JOB EVALUATION - the burning issue in Talent Management today. How to price talent competitively and have a scientific talent retention policy.

 

JOB EVAUATION OF MANAGERIAL  WORK :

analyzing to price competitively

 

Did you as CEO have a problem one fine Monday morning…!!!

 Your star performer in a pivotal position in your company comes to your office  to say  “ … I feel I am underpaid in comparison my contribution to the organization or in ratio to my market value…Could you plan to revise my compensation before I begin a search for a new job”

You are caught in a dilemma. Should you overlook it and lose your prime talent??? Or should you win back this member of the top team???(even if you run the risk of creating a chain of demands within the organization)

This is the burning issue in Talent Management today. How to price talent competitively and have a scientific talent retention policy. Talent is after all the cutting edge of your company’s competitive position in the market

The answer is Job evaluation; which  is a systematic method of determining a job’s relative worth within an organization. Here are five common methods and the characteristics of each:

1. Ranking Method

This method ranks jobs in order based on each job’s perceived value in relation to the others, .

• Does not consider market compensation rates.
• May work well for smaller companies. In a larger organization, it is more complex to use, but sometimes it can still work if jobs are grouped by job families—professional level, etc.

2. Classification/Grading Method

With this approach, generic job characteristics are grouped to reflect levels of skill/responsibility at a number of predetermined grade classifications, .
This is another straightforward method that is not too time-consuming.

• Individual jobs are compared to groups of job characteristics, then matched to specific grade classification.
• Can be a challenge because one size does not fit all, so jobs may be forcefit into a grade.
• The system is subject to grade inflation as jobs get pushed to the next higher level.

3. Point–Factor Method

This approach identifies job factors that add value and worth to a position. The job factors are separated into groups (i.e., skill, responsibility, effort) and assigned a numerical or weighted point value. The points for individual factors are added up to get a point value for the whole job.

• May not reflect market values of jobs.
• Generates a hierarchy but does not have an external component.

4. Factor Comparison Method

With this method, job factors are identified under primary groups (i.e., skill, effort, responsibilities, working conditions) typically up to five groups. Each factor is assigned a RUPEE value (as opposed to point value).

• This is a complex system used only by a few organizations.
• It is hard to communicate to employees.
• There is an inherent degree of subjectivity.

This method is widely used and is considered to be one of the reliable and systematic approach for job evaluation in mid and large size organizations. Most consulting firms adopt this method, where jobs are expressed in terms of key factors. Points are assigned to each factor after prioritizing each factor in order of importance. The points are summed up to determine the wage rate for the job. Jobs with similar point totals are placed in similar pay grades. The procedure involved may be explained thus:

1. Select key jobs. Identify the factors common to all the identified jobs such as skill, effort, responsibility, etc.

2. Divide each major factor into a number of sub factors. Each sub factor is defined and expressed clearly in the order of importance, preferably along a scale.

The most frequent factors employed in point systems are:

(i) Skill (key factor); Education and training required, Breadth/depth of experience required, Social skills required, Problem-solving skills, Degree of discretion/use of judgment, Creative thinking

(ii) Responsibility/Accountability: Breadth of responsibility, Specialized responsibility, Complexity of the work, Degree of freedom to act, Number and nature of subordinate staff, Extent of accountability for equipment/plant, Extent of accountability for product/materials;

(iii) Effort: Mental demands of a job, Physical demands of a job, Degree of potential stress

The educational requirements (sub factor) under the skill (key factor) may be expressed thus in the order of importance.

3. Find the maximum number of points assigned to each job (after adding up the point values of all sub-factors of such a job).

This would help in finding the relative worth of a job. For instance, the maximum points assigned to an officer's job in a bank come to 540. The manager's job, after adding up key factors + sub factors points, may be getting a point value of say 650 from the job evaluation committee. This job is now priced at a higher level.

