3) Explain the rationale and procedure of job evaluation. Describe the method which has been followed in any organization you are familiar with. Discuss the merits and demerits of that method. Briefly describe the organization you are referring to.
4) Explain the performance–linked reward system. Describe the steps involved in designing a performance –linked reward system relating to an organization you are familiar with. Discuss any short comings of the system. Briefly describe the organization your are referring to.
Wage And Salary
2 posts • Page 1 of 1
Wage And Salary
by Garcia » Fri Apr 11, 2014 10:54 pm
- Garcia
- Posts: 15
- Joined: Sun Jan 05, 2014 8:59 pm
Wage And Salary
by Clynt » Sat Apr 19, 2014 7:11 am
3]Explain the rationale and procedure of job evaluation. Describe the method which has been followed in any organization you are familiar with. Discuss the merits and demerits of that method. Briefly describe the organization you are referring to.
You can use job evaluations to:
• Clarify job descriptions so that employees understand the expectations of their roles and the relationship of their roles to other jobs within the organization. • Attract desirable job candidates. • Retain high-potential employees. What is job evaluation?
Job evaluation is a systematic process that you can use to determine the relative level, importance, complexity, and value of each job in your organization. With a successful job evaluation system, you can compare each job to other jobs within your organization.
It is best to perform job evaluation after work analysis. Job evaluation, in conjunction with work analysis, helps you develop a job description that is broad, descriptive, and flexible so that you can adapt the description to your organization's changing needs.
Assess employee contribution
Job evaluation helps you establish and qualify differences in employee contribution across jobs. These differences provide a foundation for employee compensation decisions. The job evaluation process measures the elements of a job and produces an overall score. In each case, you evaluate the job, not the employee who performs the job.
Assess job content and value Typically, job evaluation assesses both the content of a job and the value of a job for your organization.
• Job content refers to the type of work performed and the skills and knowledge necessary to perform the work. • Job value refers to the job's degree of contribution in meeting your organization's goals and the degree of difficulty in filling the job. Factors in job evaluation
Job evaluators often assess jobs based on these factors:
• Training level or qualifications requirements • Knowledge and skills requirements • Complexity of tasks • Interaction with various levels of the organization • Problem-solving and independent judgment • Accountability and responsibility • Decision-making authority • Degree of supervision required • Cross-training requirements • Working conditions • Degree of difficulty in filling job =============================================
Steps in job evaluation
The standard steps in job evaluation include:
Introduce the concept of job evaluation. Obtain management approval for the evaluation. Train the job evaluation selection team. Review and select the job evaluation method. Gather information on all internal jobs. Use information to fully expand job descriptions. Use the selected job evaluation method to rank jobs hierarchically or in groups. Link the ranked jobs with your compensation system or develop a new system. Implement the job evaluation and compensation systems. Periodically review your job evaluation system and the resulting compensation decisions. =========================================
Analyze job evaluation methods
Before implementing job evaluation in your organization, select the most appropriate job evaluation method. Hundreds of job evaluation systems exist. Research the job evaluation methods and resources available online. 4 job evaluation systems are most commonly used:
• Ranking • Classification • Point evaluation • Factor comparison
1.Ranking
Ranking jobs is the easiest, fastest, and least expensive approach to job evaluation. It is also most effective in smaller organizations with few job classifications. To rank positions, order jobs from highest to lowest based on their relative value to your organization.
The process of job ranking typically assigns more value to jobs that require managerial or technical competencies. More value is also assigned to jobs that supervise, exercise decision-making authority, or rely on independent judgment. For example, a job-ranking system might rank the job of CEO as the most valued job within the organization and the job of product assembler as the least valued.
• Advantages Simplicity is the main advantage in using a ranking system. It is also easy to communicate the results to employees, and it is easy to understand. • Disadvantages Ranking jobs is subjective. Jobs are evaluated, and their value and complexity are often assessed on the basis of opinion. Also, when creating a new job, existing jobs must be reranked to accommodate the the new position. -------------------------------------------------
1.Ranking Method APPROACH
Perhaps the simplest method of job evaluation is the ranking method. According to this method, jobs are arranged from highest to lowest, in order of their value or merit to the organization. Jobs also can be arranged according to the relative difficulty in performing them. The jobs are examined as a whole rather than on the basis of important factors in the job; and the job at the top of the list has the highest value and obviously the job at the bottom of the list will have the lowest value.
Jobs are usually ranked in each department and then the department rankings are combined to develop an organizational ranking. The following table is a hypothetical illustration of ranking of jobs.
Table: Array of Jobs according to the Ranking Method
Rank Monthly salaries
1. Accountant Rs 3,000
2. Accounts clerk Rs 1,800
3. Purchase assistant Rs 1,700
4. Machine-operator Rs 1,400
5. Typist Rs 900
6. Office boy Rs 600
The variation in payment of salaries depends on the variation of the nature of the job performed by the employees. The ranking method is simple to understand and practice and it is best suited for a small organization. Its simplicity, however, works to its disadvantage in big organizations because rankings are difficult to develop in a large, complex organization. Moreover, this kind of ranking is highly subjective in nature and may offend many employees. Therefore, a more scientific and fruitful way of job evaluation is called for. =============================
2.Classification
The general purpose of job classification is to create and maintain pay grades for comparable work across your organization.
To conduct a job classification: First, write descriptions for a category of jobs; next, develop standards for each job category by describing the key characteristics of those jobs in the category; finally, match all jobs to the categories based on the similarity of tasks, the decision-making exercised, and the job's contribution to the organization's overall goals.
Universities, government employers and agencies, and other large organizations with limited resources typically use job classification systems. These types of organizations have many types of jobs at diverse locations and must maintain equitable and fair standards across all work settings.
• Advantage Job classification is simple once you establish your categories. You can assign new jobs and jobs with changing responsibilities within the existing system. • Disadvantages Job classification is subjective, so jobs mightfall into several categories. Decisions rely on the judgment of the job evaluator. Job evaluators must evaluate jobs carefully because similar titles might describe different jobs from different work sites. ------------------------------------------------------------------------
2.Classification Method APPROACH
According to this method, a predetermined number of job groups or job classes are established and jobs are assigned to these classifications. This method places groups of jobs into job classes or job grades. Separate classes may include office, clerical, managerial, personnel, etc. Following is a brief description of such a classification in an office.
(a) Class I - Executives: Further classification under this category may be Office manager, Deputy office manager, Office superintendent, Departmental supervisor, etc.
(b) Class II - Skilled workers: Under this category may come the Purchasing assistant, Cashier, Receipts clerk, etc.
(c) Class III - Semiskilled workers: Under this category may come Stenotypists, Machine-operators, Switchboard operators, etc.
(d) Class IV - Semiskilled workers: This category comprises Daftaris, File clerks, Office boys, etc.
The job classification method is less subjective when compared to the earlier ranking method. The system is very easy to understand and acceptable to almost all employees without hesitation. One strong point in favor of the method is that it takes into account all the factors that a job comprises. This system can be effectively used for a variety of jobs.
The weaknesses of the job classification method are:
• Even when the requirements of different jobs differ, they may be combined into a single category, depending on the status a job carries. • It is difficult to write all-inclusive descriptions of a grade. • The method oversimplifies sharp differences between different jobs and different grades. • When individual job descriptions and grade descriptions do not match well, the evaluators have the tendency to classify the job using their subjective judgments. =======================================
3.Point evaluation
Point evaluation is the most widely used job evaluation method. In a point evaluation system, you express the value of a particular job in monetary terms. You first identify compensable factors that a group of jobs possess. Based on these factors, you assign points that numerically represent the description and range of the job.
Examples of compensable factors are skills required, level of decision-making authority, number of reporting staff members, and working conditions.
• Advantage This method is often viewed as less biased than other methods because the job evaluator assigns each job's total points before the compensable factors become part of the equation. • Disadvantages Subjective decisions about compensable factors and the associated points assigned might be dominate. The job evaluator must be aware of biases and ensure that they are not represented in points assigned to jobs that are traditionally held by minority and female employees. -------------------------------------------------------------
3.Point method APPROACH
This method is widely used currently. Here, jobs are expressed in terms of key factors. Points are assigned to each factor after prioritizing each factor in the 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:
(a) Select key jobs. Identify the factors common to all the identified jobs such as skill, effort, responsibility, etc.
(b) 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.
