the bad performers.

2. Identify someone who is clearly superior to the other workers. What characteristics explain this superiority?

3. Think about examples of good and bad performance; what determined them?

4. If you were hiring for this job, what kind of characteristics would you look for?

5. What kinds of things would you expect that those being trained for this job should learn?

Table 7-10

Characteristics of Benchmark Jobs

The contents are well known, relatively stable over time, and agreed 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 being evaluated 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).

Table 7-13

Federal 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 employee’s 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 develop

new guides

Compensable Factors - A Definition (1 of 2)

Compensable factors are paid-for, measurable qualities, features, requirements, or constructs that are common to many different kinds of jobs.

These factors are qualities intrinsic to the job and must be addressed in an acceptable manner if the job is to be performed satisfactorily.

Compensable Factors -A Definition (2 of 2)

In addition to being quantifiable, compensable factors should be relatively easy to describe and document.

Those involved in using compensable factors to measure job worth should consistently arrive at similar results.

Universal Compensable Factors

Skill: the experience, training, ability, and education required to perform a job under consideration - not with the skills an employee may possess

Universal Factor - Skill

Technical Know-how Specialized Knowledge Organizational Awareness Educational Levels Specialized Training Years of Experience Required Interpersonal Skills Degree of Supervisory Skills


Effort: the measurement of the physical or mental exertion needed for performance of a job

Universal Factor - Effort

Diversity of Tasks Complexity of Tasks Creativity of Thinking Analytical Problem Solving Physical Application of Skills Degree of Assistance Available


Responsibility: the extent to which an employer depends on the employee to perform the job as expected, with emphasis on the importance of job obligation.

Universal Factor - Responsibility

Decision-making Authority Scope of the organization under control Scope of the organization impacted Degree of integration of work with others Impact of failure or risk of job Ability to perform tasks without supervision


Working Conditions: hazards physical

surroundings

of the job.

Universal Factor - Working Conditions

Potential Hazards Inherent in Job Degree of Danger Which Can be Exposed to

Others Impact of Specialized Motor or Concentration

Skills Degree of Discomfort, Exposure, or Dirtiness

in Doing Job

Table 7-13

Federal 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 environment

Source: US Civil Service Commission, Instructions for the factor evaluation system ( Washington, D.C.: US Government Printing Office, 1977).

Example of pay structure

Sal

ary

$80

$40

200 4000

Points

Job title Points Salary

Computer Programmer

240 $60k

Computer Service

180 $30k

Systems Analyst

330 $70k

Computer Operator

210 $37k

Data Entry Clerk

150 $33k

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26,000

24,000

21,000

18,000

15,000

12,000250

Clerk IJob Evaluation Points

Market Pay Line

500Clerk II

750Clerk III

1,200Chief Clerk

Figure 9-1

Pay Structure for Clerk Jobs (1 of 5)

Clerk I» Employees receive training in basic office support

procedures, the operation of office equipment, and the specific activities of the unit. tasks assigned are simple and repetitive in nature and are performed in accordance with explicit instructions and clearly established guidelines. Sample duties include: Files materials in established alphabetical order and prepared new file folders and affixes labels. Clerk Is must possess a high school diploma or equivalent.

Figure 9-1


Clerk II» Employees work under general supervision in support of an

office. They perform routine office support tasks that require a knowledge of standard office procedures and the ability to operate a variety of office equipment. Sample duties include: Prepares simple factual statements or reports involving computations such as totals or subtotals and composes memos requesting or transmitting factual information. Clerk IIs must possess a high school diploma or equivalent and one year work experience performing simple clerical tasks.

Figure 9-1


Clerk III» Employees work under general supervision in support of an

office. They perform office support tasks requiring knowledge of general office and departmental procedures and methods and ability to operate a variety of office equipment. Sample duties include: Reconciles discrepancies between unit records and those of other departments and assigns and reviews work performed by Clerks I and II. Clerk IIIs must possess a high school diploma or equivalent, two years work experience performing moderately complex clerical tasks, and completed coursework (five in all) in such related topics as word processing and basic accounting principles.

Figure 9-1


Chief Clerk» Employees work under direction in support of an office. They

perform a wide variety of office support tasks that require the use of judgment and initiative. A knowledge of the organization, programs, practices, and procedures of the unit is central to the performance of the duties. Chief clerks must possess a high school diploma or equivalent, four years work experience performing moderately difficult clerical tasks, and an associate’s degree in office management.