4. Once the worth of a job in terms of total points is expressed, the points are converted into money values keeping in view the hourly/daily wage rates. A wage survey is usually undertaken to collect wage rates of certain key jobs in the organization.

 

5. Competitive Market Analysis Method

This approach looks at external data, . Job evaluation forms the basis for market pricing. You utilize job descriptions to compare jobs to like positions within the external marketplace. Pay data are collected from published sources and the value of the position within the competitive market is determined.

• Considers the organization’s compensation philosophy. (Where do we want to position ourselves vis-à-vis the market?)
• Examines internal value against market data.
• Requires an overlay to see how it fits with the internal hierarchy.

Market pricing is used by many organizations, , to determine:

• The competitive value of individual positions
• The company’s overall positioning in the marketplace
• The company’s pay positioning against its compensation philosophy
• Whether pay programs achieve basic objectives of compensation
• Internal equity

BENEFITS OF JOB EVALUATION:

 Job evaluation is a process of determining the relative worth of a job. It is a process which is helpful even for framing compensation plans by the personnel manager. Job evaluation as a process is advantageous to a company in many ways:

·         Reduction in inequalities in salary structure - It is found that people and their motivation is dependent upon how well they are being paid. Therefore the main objective of job evaluation is to have external and internal consistency in salary structure so that inequalities in salaries are reduced.

·         Specialization - Because of division of labour and thereby specialization, a large number of enterprises have got hundred jobs and many employees to perform them. Therefore, an attempt should be made to define a job and thereby fix salaries for it. This is possible only through job evaluation.

·         Helps in selection of employees - The job evaluation information can be helpful at the time of selection of candidates. The factors that are determined for job evaluation can be taken into account while selecting the employees.

·         Harmonious relationship between employees and manager - Through job evaluation, harmonious and congenial relations can be maintained between employees and management, so that all kinds of salaries controversies can be minimized.

·         Standardization - The process of determining the salary differentials for different jobs become standardized through job evaluation. This helps in bringing uniformity into salary structure.

·         Relevance of new jobs - Through job evaluation, one can understand the relative value of new jobs in a concern.

PROCESS OF JOB EVALUATION

The process of job evaluation involves the following steps:

·         Gaining acceptance: Before undertaking job evaluation, top management must explain the aims and uses of the programme to managers, emphasizing the benefits. Employees and unions may be consulted, depending on the legal and employee relations environment and company culture. To elaborate the program further, presentations could be made to explain the inputs, process and outputs/benefits of job evaluation.

·         Creating job evaluation committee: It is not possible for a single person to evaluate all the key jobs in an organization. Often a job evaluation committee consisting of experienced employees, union representatives and HR experts is created to set the ball rolling.

·         Finding the jobs to be evaluated: Every job need not be evaluated. This may be too taxing and costly. Certain key jobs in each department may be identified. While picking up the jobs, care must be taken to ensure that they represent the type of work performed in that department, at various levels.

·         Analysing and preparing job description: This requires the preparation of a job description and also an analysis of job specifications for successful performance. See job analysis.

·         Selecting the method of evaluation: The method of evaluating jobs must be identified, keeping the job factors as well as organisational demands in mind. Selecting a method also involves consideration of company culture, and the capacity of the compensation and benefits function or job evaluation committee.

THE WAY AHEAD:

Evaluating jobs: The relative worth of various jobs in an organisation may be determined by applying the job evaluation method. The method may consider the "whole job" by ranking a set of jobs, or by comparing each job to a general level description. Factor-based methods require consideration of the level of various compensable factors (criteria) such as level and breadth of responsibility, knowledge and skill required, complexity, impact, accountability, working conditions, etc. These factor comparisons can be one with or without numerical scoring. If there is numerical scoring, weights can be assigned to each such factor and scores are associated with different levels of each factor, so that a total score is determined for the job. All methods result in an assigned grade level.

 

  

all good wishes

Dr Wilfred Monteiro

www.synergmanager.net