Degree Define
1. Able to carry out simple calculations; High School educated
2. Does all the clerical operations; computer literate; graduate
3 Handles mail, develops contacts, takes initiative and does work independently; post graduate
Assign point values to degrees after fixing a relative value for each key factor. Point Values to Factors along a Scale
Point values for Degrees Total
Factor 1 -2- 3- 4- 5
Skill 10- 20- 30 -40 -50 = 150
Physical effort 8 -16 -24 -32- 40 =120
Mental effort 5 -10 -15 -20 -25 =75
Responsibility 7 -14 -21 -28 -35 =105
Working conditions 6- 12 -18- 24- 30= 90 Maximum total points of all factors depending on their importance to job = 540
4 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.
5 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, usually, is undertaken to collect wage rates of certain key jobs in the organization. Let’s explain this: Conversion of Job Grade Points into Money Value
Point range Daily wage rate(Rs) Job grades of key bank officials
500-600 300-400 1 Officer
600-700 400-500 2 Accountant
700-800 500-600 3 Manager I Scale
800-900 600-700 4 Manager II Scale
900-1,000 700-800 5 Manager III Scale
Merits and Demerits
The point method is a superior and widely used method of evaluating jobs. It forces raters to look into all keys factors and sub-factors of a job. Point values are assigned to all factors in a systematic way, eliminating bias at every stage. It is reliable because raters using similar criteria would get more or less similar answers. “The methodology underlying the approach contributes to a minimum of rating error” . It accounts for differences in wage rates for various jobs on the strength of job factors. Jobs may change over time, but the rating scales established under the point method remain unaffected.
On the negative side, the point method is complex. Preparing a manual for various jobs, fixing values for key and sub-factors, establishing wage rates for different grades, etc., is a time consuming process. According to Decenzo and Robbins, “the key criteria must be carefully and clearly identified, degrees of factors have to be agreed upon in terms that mean the same to all rates, the weight of each criterion has to be established and point values must be assigned to degrees”. This may be too taxing, especially while evaluating managerial jobs where the nature of work(varied, complex, novel) is such that it cannot be expressed in quantifiable numbers.
==============================
4.Factor comparison
Job evaluators rank jobs that have similar responsibilities and tasks according to points assigned to compensable factors. The evaluators then analyze jobs in the external labor market to establish the market rate for such factors. Jobs across the organization are then compared to the benchmark jobs according to the market rate of each job's compensable factors to determine job salaries.
• Advantage This method results in customized job-ranking. • Disadvantage Compensable factor comparison is a time-consuming and subjective process. 4.Factor Comparison Method APPROACH
A more systematic and scientific method of job evaluation is the factor comparison method. Though it is the most complex method of all, it is consistent and appreciable. Under this method, instead of ranking complete jobs, each job is ranked according to a series of factors. These factors include mental effort, physical effort, skill needed, supervisory responsibility, working conditions and other relevant factors(for instance, know-how, problem solving abilities, accountability, etc.). Pay will be assigned in this method by comparing the weights of the factors required for each job, i.e., the present wages paid for key jobs may be divided among the factors weighed by importance(the most important factor, for instance, mental effort, receives the highest weight). In other words, wages are assigned to the job in comparison to its ranking on each job factor.
The steps involved in factor comparison method may be briefly stated thus:
• Select key jobs(say 15 to 20), representing wage/salary levels across the organization. The selected jobs must represent as many departments as possible. • Find the factors in terms of which the jobs are evaluated(such as skill, mental effort, responsibility, physical effort, working conditions, etc.). • Rank the selected jobs under each factor(by each and every member of the job evaluation committee) independently. • Assign money value to each factor and determine the wage rates for each key job. • The wage rate for a job is apportioned along the identified factors. • All other jobs are compared with the list of key jobs and wage rates are determined. An example of how the factor comparison method works is given below:
Merits and Demerits of Factor Comparison Method
MERITS
• Analytical and objective. • Reliable and valid as each job is compared with all other jobs in terms of key factors. • Money values are assigned in a fair way based on an agreed rank order fixed by the job evaluation committee. *Flexible as there is no upper limitation on the rating of a factor
DEMERITS
• Difficult to understand, explain and operate. • Its use of the same criteria to assess all jobs is questionable as jobs differ across and within organizations. *Time consuming and costly. ====================================
###################################################### The organisation I am are referring to
The organization, I am familiar with is a -a large manufacturer/ marketer of safety products
-the products are used as [personal protection safety] [ industrial safety]
-the products are distributed through the distributors as well as sold directly
-the products are sold to various industries like mining/fireservices/defence/
as well as to various manufacturing companies.
-the company employs about 235 people.
-the company has the following functional departments
*marketing
*manufacturing
*sales
*finance/ administration
*human resource
*customer service
*distribution
*warehousing/ transportation
*TQM
==============================================
In job evaluation, we re-visit, the job analysis
technically speaking, and review the job description/
specification.
It is an exercise in job comparison and defining the
relative worth of jobs .
The aim of job evaluation is to provide a systematic and consistent approach to defining the relative worth of jobs within a workplace, single plant or multiple site organisation. It is a process whereby jobs are placed in a rank order according to overall demands placed upon the job holder. It therefore provides a basis for a fair and orderly grading structure.
Only the job is evaluated, not the person doing it. It is a technique of job analysis, assessment and comparison and it is concerned with the demands of the job, such as the experience and the responsibility required to carry out the job. It is not concerned with the total volume of work, the number of people required to do it, the scheduling of work, or the ability of the job holder.
The system assesses each job by examining three main elements of job content which are common to all jobs to one extent or another: 1. Know How – the levels of knowledge, skill and experience(gained through job experience, education and training) which are required to perform the job successfully 2. Problem Solving – the complexity of thinking required to perform the job when applying Know How 3. Accountability – the impact the job has on the organisation and the constraints the job holder has on acting independently The three main elements are broken down further into sub elements: 4. Working conditions.
* Know how
* Depth and Range of Know How
* Planning and Organising
* Communicating and Influencing
* Problem Solving
* Thinking Environment
* Thinking Challenge
* Accountability
* Freedom to Act
* Nature of Impact
* Area of Impact A trained evaluation panel evaluates jobs against each of the elements using detailed job descriptions. The outcome of the evaluation assigns a profile and points score which shows the total size of the job. The points score enables jobs to be placed in a rank order with other jobs IN THE WORKPLACE.
The System is an evaluation method that is widely used . Training in the use of the system takes several days, followed by several months organizational experience to become proficient in its evaluation style. All jobs are evaluated not only by the interpretation of the factor descriptions but within the context of all other jobs in the organization. Knowledge, Problem Solving, Accountability and Working Conditions. The system works on an integration of all the factors. A job is evaluated by looking at the knowledge required to do the job(whether practical or intellectual), the kind of thinking required to solve the problems which the job commonly faces, the responsibilities(accountabilities) assigned, and the work environment in which the work is performed.
In each of the following factors there are a series of descriptions and variables with points assigned to each.
KNOW HOW
‘Know How’ is defined as the "sum total of every kind of knowledge and skill, however, acquired, needed for acceptable job performance."
There are three dimensions in know how:
Practical procedures, specialized techniques and knowledge within occupational fields, commercial functions, and professional and scientific disciplines. Planning, organizing, coordinating, integrating, staffing, directing and or controlling the activities and resources associated with the function of the unit, position, section, etc. Face to face skills needed for various relationships with other people. PROBLEM SOLVING
‘Problem Solving’ is "the amount and nature of the thinking required in the job in the form of analyzing, reasoning, evaluating, creating, using judgment, forming hypotheses, drawing inferences, arriving at conclusions, etc."
There are two dimensions in problem solving:
The environment in which the thinking takes place. The challenge of the thinking to be done; the novelty and complexity of the thinking required. Problem Solving is always expressed as a percentage of Know How since it directly relates to how one uses the knowledge which he or she must have in the job to solve the problems which are encountered as part of that job.
ACCOUNTABILITY
‘Accountability’ is "the answerability for action and its consequences. The measured effect of the job on end results in the organization."
There are three dimensions in accountability:
"Freedom to Act" which is the extent of personal, procedural or systematic guidance and control on the job. "Job Impact on End Results" which is the degree to which the job affects or brings about the results expected of the unit or function being considered. "Magnitude" is the size of the function or unit measured in the most appropriate fashion. WORKING CONDITIONS
‘Working Conditions’ assess the environment in which the job is performed.