Figure 9-1


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26,000

24,000

21,000

18,000

15,000

12,000

Messenger (200)Mail Clerk I (220)Clerk I (250)Recep. (300)

Job Evaluation Points

Market Pay Line

Figure 9-2

Pay Grade Definitions

Mail Clerk II (350)Clerk II (500)Sec.I (650)

Mail Clerk III (675)Clerk III (750)Sec. II (1,000)

Mailroom Super (1,175)Chief Clerk (1,200)Exec. Sec. (1,900)

200-300 301-650 651-1,150 1,151-2,000

An

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26,000

24,000

21,000

18,000

15,000

12,000

Messenger (200)Mail Clerk I (220)Clerk I (250)Recep. (300)

Job Evaluation Points

Figure 9-3

Pay Range Definitions

Mail Clerk II (350)Clerk II (500)Sec.I (650)

Mail Clerk III (675)Clerk III (750)Sec. II (1,000)

Mailroom Super (1,175)Chief Clerk (1,200)Exec. Sec. (1,900)

200-300 301-650 651-1,150 1,151-2,000

Maximum

Midpoint

Minimum

Pay grades are lines, pay ranges are squares!

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Grade A

Grade B

Grade C

Grade D

Grade E

BROADBANDING

Job Worth (based on evaluation points)

NO BANDS

Broadbanding is defined as a strategy for salary structures that consolidate a large number of pay grades into a few "broad bands.”

Broadbanding removes some levels of management and creates organizations that are flatter, multi-skilled and more flexible.

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Grade A

Grade B

Grade C

Grade D

Grade E

BROADBANDING


BENEFITS OF BROADBANDING –

• Employees are able to broaden their skills and abilities because they fulfill multiple functions

• Managers can make compensation decisions faster and with less paperwork than with a system with “no bands”

BAND A

BAND B

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Grade B

Grade C

Grade D

Grade E

BROADBANDING


BAND A

PROBLEMS WITH BROADBANDING –

• Maintaining the perception of pay equity can be more difficult because of wide or “broad” bands.• Extra resources are needed to carefully control and monitor the structure

BAND B

BAND C

Pay Compression

In theory, newly hired employees receive near minimum payIn practice, new employees often receive well above minimum pay ratesPay compression: situation where pay spread between newly hired and older employees is small (or reversed)

Example:Avg. salary of professor: $90,000Avg. salary of newly hired professor: $110,000

What causes pay compression?

Compa-ratios

Employee’s pay rate---------------------------Pay range midpoint

Market match policy: Compa-ratio = 1Market-lag policy: Compa-ratio < 1Market-lead: Compa-ratio > 1

Example of Job Evaluation Factors

Factor 1: Scope and Effect. This factor measures the relationship between the nature of the work (purpose, breadth, & depth of assignment) and the effect of work products or services within and outside the organization.

Level 1-1 (75 points):Perform specific procedures which typically comprise a complete segment of an assignment or project of broader scope (e.g., compiling a large body of data for use in a report of departmental activities). The work product or service affects the accuracy, reliability, or acceptability of further processes or services and may affect the efficiency of other employees.

Level 1-2 (150 points): Treat a variety of conventional problems, questions, or situations in conformance with established criteria (e.g., supervising an organizational unit or work group involved in the performance of well-established guidelines.

Level 1-3 (225 points): Establish guidelines or criteria, formulate major programs, assess effectiveness, investigate unusual conditions.

Factor 2: Personal Contacts. This factor includes the face-to-face contacts and telephone and radio dialogue with persons not in the supervisory chain (requirements of initial contact, difficulty of communicating with those contacted, and the contact setting).

Level 2-1 (10 points): Personal contacts are primarily with coworkers in immediate unit but may involve employees in related units.

Level 2-2 (25 points): Personal contacts are with employees of the organization but outside the immediate unit, such as directors of other departments. Contacts are engaged in different functions/kinds of work. May involve contact with public in a moderately structured setting. The exact purpose of the contact may be unclear at first to one or more of the parties (e.g., contact with job applicants).

Level 2-3 (60 points): Personal contacts with individuals or groups from outside in a moderately unstructured setting (e.g., contacts are not routine, purpose and extent of contact is uncertain, and role of each party changes during the contact (e.g., officials of other organizations, attorneys).


Factor 3: Guidelines. This factor covers the nature of guidelines and the judgment needed to apply them. Guides used may include technical manuals, policies and procedures, laws and ordinances.

Level 3-1 (25 points): Specific, detailed guidelines covering all important aspects are provided; employee works in strict adherence to guidelines; any deviations must be approved by supervisor.

Level 3-2 (125 points): Employee is provided with a number of guidelines, both written and oral, most of which are directly applicable (e.g., ordinances regulating solid waste disposal). Judgment is used in locating and selecting appropriate guidelines.

