MBM 433 /4

Dayalbagh Educational Institute

(Deemed University) Unit1 Lecture 4 Advance HRM lecture 0 Job Evaluation th 19 July 2012

JE ;Hisatory
1838 In US , pay equity among clerks based on responsibilities and qualifications of their jobs. 1909, Municipal corporation of Chicago 1912 Commonwealth Edison company installed the process. Four methods were in use in 1910 to 1926

DEFINATION AND PURPOSE

DEFINITION :It is a systematic process for establishing relative worth of the jobs within the organisation PURPOSE :

To provide a rationale basis for design and maintenance of equitable and defensible relative pay structures. Help in the management of relatitivities existing between jobs within the organisation help decisions on pay and structures establish the extent to which there is a comparable worth between jobs so that equal pay can be provided for work of equal value. Help in Decisions regarding promotions etc It is a process which brings objectivity based on human judgements. Can not be taken as scientific evaluation. Changing industrial scenario has made this process redundant as nature of work is getting redefined and people are paid more based on what their competencies and value addition and not based on the Worth of the jobs

Caution :

Methods of JE
Point Method

JE

Ranking Method

Classification Methods

Factor comparison

Different methods of job evaluation

1.

2.

Ranking Method; Jobs are ranked from high to ,low according to the perceived value of each job( worth of the job) to the organization. The worth of job is based on judgments of Skill , Effort ( Physical & ,mental ) Responsibility ( supervisory & Fiscal ) and working conditions Classification method :Classification produces hierarchy of jobs through common sense based on ( Most complex) duties (Highest level of) responsibilities and( Most demanding ) qualifications required.

Different methods of job evaluation

3.

Point method ;The point method provides job evaluators with means of quantifying their judgments' about relative worth of the various aspects of the jobs assigning points to the judgment Factor comparison method: it consists of the levels at which factor can be present in any of the jobs to be evaluated. Jobs are evaluated in terms of these factors .( A factor is a characteristic that occurs to a different degree in the jobs and can be used for assessing the relative worth of the jobs. Say a job is more responsible than other, and therefore worth more, responsibility is used as factor. It can be size of resources controlled, contribution to end results. A typical list is Knowledge and skills : decisions, complexity , interpersonal skills , responsibility for the job)

4.

1.Job Evaluation Methods: Ranking

Ranking each job relative to all other jobs, usually based on some overall factor. Steps in job ranking:
1. 2. 3. 4. 5.

Obtain job information. Select and group jobs. Select compensable factors.

Rank jobs.
Combine ratings.

TABLE 113 Job Ranking by Olympia Health Care

Ranking Order 1. Office manager Annual Pay Scale $43,000

2. Chief nurse
3. Bookkeeper 4. Nurse 5. Cook 6. Nurses aide 7. Orderly

42,500
34,000 32,500 31,000 28,500 25,500

2.Job Evaluation Methods: Job Classification

Raters categorize jobs into groups or classes of jobs that are of roughly the same value for pay purposes.

Classes contain similar jobs.

Administrative assistants

Grades are jobs similar in difficulty but otherwise different.

Mechanics, welders, electricians, and machinists

Jobs are classed by the amount or level of compensable factors they contain.

3. Job Evaluation Methods: Point Method

A quantitative technique that involves:

Identifying the degree to which each compensable factor is present in the job.
Awarding points for each degree of each factor.

Decision making: Max points 200 Problem solving: Max points 150 Knowledge: Max points 125

JE :4 factor comparison method

It is extension of point method 1. KNOWLEDGE AND SKILLS 2. RESPONSIBILITY 3. DECISIONS 4. COMPLEXITY (next slide ) 5. INTERPERSONAL SKILLS

Complexity

LEVEL-1 .Highly repetitive work without significant variation LEVEL 2 ;A fairly narrow range of tasks that are carried out which tend to be closer to each other and involve limited use of skills LEVEL -3 There is some diversity in activities although broadly related to each other. A fairly wide variety of skills to be used LEVEL 4 :A diverse range of broadly related tasks carried out. A wide Varity of Administrative technical and supervisory skills are used. LEVEL 5 : A highly diverse range unrelated. A vide variety of professional and Managerial skills are used. LEVEL 6 : The work is multi disciplinary range and involves fulfilling broad range of responsibilities

Plotting a Wage Curve

FIGURE 116 Wage Structure

Pricing Managerial and Professional Jobs

Compensating Executives and Managers

Base Pay

Short-term Incentives

Long-Term Incentives

Executive Benefits and Perks

JE For Managers: Hay Methodology

The Hay Method is comprised of "Guide Charts" which are used to define each factor and to provide quantitative measures, which form the basis for evaluation. The Factors in the Hay Guide Chart-Profile Method are: Know-How
This Guide Chart measures the total of every kind of knowledge and skill, however acquired, needed for acceptable job performance. It consists of three dimensions: a. Practical procedures and knowledge, specialized techniques, and learned skills; b. the real or conceptual planning, co-ordinating, directing, and controlling of activities and resources associated with an organizational unit or function; and, c. Active, practicing, person-to-person skills in the area of human relationships.

Hay

Problem Solving
The degree and type of original thinking required to accomplish the purpose of the job. This Guide Chart measures the thinking required in the job by considering two dimensions: a. the environment in which the thinking takes place; and, b. the challenge presented by the thinking to be done.

Hay methodology

Accountability
This Guide Chart measures the relative degree to which the job, performed competently, can affect the end results of the organization or of a unit within the organization. This measures the answerability for an action and the consequences of that action. It is the measured effect of the job on important end results and can be broken into three elements:

Freedom to Act; Types and directness of impact on end results; General size of the end results it influences, usually indicated in dollar /Rupee terms.

Total Evaluation

The total evaluation is the sum of the points for the judgments made under each of the above headings. In addition to the separate evaluation of each element, a Profile for each job is established illustrating the shape of the job in terms of the interrelationships between Know-How, Problem Solving and Accountability. This provides an inbuilt check on aspects of the validity of the evaluations made.

Total Evaluation

Implementation of JE requires
1. 2.

3.
4. 5. 6. 7. 8. 9.

Define Roles :Who is responsible for analysis , evaluation etc Get buy in : Objectives of exercise and how they would be achieved. Procedure : The terms of reference, project team and methods of working Training : To analysts and evaluators at every level Job evaluation Time table; Each activity with overall roadmap with time table for completion including methods for appealing etc. Job analysis; The methods to be used in job analysis and time table for completion Pay structure design ; The type of structures and design methods to be used. Communication and negotiation: The communication methodology and negotiation points with Unions. Communicate :The procedure for implementing.

Pros & Cons of JE

PROS A rationale basis - based on logic Approach towards to the management of relativity's. A logical and consistent approach to measuring the relative size of jobs. CONS NO scheme has been proved to be valid consistent results. Quantification of subjective judgments does not make them objective. It relies on human judgment ; its methodology may be logical, but these are subject to different interpretations and varying standards among assessors. Their pre conceived notions ensure that subjectivity creeps in. The installation and maintenance cost is very high. As organisation changes , roles merge, the scheme becomes redutant. In a fast changing environment with technology redefining the jobs at the pace of thought, the job evaluation has lost its relevance. All such schemes are prone to manipulations .