Working Conditions are made up of four dimensions:
"Physical Effort" - jobs, which may require levels of physical activity, which may produce physical, stress or fatigue. "Physical Environment" - jobs which may include exposure to unavoidable physical and environmental factors which increase the risk of accident, ill health or discomfort to the employee. "Sensory Attention" - jobs which may require concentrated levels of sensory attention(i.e. seeing, hearing, smelling, tasting, touching) during the work process. "Mental Stress" - refers to exposure to factors inherent in the work process or environment, which increase the risk of such things as tension or anxiety. Each of these four dimensions is measured according to duration, intensity and frequency.
All of these factors are evaluated in each job evaluation and the cumulative total is a total point factor for the position. Because jobs have so many different variables it is possible that a job without a high score in Know How but with severe Working Conditions could result in the same number of points with a job that has the opposite components.
For example, an insurance clerk and a bus driver have few job responsibilities that are similar, but might be evaluated in total at the same point level. Intermediate Insurance Clerk School Bus Driver
Know How 100 87
Problem Solving 19 16
Accountability 25 22
Working Conditions: Physical Effort 2 9 Physical Environment 1 7 Sensory Attention 6 9 Mental Stress 2 5
Total Points 155 155
Although these jobs have little in common and differ in the Hay Points for individual factors their total points are the same and therefore the jobs are considered to be of equal value.
Obviously the trained evaluator must consider the ratings awarded to a Senior Insurance Clerk and Junior Insurance Clerk to maintain the integrity of the rating within job families when evaluating the Intermediate Insurance Clerk.
While these jobs have been evaluated individually important concepts are consistency of application and the establishment of benchmark positions. All positions within an organization are evaluated in comparison to the benchmarks using a consistently applied evaluation tool. JOB EVALUATION HELPS TO DETERMINE THE REWARD RANGE.
IT ALSO PROVIDES OTHER KEY POINTS
BENEFITS * It can be beneficial when the existing grading structure is in need of review * It can help establish or maintain the credibility and acceptability of a grading system * Job evaluation facilitates the accommodation of new or revised jobs into the grading structure
* It can be used by organisations as a basis for job matching and external pay comparisons Job evaluation is used for all types of jobs both blue collar as well white collar . The concern for unit labour costs makes it vitally important for organisations, operating in highly competitive markets, to ensure that the grading level of their employees accurately reflects the relative importance of their jobs to the organisation.
Properly introduced and maintained, job evaluation can help lay the foundation of fair and orderly pay structures and thus improve relationships. Job evaluation may therefore be appropriate in the circumstances.
Anomalies in the pay system/need for a pay structure
Job evaluation can help remove any anomalies or inequities in an organisation's payment system where the existing grading structure is thought to place jobs in an arbitrary order with no justifiable or logical reason. Job evaluation would help remedy this by providing a more structured basis for deciding grading levels. However, job evaluation should not be introduced if the main reason is unrelated to the basic grading structure, for example because a bonus and incentive scheme has fallen into disrepute.
Changes in the job content
Work restructuring within organisations may result in companies having fewer manual employees often with a greater range of duties. In addition, new 'high tech' machinery may have altered traditional roles and blurred the differences between 'operating' and 'craft' skills. All this may have the following effects on existing grading systems:
• they may not be able to cope with the introduction of new jobs or new skills, with a likely increase in the number of grievances about grading
• they may not be able to cope with any 'grade drift', with lower grades having less to do, while other jobs may have drifted upwards, and
• there may be leap-frogging to catch up with pay rates elsewhere in the company, or outside.
Grading grievances
Frequent grievances or disputes over grading or pay may indicate that the existing grading structure is no longer appropriate. If unresolved, such dissatisfaction could result in consequential pay claims, the gradual erosion of differentials between grades, increased costs and deteriorating morale and employment relations. A job evaluation scheme, properly designed and installed with an appeals procedure, can help maintain the credibility and acceptability of a grading structure.
Technological and organisational change
It is important to ensure that the grading system is appropriate to the needs of an organisation particularly following technological and organisational change. Changes arising from new technology may affect jobs in the following ways:
• employees may no longer have control over the quality and quantity of their output where the machine dictates the pace
• mental effort may replace physical effort as an important factor for improving output
• working conditions may change to reflect the new technological process
• employees may be required to do a number of activities previously carried out by others, and
• innovative and creative skills may be required which hitherto were not within the culture of the organisation.
The introduction of flexibility, multi-skilling, team working and new operational methods also have important consequences for job design and the way jobs are organised, and will clearly affect traditional work groupings and pay structures. A further, important advantage of some job evaluation schemes is that new jobs can be more easily fitted into the existing structure.
Discrimination
The Equal Pay Act and the Equal Pay(Amendment) Regulations, make it especially important to maintain a fair and orderly grading structure. Job evaluation may be helpful as a means of ensuring that a grading structure is fair and equitable.
Other benefits
Some job evaluation techniques require the analysis and description of jobs leading to a more detailed and accurate knowledge of their content. This in turn may prompt:
• an opportunity to review roles and policies on selection and training
• improved Human Resource Management through a greater understanding of the skills and training needed for particular jobs, and
• a review of the organisation's structure and working methods, better designed jobs and the identification of poor working conditions and job hazards.
Furthermore, when both employer, employees and their representatives have been jointly involved in a job evaluation exercise, this usually leads to improved understanding, greater trust and better industrial relations. * It can be beneficial when the existing grading structure is in need of review * It can help establish or maintain the credibility and acceptability of a grading system * Job evaluation facilitates the accommodation of new or revised jobs into the grading structure
* It can be used by organisations as a basis for job matching and external pay comparisons
Job evaluation helps many other aspects in the organization, but reward management
is the major areas.
=========================================================
###########################################
4]Explain the performance–linked reward system. Describe the steps involved in designing a performance –linked reward system relating to an organization you are familiar with. Discuss any short comings of the system. Briefly describe the organization your are referring to. The current trend is one of integrated reward approach.
Reward system usually mean the financial reward on organization gives its employees in return for their labour. While the term reward system, not only includes material rewards, but also non-material rewards. The components of a reward system consist of financial rewards(basic and performance pay) and employee benefits, which together comprise total remuneration. They also include non-financial rewards(recognition, promotion, praise, achievement responsibility and personal growth) and in many case a system of performance management. Pay arrangements are central to the cultural initiative as they are the most tangible expression of the working relationship between employer and employee. The integrated reward system includes: Job evaluation and profiling • Defining key performance indicators • Analysis and modification of pay levels and structures to reflect both internal and market relativities • Designing of performance evaluation processes • Structuring of individual, team and corporate performance bonuses Social climate surveys with focus on remuneration • Designing flexible benefits plans • Implementation of new reward components in compensation package • Implementation and assistance in change communications • Training for internal specialists in reward structure planning and maintenance Performance Based Reward is based on the definition of key performance indicators identified as part of job evaluation, and linking these indicators with reward components. A combination of performance measuring system and additional motivational components delivers an integrated performance-based reward system. Flexible Benefit Schemes are a modern approach to the management of budgets for staff remuneration. Employee benefits constitute a considerable portion of staff costs, but they are often expended without the desired effect since employees do not perceive the full value of benefits. This system increases the effectiveness and enable better control. Why reward system is required? These components will be designed, developed and maintained on the basis of reward strategies and policies which will be created within the context of the organizations between strategies, culture and environment: they will be expected to fulfill the following broad aims;
1. Improve Organizational Effectiveness: Support the attainment of the organization's mission, strategies, and help to achieve sustainable, competitive advantage.
2. Support and change culture: Under pin and as necessary help to change the 'organizational culture' as expressed through its values for performance innovation, risks taking, quality, flexibility and team working.
3. Achieve Integration: Be an integrated part of the management process of the organization. This involves playing a key role in a mutually reinforcing and coherent range of personal policies and process. 4. Supportive Managers: Support individual managers in the achievement of their goals.
5. Motivate Employees : Motivate employees to achieve high levels of quality performance.
6. Compete in the Labour Market: Attract and retain high quality people.
7. Increased Commitment: Enhance the commitment of employees to the organization that will a) want to remain members of it, b) develop a strong belief in and acceptance of the values and goals of the organization and c) be ready and willing to exert considerable effort on its behalf.
8. Fairness and Equity: Reward people fairly and consistently according to their contribution and values to the organization.