Level 3-3 (275 points): Guidelines are available, but many are not applicable to the work or have gaps in specificity (e.g., City ordinances, court decisions, Civil Rights Act). Judgment is used in interpreting, modifying, and adapting guidelines for application in specific situations. Employee analyzes the results and recommends changes in guidelines.


Factor 4: Complexity. This factor covers the nature, number, variety, and intricacy of tasks, steps, processes, methods, or activities in the work performed; and the degree to which the employee must vary the work, discern interrelationships and deviations, or develop new techniques, criteria, or information.

Level 4-1 (25 points): Require performance of several related duties involving consideration of choices of appropriate procedures or actions to be taken in a variety of situations. Assignments are usually similar, thus limiting the need to use judgment. Problems are readily solved by well-established procedures.

Level 4-2 (150 points): Require performance of several duties involving different or unrelated processes or methods. There is a substantial amount of problem analysis involved, requiring consideration of many alternative courses of action and the identification of of conditions necessary to discern interrelationships.

Level 4-3 (225 points): Varied duties requiring many different and unrelated processes and methods (e.g., supervision, performance evaluation, coaching). It requires the assessment of unusual circumstances, variations, and incomplete or conflicting data. Employee is required to refine methods to be used.


Factor 5: Physical Demands. This factor covers the requirements and physical demands placed on the employee by the work assignment. This includes physical characteristics and abilities (e.g., agility and dexterity) and the physical exertion involved in the work (e.g., climbing, lifting, pushing, balancing, kneeling, crawling, or reaching). The frequency and intensity of physical exertion must also be considered (e.g., prolonged standing).

Level 5-1 (5 points): Work is primarily sedentary, although there may be some walking, bending, or carrying of light objects.

Level 5-2 (20 points): Work requires some physical exertion such as prolonged walking or standing, bending, crouching, or stooping. The employee frequently lifts light objects and occasionally objects weighing 25 to 50 pounds. The use of tools or equipment requiring above average dexterity may be needed (e.g., when training others in their use).


Evaluation Form

Factor Weight Pay Grade Your

choice1 2 3

Scope and Effect 30% 75 150 300

Personal Contacts 15% 10 50 150

Guidelines 20% 25 125 200

Complexity 30% 25 150 300

Physical Demands 5% 10 50 NA

100% Total

Job evaluation committee members will enter their selected points after carefully studying the corresponding job description. Then, the total job worth (sum of points across factors) will be computed.

Job Evaluation Exercise$95k

$80k

$65k

$50k

$35k

$20k

$16kPoints

800100 200 300 400 500 600 700

Testing your applied knowledge: Linking Factors and Points to

Corporate Strategy

Factor Pay Grade Pay Grade

1 2 3 1 2 3 4 5

Scope and Effect 75 150 300

Personal Contacts 10 50 150

Guidelines 25 125 300

Complexity 25 150 200

Physical Demands 5 50 NA

Change the following allocation of points to reflect this corporation’s new strategic focus on customer service and quality. Note that you may add two more pay grades if you deem it necessary:

Testing your applied knowledge: Linking Factors and Points to

Corporate Strategy

Factor Pay Grade Pay Grade

1 2 3 1 2 3 4 5Scope and Effect 75 150 300 50 125 200 350 NAPersonal Contacts 10 25 150 25 75 100 150 200Guidelines 25 125 300 25 75 150 200 300Complexity 25 150 200 25 75 100 NA NAPhysical Demands 5 50 NA 5 50 NA NA NA

Answer: it makes sense to increase the point allocation of the “Personal Contacts,” “Scope and Effects,” and perhaps “Guidelines.” More grades may be created within these factors to better differentiate relative employee contributions and career paths.

The U.S. Department of labor O*NET or occupational network provides an expedient way to find out information about occupational requirements. Please visit the O*NET web site: http://online.onetcenter.org

Identify the O*NET characteristics of two occupations, one primarily male and another primarily female at approximately the same level of occupational complexity. Try to determine whether or not the two occupations have a comparable worth (i.e., similarly important skill, effort, responsibility, working conditions) and therefore should receive similar compensation. What made this comparison difficult?

Discussion Question 7-1

http://online.onetcenter.org/

Discussion Question 7-2

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Band A Band B

Job Worth (based on job evaluation points)

Grade AGrade B

Grade C

Grade D

Grade E

Band C

Solution B

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Band A Band B

Job Worth (based on job evaluation points)

Grade AGrade B

Grade C

Grade D

Grade E

An organization is contemplating the “broadbanding” of its job evaluation structure. Two different consultants suggest the following broadbanding solutions. Think about the pros and cons of each solution.

Solution A

Documents

Chapter Seven Building Internally Consistent Compensation Systems