SEMESTER RECAP

Context
SHRM
Legal environment
International

Procuring
Planning
Recruiting
Selection

Utilizing & Maximizing

Training
Appraisal

Compensation Defined
The package of quantifiable rewards an
employee receives for his/her labors.
Three components:
Base compensation
Pay incentives
Indirect compensation

Three Job Rating Methods

Method

Procedure

Ranking (paired comparison) Rank-order whole

jobs for worth of
compare pairs of
jobs.

Advantages

Disadvantages

Simplest method;
Only general rating of
inexpensive, easily - not very reliable
understandable.
doesnt measure
differences between jobs.

Classification

Compare job de- Simple, easy to

scriptions to grade use for large numdescriptions.
ber of jobs; one
rating scale.

Ambiguous, overlapping
grade descriptions

Point factor

Reduce general
factors to subfactors: give each
factor weights and
points; use points
to determine
grades.

Time-consuming process
more difficult to understand; greater opportunity to disagree.

More specific and

larger number of
factors; off-theshelf plans available
more precise
measurements.

Point Factor Method

1 Identify specific characteristics (factors)
of jobs that will be measured

Major Factors of the Hay Plan

Know-How

Problem Solving

Accountability

Sum total of every kind

kind of skill, however
acquired, required for
acceptable job performance. Know-how has
three subfactors:
(1) Practical procedures,
specialized techniques.
(2) Ability to integrate
and harmonize the
diversified functions
of management.
(3) Interpersonal skills.

Original, self-starting thinking

required by the job for analyzing,
evaluating, creating, reasoning.
Problem solving has two subfactors:

Answerability for action

and for the consequences of the action; the
measured effect of the
the job. Accountability
has three subfactors:
(1) Freedom to act
(personal control).

(1) The thinking environment

in which problems are
solved.
(2) The thinking challenge of
the problem.

(2) The impact of the

job on end results
(direct, indirect).
(3) Magnitude - general
dollar size of areas
most affected by job.

Degree Statements for the Factor

Physical Requirements
Factor: Physical Requirements
This factor appraises the physical effort required by a job, including its intensity and
degree of continuity. Analysis of this factor may be incorrect unless a sufficiently
broad view of the work is considered.

1.
2.

3.

Degree
Light work involving a minimum of physical effort.
Requires only intermittent sitting, standing, and walking.
Repetitive work of a mechanical nature. Small amount of lifting and
carrying. Occasional difficult working positions. Almost continuous sitting
or considerable moving around.
Continuous standing or walking, or difficult working positions. Working
with average weight or heavy materials and supplies. Fast manipulative skill
in almost continuous use of machine or office equipment on paced work.

The Traditional Approach to Compensation

Job Analysis
Job Documentation
Prepare to
Survey

Job Rating

Conduct
Survey

Create Job
Worth Hierarchy

Analyze
Market Data
Reconcile
Internal and External
Considerations
Develop Pay
Structure

The Traditional Approach to Compensation

Job Analysis
Job Documentation
Prepare to
Survey

Job Rating

Conduct
Survey

Create Job
Worth Hierarchy

Analyze
Market Data
Reconcile
Internal and External
Considerations
Develop Pay
Structure

Skill-based Pay
Advantages?
motivation, flexibility, reduced absenteeism and
turnover costs (can cover), flatter

Disadvantages?
Labor costs; Rusty skills, loss of labor specialization

When?

Expertise and innovation are sources of CA

Technology changes frequently
Upward mobility is limited
Developmental opportunities are present