9. Improved Skills : Upgrade competence and encourage personal development.
10. Improved Quality: Help to achieve continuous improvement in levels of quality and customer service.
11. Develop team working : Improve co-operation and effective team working at all level.
12. Value for money: Pride value for the money for the organization.
13. Manageable: Be easily manageable so that undue administrative burdens are not imposed on managers and members of the personal department.
14. Controllable: Be easily controllable so that the policies can be implemented consistently and costs can be contained within the budget. ==========================================================================
Describe the organisation you are referring to
The organization, I am familiar with is a -a large manufacturer/ marketer of safety products
-the products are used as [personal protection safety] [ industrial safety]
-the products are distributed through the distributors as well as sold directly
-the products are sold to various industries like mining/fireservices/defence/
as well as to various manufacturing companies.
-the company employs about 235 people.
-the company has the following functional departments
*marketing
*manufacturing
*sales
*finance/ administration
*human resource
*customer service
*distribution
*warehousing/ transportation
*TQM
==============================================
THE ORGANIZATION , I ASSOCIATED WITH
HAVE THE FOLLOWING SYSTEM
The Reward systems focus on positive reinforcement. Positive reinforcement is the most effective tool for encouraging desired behavior because it stimulates people to take actions because they want to because they get something of value(internally or externally) for doing it. An effectively designed and managed reward program can drive an organization's change process by positively reinforcing desired behaviors. The SMART criteria. These criteria used when designing and evaluating programs. Programs should be: • Specific. A line of sight should be maintained between rewards and actions. • Meaningful. The achievements rewarded should provide an important return on investment to both the performer and the organization. • Achievable. The employee's or group's goals should be within the reach of the performers. • Reliable. The program should operate according to its principles and purpose. *Timely. The recognition/rewards should be provided frequently enough to make performers feel valued for their efforts
---------------------------------------------------------------------------------------------------------
Performance Management.
The process of performance management reflects how the work gets done and creates the environment in which people feel valued for their achievements. The performance management process includes four critical components: • Focus on what is important to change or be improved. • Measures to determine whether and how much progress is being achieved. • Feedback so that performers will know whether and how much progress is being achieved. • Reinforcement so that everyone celebrates achievements as they are unfolding. Indicators of successful performance management include the following: • All measures are understood by the employees, who can describe the importance of their activities to the agency. Measures address results and behaviors/processes. • A tracking system is used to monitor performance in the areas identified. • The performance measures and progress are displayed in a public area. • Data on the performance charts is current. • The team leaders/managers are actively engaged in coaching staff members and providing assistance to improve performance. • Periodic celebrations mark achievements as they are realized. These celebrations are regarded positively by employees. • Data indicate performance is improving. Recommend that organizations: • focus on variables critical to success; • create timely, chart-oriented feedback; • create celebrations that mean something to the performers; • use performance reviews as an opportunity to reflect "how we won" and "how we lost" make them as often as necessary to cement the learning; • anchor the memory of achievements achievement-oriented firms measure a lot, accomplish milestones frequently, and do much celebrating; • don't rely on annual performance appraisals as the sole source of feedback; • when designing programs, avoid copying programs used by other organizations; and • don't make the design process into the "let's make a form" game. BENEFITS OF REWARD LINKED SYSTEM
Approaches of compensation management
There are 3P approach of developing a compensation policy centered on the fundamentals of paying for Position, Person and Performance. Drawing from external market information and internal policies, this program helps establish guidelines for an equitable grading structure, determine capability requirements and creation of short and long-term incentive plans.
The 3P approach to compensation management supports a company’s strategy, mission and objectives. It is highly proactive and fully integrated into a company’s management practices and business strategy. The 3P system ensures that human resources management plays a central role in management decision making and the achievement of business goals.
• Paying for position • Paying for person • Paying for performance Because it is so important to employees, the issue of pay deserves to be clearly addressed. In spite of their hesitance, managers are capable of dealing with this sometimes difficult issue in a professional and effective manner. By keeping the following basic points about pay in mind, they can address virtually any pay-related topic with their employees in a professional and productive manner.
Specificity is Key
Pay is a topic with many different shades and a variety of implications. Whenever approaching the subject, it is important to work out the details beforehand so that specifics can be clearly communicated. For the manager, this means that the increase amount is nailed down before discussing a promotion with an employee. No chance of misunderstanding or false expectations can be permitted. Far too often, managers are apt to discuss generalities. “It will mean a good increase.” What exactly does that mean in terms of the employee’s monthly budget? If care is not taken here, good news can become the source of conflict and resentment.
By the same token, if asked for a raise, the manager should request that the employee suggest a specific number that he believes reflects his value. Once the employee provides that number, the manager can do his homework and decide what, if anything can be done. The employee can then be given a definitive response.
Pay is Relative
What one employee considers a fantastic increase maybe an insult to another? Each individual has a unique set of creativity and competencies. Pay should be based on the performance, position and the competencies/skills the person is having.
Pay is Not Created Equal
Various forms of pay have different purposes. The two most common forms of direct cash compensation in most companies are base pay and bonus. Base pay is the annual salary or hourly wage paid to an employee given the job he holds, While bonus is typically(or at least should be) rewarded based on the achievement of a goal of the organization. Discussions about bonus payments should be as specific as possible. This is the opportunity to point out particular accomplishments that contributed to overall team or company success. Even if the bonus is paid to all employees based on a simple overall company profit target, the manager should use the opportunity to point out specifically how individual employees helped achieve that target.
Distributing bonus checks presents a unique motivational opportunity for a manager. Handing money to an employee while discussing actions and behaviors he would like to see repeated, creates a powerful link between performance and reward. Discussions about base pay increases can be a bit different. Most companies claim to link their annual base pay increases to performance. In reality, however, base pay decisions take into account a variety of factors, including the relative pay of others in the same job, the company’s increase budget, market practices and where the individual falls within his pay range.
Even when performance is a factor, the manager is faced with the difficult task of evaluating an entire year’s worth of activity and then categorizing it according to the percentage increase options allowed by the budget. It becomes very difficult to pinpoint specific employee actions or accomplishments as the reason for the increase.
For these reasons, it’s appropriate for the discussion about base pay increases to be more general and balanced. Both strengths and weaknesses of the employee should be addressed. The actual increase is then based on an overall assessment, as opposed to a link with one or two specific outcomes. Any other factors that impact the increase percent, such as budget or pay range should be openly discussed as well.
THE REWARD SYSTEM IS TWO-FOLD
1.RECOGNITION FOR PERFORMANCE.
2.PAYMENT. WHICH INCLUDES
-base pay
-cost of living rise
-merit INCREASE , which is based on
*performance against the KEY PERFORMANCE INDICATORS.
*bonus for exceptional performance with the scope of the job position
PAY FOR PERFORMANCE STRUCTURING
The following tentative guidelines are suggested: 1. A performance pay system should be designed to promote the kind of performance an organization needs. In order to do so
o an analysis should first be made of the objectives and results sought o the principles/policies and practices needed to obtain the results(e.g. team work) should be established
o these policies and practices should form part of an overall human resource management strategy.
2. Employees should be consulted in the formulation of the plan(to ascertain the type of rewards most likely to have motivational effect), in regard to its operation and distribution of
rewards, and in monitoring the scheme.
3. The criteria for the determination of performance pay should be
o objective
o measurable and measure only what is important
o that it is operated along with an appraisal system which measures performance appropriately o designed to feed back information to employees, and not only to management
o easily understood
o related to what is controllable, so as to exclude what is beyond the control of employees.
4. The intrinsic reward system should be strengthened if need be, e.g. through
o consultation, communication, participatory systems
o training
o job satisfaction and responsibility
o reorganization of work processes
5. How the performance pay is shared is as important as the quantum, because the manner of sharing affects employees' perceptions as to whether the scheme is equitable.
6. The impact of the scheme also depends on the frequency of the payment. Therefore the reward should follow the performance as soon as possible.
7. The scheme should be given wide publicity within the enterprise.
8. The performance level should be achievable or else the scheme will have no motivational impact.
9. The quantum of pay on account of performance which is placed at risk(i.e. the amount that can be lost due to poor performance) should be carefully determined. At the same time the scheme should be sufficiently flexible to absorb downturns and adequately reward when performance is good =======================================
POSSIBLE NEGATIVE ASPECTS
1. Single Mindedness – “you get what you pay for” – no more, no less. The activities that are rewarded get done, to the exclusion of other activities that are not rewarded. Example: The dysfunctional behaviors that are observed when a sales representative is put on straight commission. 2. Control – externalities can control the outcomes, positive or negative. There can be windfall affects(the bull market improving the stock value of all stock options) or negative externalities(a bear market or recession that lowers the value of all stocks). Employee performance results may be magnified or diluted by these effects.
3. Measurement error – some measures can be “gamed” or manipulated and may not reflect “true” performance. Sales reps can withhold sales and report it in a different period so they are not penalized by a cap on sales commissions. Managers can use “creative accounting” measures to report greater profits than were actually experienced by the firm.
4. Inflexibility – managers or employees may resist change of the basis of compensation because they are comfortable with current basis for pay and want to avoid risk of taking reduction in earnings in new system.
5. Misalignment of incentives – if pay emphasis is on a goal that is no longer relevant, that goal will continue to be emphasized until the pay system places emphasis on a different objective.
For example, managers may emphasize short-term goals, even if long-term goals are more relevant, until the pay system recognizes long-term goals to a greater extent than short-term goals. The reward mix for complex jobs with several goals must reflect the relative value of attaining the mix of goals.
6. Line of Sight problem - division performance and corporate performance should be reflected in the pay system. If division performance and corporate performance are closely linked than both division and corporate performance should contribute incentives to the managers’ pay for performance plan. If division performance is independent of corporate performance, then the emphasis should be on rewards for meeting division goals.
############################################################
You can use job evaluations to:
• Clarify job descriptions so that employees understand the expectations of their roles and the relationship of their roles to other jobs within the organization. • Attract desirable job candidates. • Retain high-potential employees. What is job evaluation?
Job evaluation is a systematic process that you can use to determine the relative level, importance, complexity, and value of each job in your organization. With a successful job evaluation system, you can compare each job to other jobs within your organization.
It is best to perform job evaluation after work analysis. Job evaluation, in conjunction with work analysis, helps you develop a job description that is broad, descriptive, and flexible so that you can adapt the description to your organization's changing needs.
Assess employee contribution
Job evaluation helps you establish and qualify differences in employee contribution across jobs. These differences provide a foundation for employee compensation decisions. The job evaluation process measures the elements of a job and produces an overall score. In each case, you evaluate the job, not the employee who performs the job.
Assess job content and value Typically, job evaluation assesses both the content of a job and the value of a job for your organization.
• Job content refers to the type of work performed and the skills and knowledge necessary to perform the work. • Job value refers to the job's degree of contribution in meeting your organization's goals and the degree of difficulty in filling the job. Factors in job evaluation
Job evaluators often assess jobs based on these factors:
• Training level or qualifications requirements • Knowledge and skills requirements • Complexity of tasks • Interaction with various levels of the organization • Problem-solving and independent judgment • Accountability and responsibility • Decision-making authority • Degree of supervision required • Cross-training requirements • Working conditions • Degree of difficulty in filling job =============================================
Steps in job evaluation
The standard steps in job evaluation include:
Introduce the concept of job evaluation. Obtain management approval for the evaluation. Train the job evaluation selection team. Review and select the job evaluation method. Gather information on all internal jobs. Use information to fully expand job descriptions. Use the selected job evaluation method to rank jobs hierarchically or in groups. Link the ranked jobs with your compensation system or develop a new system. Implement the job evaluation and compensation systems. Periodically review your job evaluation system and the resulting compensation decisions. =========================================
Analyze job evaluation methods
Before implementing job evaluation in your organization, select the most appropriate job evaluation method. Hundreds of job evaluation systems exist. Research the job evaluation methods and resources available online. 4 job evaluation systems are most commonly used:
• Ranking • Classification • Point evaluation • Factor comparison
1.Ranking
Ranking jobs is the easiest, fastest, and least expensive approach to job evaluation. It is also most effective in smaller organizations with few job classifications. To rank positions, order jobs from highest to lowest based on their relative value to your organization.
The process of job ranking typically assigns more value to jobs that require managerial or technical competencies. More value is also assigned to jobs that supervise, exercise decision-making authority, or rely on independent judgment. For example, a job-ranking system might rank the job of CEO as the most valued job within the organization and the job of product assembler as the least valued.
• Advantages Simplicity is the main advantage in using a ranking system. It is also easy to communicate the results to employees, and it is easy to understand. • Disadvantages Ranking jobs is subjective. Jobs are evaluated, and their value and complexity are often assessed on the basis of opinion. Also, when creating a new job, existing jobs must be reranked to accommodate the the new position. -------------------------------------------------
1.Ranking Method APPROACH
Perhaps the simplest method of job evaluation is the ranking method. According to this method, jobs are arranged from highest to lowest, in order of their value or merit to the organization. Jobs also can be arranged according to the relative difficulty in performing them. The jobs are examined as a whole rather than on the basis of important factors in the job; and the job at the top of the list has the highest value and obviously the job at the bottom of the list will have the lowest value.
Jobs are usually ranked in each department and then the department rankings are combined to develop an organizational ranking. The following table is a hypothetical illustration of ranking of jobs.
Table: Array of Jobs according to the Ranking Method
Rank Monthly salaries
1. Accountant Rs 3,000
2. Accounts clerk Rs 1,800
3. Purchase assistant Rs 1,700
4. Machine-operator Rs 1,400
5. Typist Rs 900
6. Office boy Rs 600
The variation in payment of salaries depends on the variation of the nature of the job performed by the employees. The ranking method is simple to understand and practice and it is best suited for a small organization. Its simplicity, however, works to its disadvantage in big organizations because rankings are difficult to develop in a large, complex organization. Moreover, this kind of ranking is highly subjective in nature and may offend many employees. Therefore, a more scientific and fruitful way of job evaluation is called for. =============================
2.Classification
The general purpose of job classification is to create and maintain pay grades for comparable work across your organization.
To conduct a job classification: First, write descriptions for a category of jobs; next, develop standards for each job category by describing the key characteristics of those jobs in the category; finally, match all jobs to the categories based on the similarity of tasks, the decision-making exercised, and the job's contribution to the organization's overall goals.
Universities, government employers and agencies, and other large organizations with limited resources typically use job classification systems. These types of organizations have many types of jobs at diverse locations and must maintain equitable and fair standards across all work settings.
• Advantage Job classification is simple once you establish your categories. You can assign new jobs and jobs with changing responsibilities within the existing system. • Disadvantages Job classification is subjective, so jobs mightfall into several categories. Decisions rely on the judgment of the job evaluator. Job evaluators must evaluate jobs carefully because similar titles might describe different jobs from different work sites. ------------------------------------------------------------------------
2.Classification Method APPROACH
According to this method, a predetermined number of job groups or job classes are established and jobs are assigned to these classifications. This method places groups of jobs into job classes or job grades. Separate classes may include office, clerical, managerial, personnel, etc. Following is a brief description of such a classification in an office.
(a) Class I - Executives: Further classification under this category may be Office manager, Deputy office manager, Office superintendent, Departmental supervisor, etc.
(b) Class II - Skilled workers: Under this category may come the Purchasing assistant, Cashier, Receipts clerk, etc.
(c) Class III - Semiskilled workers: Under this category may come Stenotypists, Machine-operators, Switchboard operators, etc.
(d) Class IV - Semiskilled workers: This category comprises Daftaris, File clerks, Office boys, etc.
The job classification method is less subjective when compared to the earlier ranking method. The system is very easy to understand and acceptable to almost all employees without hesitation. One strong point in favor of the method is that it takes into account all the factors that a job comprises. This system can be effectively used for a variety of jobs.
The weaknesses of the job classification method are:
• Even when the requirements of different jobs differ, they may be combined into a single category, depending on the status a job carries. • It is difficult to write all-inclusive descriptions of a grade. • The method oversimplifies sharp differences between different jobs and different grades. • When individual job descriptions and grade descriptions do not match well, the evaluators have the tendency to classify the job using their subjective judgments. =======================================
3.Point evaluation
Point evaluation is the most widely used job evaluation method. In a point evaluation system, you express the value of a particular job in monetary terms. You first identify compensable factors that a group of jobs possess. Based on these factors, you assign points that numerically represent the description and range of the job.
Examples of compensable factors are skills required, level of decision-making authority, number of reporting staff members, and working conditions.
• Advantage This method is often viewed as less biased than other methods because the job evaluator assigns each job's total points before the compensable factors become part of the equation. • Disadvantages Subjective decisions about compensable factors and the associated points assigned might be dominate. The job evaluator must be aware of biases and ensure that they are not represented in points assigned to jobs that are traditionally held by minority and female employees. -------------------------------------------------------------
3.Point method APPROACH
This method is widely used currently. Here, jobs are expressed in terms of key factors. Points are assigned to each factor after prioritizing each factor in the 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:
(a) Select key jobs. Identify the factors common to all the identified jobs such as skill, effort, responsibility, etc.
(b) 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.
Degree Define
1. Able to carry out simple calculations; High School educated
2. Does all the clerical operations; computer literate; graduate
3 Handles mail, develops contacts, takes initiative and does work independently; post graduate
Assign point values to degrees after fixing a relative value for each key factor. Point Values to Factors along a Scale
Point values for Degrees Total
Factor 1 -2- 3- 4- 5
Skill 10- 20- 30 -40 -50 = 150
Physical effort 8 -16 -24 -32- 40 =120
Mental effort 5 -10 -15 -20 -25 =75
Responsibility 7 -14 -21 -28 -35 =105
Working conditions 6- 12 -18- 24- 30= 90 Maximum total points of all factors depending on their importance to job = 540
4 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.
5 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, usually, is undertaken to collect wage rates of certain key jobs in the organization. Let’s explain this: Conversion of Job Grade Points into Money Value
Point range Daily wage rate(Rs) Job grades of key bank officials
500-600 300-400 1 Officer
600-700 400-500 2 Accountant
700-800 500-600 3 Manager I Scale
800-900 600-700 4 Manager II Scale
900-1,000 700-800 5 Manager III Scale
Merits and Demerits
The point method is a superior and widely used method of evaluating jobs. It forces raters to look into all keys factors and sub-factors of a job. Point values are assigned to all factors in a systematic way, eliminating bias at every stage. It is reliable because raters using similar criteria would get more or less similar answers. “The methodology underlying the approach contributes to a minimum of rating error” . It accounts for differences in wage rates for various jobs on the strength of job factors. Jobs may change over time, but the rating scales established under the point method remain unaffected.
On the negative side, the point method is complex. Preparing a manual for various jobs, fixing values for key and sub-factors, establishing wage rates for different grades, etc., is a time consuming process. According to Decenzo and Robbins, “the key criteria must be carefully and clearly identified, degrees of factors have to be agreed upon in terms that mean the same to all rates, the weight of each criterion has to be established and point values must be assigned to degrees”. This may be too taxing, especially while evaluating managerial jobs where the nature of work(varied, complex, novel) is such that it cannot be expressed in quantifiable numbers.
==============================
4.Factor comparison
Job evaluators rank jobs that have similar responsibilities and tasks according to points assigned to compensable factors. The evaluators then analyze jobs in the external labor market to establish the market rate for such factors. Jobs across the organization are then compared to the benchmark jobs according to the market rate of each job's compensable factors to determine job salaries.
• Advantage This method results in customized job-ranking. • Disadvantage Compensable factor comparison is a time-consuming and subjective process. 4.Factor Comparison Method APPROACH
A more systematic and scientific method of job evaluation is the factor comparison method. Though it is the most complex method of all, it is consistent and appreciable. Under this method, instead of ranking complete jobs, each job is ranked according to a series of factors. These factors include mental effort, physical effort, skill needed, supervisory responsibility, working conditions and other relevant factors(for instance, know-how, problem solving abilities, accountability, etc.). Pay will be assigned in this method by comparing the weights of the factors required for each job, i.e., the present wages paid for key jobs may be divided among the factors weighed by importance(the most important factor, for instance, mental effort, receives the highest weight). In other words, wages are assigned to the job in comparison to its ranking on each job factor.
The steps involved in factor comparison method may be briefly stated thus:
• Select key jobs(say 15 to 20), representing wage/salary levels across the organization. The selected jobs must represent as many departments as possible. • Find the factors in terms of which the jobs are evaluated(such as skill, mental effort, responsibility, physical effort, working conditions, etc.). • Rank the selected jobs under each factor(by each and every member of the job evaluation committee) independently. • Assign money value to each factor and determine the wage rates for each key job. • The wage rate for a job is apportioned along the identified factors. • All other jobs are compared with the list of key jobs and wage rates are determined. An example of how the factor comparison method works is given below:
Merits and Demerits of Factor Comparison Method
MERITS
• Analytical and objective. • Reliable and valid as each job is compared with all other jobs in terms of key factors. • Money values are assigned in a fair way based on an agreed rank order fixed by the job evaluation committee. *Flexible as there is no upper limitation on the rating of a factor
DEMERITS
• Difficult to understand, explain and operate. • Its use of the same criteria to assess all jobs is questionable as jobs differ across and within organizations. *Time consuming and costly. ====================================
###################################################### The organisation I am are referring to
The organization, I am familiar with is a -a large manufacturer/ marketer of safety products
-the products are used as [personal protection safety] [ industrial safety]
-the products are distributed through the distributors as well as sold directly
-the products are sold to various industries like mining/fireservices/defence/
as well as to various manufacturing companies.
-the company employs about 235 people.
-the company has the following functional departments
*marketing
*manufacturing
*sales
*finance/ administration
*human resource
*customer service
*distribution
*warehousing/ transportation
*TQM
==============================================
In job evaluation, we re-visit, the job analysis
technically speaking, and review the job description/
specification.
It is an exercise in job comparison and defining the
relative worth of jobs .
The aim of job evaluation is to provide a systematic and consistent approach to defining the relative worth of jobs within a workplace, single plant or multiple site organisation. It is a process whereby jobs are placed in a rank order according to overall demands placed upon the job holder. It therefore provides a basis for a fair and orderly grading structure.
Only the job is evaluated, not the person doing it. It is a technique of job analysis, assessment and comparison and it is concerned with the demands of the job, such as the experience and the responsibility required to carry out the job. It is not concerned with the total volume of work, the number of people required to do it, the scheduling of work, or the ability of the job holder.
The system assesses each job by examining three main elements of job content which are common to all jobs to one extent or another: 1. Know How – the levels of knowledge, skill and experience(gained through job experience, education and training) which are required to perform the job successfully 2. Problem Solving – the complexity of thinking required to perform the job when applying Know How 3. Accountability – the impact the job has on the organisation and the constraints the job holder has on acting independently The three main elements are broken down further into sub elements: 4. Working conditions.
* Know how
* Depth and Range of Know How
* Planning and Organising
* Communicating and Influencing
* Problem Solving
* Thinking Environment
* Thinking Challenge
* Accountability
* Freedom to Act
* Nature of Impact
* Area of Impact A trained evaluation panel evaluates jobs against each of the elements using detailed job descriptions. The outcome of the evaluation assigns a profile and points score which shows the total size of the job. The points score enables jobs to be placed in a rank order with other jobs IN THE WORKPLACE.
The System is an evaluation method that is widely used . Training in the use of the system takes several days, followed by several months organizational experience to become proficient in its evaluation style. All jobs are evaluated not only by the interpretation of the factor descriptions but within the context of all other jobs in the organization. Knowledge, Problem Solving, Accountability and Working Conditions. The system works on an integration of all the factors. A job is evaluated by looking at the knowledge required to do the job(whether practical or intellectual), the kind of thinking required to solve the problems which the job commonly faces, the responsibilities(accountabilities) assigned, and the work environment in which the work is performed.
In each of the following factors there are a series of descriptions and variables with points assigned to each.
KNOW HOW
‘Know How’ is defined as the "sum total of every kind of knowledge and skill, however, acquired, needed for acceptable job performance."
There are three dimensions in know how:
Practical procedures, specialized techniques and knowledge within occupational fields, commercial functions, and professional and scientific disciplines. Planning, organizing, coordinating, integrating, staffing, directing and or controlling the activities and resources associated with the function of the unit, position, section, etc. Face to face skills needed for various relationships with other people. PROBLEM SOLVING
‘Problem Solving’ is "the amount and nature of the thinking required in the job in the form of analyzing, reasoning, evaluating, creating, using judgment, forming hypotheses, drawing inferences, arriving at conclusions, etc."
There are two dimensions in problem solving:
The environment in which the thinking takes place. The challenge of the thinking to be done; the novelty and complexity of the thinking required. Problem Solving is always expressed as a percentage of Know How since it directly relates to how one uses the knowledge which he or she must have in the job to solve the problems which are encountered as part of that job.
ACCOUNTABILITY
‘Accountability’ is "the answerability for action and its consequences. The measured effect of the job on end results in the organization."
There are three dimensions in accountability:
"Freedom to Act" which is the extent of personal, procedural or systematic guidance and control on the job. "Job Impact on End Results" which is the degree to which the job affects or brings about the results expected of the unit or function being considered. "Magnitude" is the size of the function or unit measured in the most appropriate fashion. WORKING CONDITIONS
‘Working Conditions’ assess the environment in which the job is performed.
Working Conditions are made up of four dimensions:
"Physical Effort" - jobs, which may require levels of physical activity, which may produce physical, stress or fatigue. "Physical Environment" - jobs which may include exposure to unavoidable physical and environmental factors which increase the risk of accident, ill health or discomfort to the employee. "Sensory Attention" - jobs which may require concentrated levels of sensory attention(i.e. seeing, hearing, smelling, tasting, touching) during the work process. "Mental Stress" - refers to exposure to factors inherent in the work process or environment, which increase the risk of such things as tension or anxiety. Each of these four dimensions is measured according to duration, intensity and frequency.
All of these factors are evaluated in each job evaluation and the cumulative total is a total point factor for the position. Because jobs have so many different variables it is possible that a job without a high score in Know How but with severe Working Conditions could result in the same number of points with a job that has the opposite components.
For example, an insurance clerk and a bus driver have few job responsibilities that are similar, but might be evaluated in total at the same point level. Intermediate Insurance Clerk School Bus Driver
Know How 100 87
Problem Solving 19 16
Accountability 25 22
Working Conditions: Physical Effort 2 9 Physical Environment 1 7 Sensory Attention 6 9 Mental Stress 2 5
Total Points 155 155
Although these jobs have little in common and differ in the Hay Points for individual factors their total points are the same and therefore the jobs are considered to be of equal value.
Obviously the trained evaluator must consider the ratings awarded to a Senior Insurance Clerk and Junior Insurance Clerk to maintain the integrity of the rating within job families when evaluating the Intermediate Insurance Clerk.
While these jobs have been evaluated individually important concepts are consistency of application and the establishment of benchmark positions. All positions within an organization are evaluated in comparison to the benchmarks using a consistently applied evaluation tool. JOB EVALUATION HELPS TO DETERMINE THE REWARD RANGE.
IT ALSO PROVIDES OTHER KEY POINTS
BENEFITS * It can be beneficial when the existing grading structure is in need of review * It can help establish or maintain the credibility and acceptability of a grading system * Job evaluation facilitates the accommodation of new or revised jobs into the grading structure
* It can be used by organisations as a basis for job matching and external pay comparisons Job evaluation is used for all types of jobs both blue collar as well white collar . The concern for unit labour costs makes it vitally important for organisations, operating in highly competitive markets, to ensure that the grading level of their employees accurately reflects the relative importance of their jobs to the organisation.
Properly introduced and maintained, job evaluation can help lay the foundation of fair and orderly pay structures and thus improve relationships. Job evaluation may therefore be appropriate in the circumstances.
Anomalies in the pay system/need for a pay structure
Job evaluation can help remove any anomalies or inequities in an organisation's payment system where the existing grading structure is thought to place jobs in an arbitrary order with no justifiable or logical reason. Job evaluation would help remedy this by providing a more structured basis for deciding grading levels. However, job evaluation should not be introduced if the main reason is unrelated to the basic grading structure, for example because a bonus and incentive scheme has fallen into disrepute.
Changes in the job content
Work restructuring within organisations may result in companies having fewer manual employees often with a greater range of duties. In addition, new 'high tech' machinery may have altered traditional roles and blurred the differences between 'operating' and 'craft' skills. All this may have the following effects on existing grading systems:
• they may not be able to cope with the introduction of new jobs or new skills, with a likely increase in the number of grievances about grading
• they may not be able to cope with any 'grade drift', with lower grades having less to do, while other jobs may have drifted upwards, and
• there may be leap-frogging to catch up with pay rates elsewhere in the company, or outside.
Grading grievances
Frequent grievances or disputes over grading or pay may indicate that the existing grading structure is no longer appropriate. If unresolved, such dissatisfaction could result in consequential pay claims, the gradual erosion of differentials between grades, increased costs and deteriorating morale and employment relations. A job evaluation scheme, properly designed and installed with an appeals procedure, can help maintain the credibility and acceptability of a grading structure.
Technological and organisational change
It is important to ensure that the grading system is appropriate to the needs of an organisation particularly following technological and organisational change. Changes arising from new technology may affect jobs in the following ways:
• employees may no longer have control over the quality and quantity of their output where the machine dictates the pace
• mental effort may replace physical effort as an important factor for improving output
• working conditions may change to reflect the new technological process
• employees may be required to do a number of activities previously carried out by others, and
• innovative and creative skills may be required which hitherto were not within the culture of the organisation.
The introduction of flexibility, multi-skilling, team working and new operational methods also have important consequences for job design and the way jobs are organised, and will clearly affect traditional work groupings and pay structures. A further, important advantage of some job evaluation schemes is that new jobs can be more easily fitted into the existing structure.
Discrimination
The Equal Pay Act and the Equal Pay(Amendment) Regulations, make it especially important to maintain a fair and orderly grading structure. Job evaluation may be helpful as a means of ensuring that a grading structure is fair and equitable.
Other benefits
Some job evaluation techniques require the analysis and description of jobs leading to a more detailed and accurate knowledge of their content. This in turn may prompt:
• an opportunity to review roles and policies on selection and training
• improved Human Resource Management through a greater understanding of the skills and training needed for particular jobs, and
• a review of the organisation's structure and working methods, better designed jobs and the identification of poor working conditions and job hazards.
Furthermore, when both employer, employees and their representatives have been jointly involved in a job evaluation exercise, this usually leads to improved understanding, greater trust and better industrial relations. * It can be beneficial when the existing grading structure is in need of review * It can help establish or maintain the credibility and acceptability of a grading system * Job evaluation facilitates the accommodation of new or revised jobs into the grading structure
* It can be used by organisations as a basis for job matching and external pay comparisons
Job evaluation helps many other aspects in the organization, but reward management
is the major areas.
=========================================================
###########################################
4]Explain the performance–linked reward system. Describe the steps involved in designing a performance –linked reward system relating to an organization you are familiar with. Discuss any short comings of the system. Briefly describe the organization your are referring to. The current trend is one of integrated reward approach.
Reward system usually mean the financial reward on organization gives its employees in return for their labour. While the term reward system, not only includes material rewards, but also non-material rewards. The components of a reward system consist of financial rewards(basic and performance pay) and employee benefits, which together comprise total remuneration. They also include non-financial rewards(recognition, promotion, praise, achievement responsibility and personal growth) and in many case a system of performance management. Pay arrangements are central to the cultural initiative as they are the most tangible expression of the working relationship between employer and employee. The integrated reward system includes: Job evaluation and profiling • Defining key performance indicators • Analysis and modification of pay levels and structures to reflect both internal and market relativities • Designing of performance evaluation processes • Structuring of individual, team and corporate performance bonuses Social climate surveys with focus on remuneration • Designing flexible benefits plans • Implementation of new reward components in compensation package • Implementation and assistance in change communications • Training for internal specialists in reward structure planning and maintenance Performance Based Reward is based on the definition of key performance indicators identified as part of job evaluation, and linking these indicators with reward components. A combination of performance measuring system and additional motivational components delivers an integrated performance-based reward system. Flexible Benefit Schemes are a modern approach to the management of budgets for staff remuneration. Employee benefits constitute a considerable portion of staff costs, but they are often expended without the desired effect since employees do not perceive the full value of benefits. This system increases the effectiveness and enable better control. Why reward system is required? These components will be designed, developed and maintained on the basis of reward strategies and policies which will be created within the context of the organizations between strategies, culture and environment: they will be expected to fulfill the following broad aims;
1. Improve Organizational Effectiveness: Support the attainment of the organization's mission, strategies, and help to achieve sustainable, competitive advantage.
2. Support and change culture: Under pin and as necessary help to change the 'organizational culture' as expressed through its values for performance innovation, risks taking, quality, flexibility and team working.
3. Achieve Integration: Be an integrated part of the management process of the organization. This involves playing a key role in a mutually reinforcing and coherent range of personal policies and process. 4. Supportive Managers: Support individual managers in the achievement of their goals.
5. Motivate Employees : Motivate employees to achieve high levels of quality performance.
6. Compete in the Labour Market: Attract and retain high quality people.
7. Increased Commitment: Enhance the commitment of employees to the organization that will a) want to remain members of it, b) develop a strong belief in and acceptance of the values and goals of the organization and c) be ready and willing to exert considerable effort on its behalf.
8. Fairness and Equity: Reward people fairly and consistently according to their contribution and values to the organization.
9. Improved Skills : Upgrade competence and encourage personal development.
10. Improved Quality: Help to achieve continuous improvement in levels of quality and customer service.
11. Develop team working : Improve co-operation and effective team working at all level.
12. Value for money: Pride value for the money for the organization.
13. Manageable: Be easily manageable so that undue administrative burdens are not imposed on managers and members of the personal department.
14. Controllable: Be easily controllable so that the policies can be implemented consistently and costs can be contained within the budget. ==========================================================================
Describe the organisation you are referring to
The organization, I am familiar with is a -a large manufacturer/ marketer of safety products
-the products are used as [personal protection safety] [ industrial safety]
-the products are distributed through the distributors as well as sold directly
-the products are sold to various industries like mining/fireservices/defence/
as well as to various manufacturing companies.
-the company employs about 235 people.
-the company has the following functional departments
*marketing
*manufacturing
*sales
*finance/ administration
*human resource
*customer service
*distribution
*warehousing/ transportation
*TQM
==============================================
THE ORGANIZATION , I ASSOCIATED WITH
HAVE THE FOLLOWING SYSTEM
The Reward systems focus on positive reinforcement. Positive reinforcement is the most effective tool for encouraging desired behavior because it stimulates people to take actions because they want to because they get something of value(internally or externally) for doing it. An effectively designed and managed reward program can drive an organization's change process by positively reinforcing desired behaviors. The SMART criteria. These criteria used when designing and evaluating programs. Programs should be: • Specific. A line of sight should be maintained between rewards and actions. • Meaningful. The achievements rewarded should provide an important return on investment to both the performer and the organization. • Achievable. The employee's or group's goals should be within the reach of the performers. • Reliable. The program should operate according to its principles and purpose. *Timely. The recognition/rewards should be provided frequently enough to make performers feel valued for their efforts
---------------------------------------------------------------------------------------------------------
Performance Management.
The process of performance management reflects how the work gets done and creates the environment in which people feel valued for their achievements. The performance management process includes four critical components: • Focus on what is important to change or be improved. • Measures to determine whether and how much progress is being achieved. • Feedback so that performers will know whether and how much progress is being achieved. • Reinforcement so that everyone celebrates achievements as they are unfolding. Indicators of successful performance management include the following: • All measures are understood by the employees, who can describe the importance of their activities to the agency. Measures address results and behaviors/processes. • A tracking system is used to monitor performance in the areas identified. • The performance measures and progress are displayed in a public area. • Data on the performance charts is current. • The team leaders/managers are actively engaged in coaching staff members and providing assistance to improve performance. • Periodic celebrations mark achievements as they are realized. These celebrations are regarded positively by employees. • Data indicate performance is improving. Recommend that organizations: • focus on variables critical to success; • create timely, chart-oriented feedback; • create celebrations that mean something to the performers; • use performance reviews as an opportunity to reflect "how we won" and "how we lost" make them as often as necessary to cement the learning; • anchor the memory of achievements achievement-oriented firms measure a lot, accomplish milestones frequently, and do much celebrating; • don't rely on annual performance appraisals as the sole source of feedback; • when designing programs, avoid copying programs used by other organizations; and • don't make the design process into the "let's make a form" game. BENEFITS OF REWARD LINKED SYSTEM
Approaches of compensation management
There are 3P approach of developing a compensation policy centered on the fundamentals of paying for Position, Person and Performance. Drawing from external market information and internal policies, this program helps establish guidelines for an equitable grading structure, determine capability requirements and creation of short and long-term incentive plans.
The 3P approach to compensation management supports a company’s strategy, mission and objectives. It is highly proactive and fully integrated into a company’s management practices and business strategy. The 3P system ensures that human resources management plays a central role in management decision making and the achievement of business goals.
• Paying for position • Paying for person • Paying for performance Because it is so important to employees, the issue of pay deserves to be clearly addressed. In spite of their hesitance, managers are capable of dealing with this sometimes difficult issue in a professional and effective manner. By keeping the following basic points about pay in mind, they can address virtually any pay-related topic with their employees in a professional and productive manner.
Specificity is Key
Pay is a topic with many different shades and a variety of implications. Whenever approaching the subject, it is important to work out the details beforehand so that specifics can be clearly communicated. For the manager, this means that the increase amount is nailed down before discussing a promotion with an employee. No chance of misunderstanding or false expectations can be permitted. Far too often, managers are apt to discuss generalities. “It will mean a good increase.” What exactly does that mean in terms of the employee’s monthly budget? If care is not taken here, good news can become the source of conflict and resentment.
By the same token, if asked for a raise, the manager should request that the employee suggest a specific number that he believes reflects his value. Once the employee provides that number, the manager can do his homework and decide what, if anything can be done. The employee can then be given a definitive response.
Pay is Relative
What one employee considers a fantastic increase maybe an insult to another? Each individual has a unique set of creativity and competencies. Pay should be based on the performance, position and the competencies/skills the person is having.
Pay is Not Created Equal
Various forms of pay have different purposes. The two most common forms of direct cash compensation in most companies are base pay and bonus. Base pay is the annual salary or hourly wage paid to an employee given the job he holds, While bonus is typically(or at least should be) rewarded based on the achievement of a goal of the organization. Discussions about bonus payments should be as specific as possible. This is the opportunity to point out particular accomplishments that contributed to overall team or company success. Even if the bonus is paid to all employees based on a simple overall company profit target, the manager should use the opportunity to point out specifically how individual employees helped achieve that target.
Distributing bonus checks presents a unique motivational opportunity for a manager. Handing money to an employee while discussing actions and behaviors he would like to see repeated, creates a powerful link between performance and reward. Discussions about base pay increases can be a bit different. Most companies claim to link their annual base pay increases to performance. In reality, however, base pay decisions take into account a variety of factors, including the relative pay of others in the same job, the company’s increase budget, market practices and where the individual falls within his pay range.
Even when performance is a factor, the manager is faced with the difficult task of evaluating an entire year’s worth of activity and then categorizing it according to the percentage increase options allowed by the budget. It becomes very difficult to pinpoint specific employee actions or accomplishments as the reason for the increase.
For these reasons, it’s appropriate for the discussion about base pay increases to be more general and balanced. Both strengths and weaknesses of the employee should be addressed. The actual increase is then based on an overall assessment, as opposed to a link with one or two specific outcomes. Any other factors that impact the increase percent, such as budget or pay range should be openly discussed as well.
THE REWARD SYSTEM IS TWO-FOLD
1.RECOGNITION FOR PERFORMANCE.
2.PAYMENT. WHICH INCLUDES
-base pay
-cost of living rise
-merit INCREASE , which is based on
*performance against the KEY PERFORMANCE INDICATORS.
*bonus for exceptional performance with the scope of the job position
PAY FOR PERFORMANCE STRUCTURING
The following tentative guidelines are suggested: 1. A performance pay system should be designed to promote the kind of performance an organization needs. In order to do so
o an analysis should first be made of the objectives and results sought o the principles/policies and practices needed to obtain the results(e.g. team work) should be established
o these policies and practices should form part of an overall human resource management strategy.
2. Employees should be consulted in the formulation of the plan(to ascertain the type of rewards most likely to have motivational effect), in regard to its operation and distribution of
rewards, and in monitoring the scheme.
3. The criteria for the determination of performance pay should be
o objective
o measurable and measure only what is important
o that it is operated along with an appraisal system which measures performance appropriately o designed to feed back information to employees, and not only to management
o easily understood
o related to what is controllable, so as to exclude what is beyond the control of employees.
4. The intrinsic reward system should be strengthened if need be, e.g. through
o consultation, communication, participatory systems
o training
o job satisfaction and responsibility
o reorganization of work processes
5. How the performance pay is shared is as important as the quantum, because the manner of sharing affects employees' perceptions as to whether the scheme is equitable.
6. The impact of the scheme also depends on the frequency of the payment. Therefore the reward should follow the performance as soon as possible.
7. The scheme should be given wide publicity within the enterprise.
8. The performance level should be achievable or else the scheme will have no motivational impact.
9. The quantum of pay on account of performance which is placed at risk(i.e. the amount that can be lost due to poor performance) should be carefully determined. At the same time the scheme should be sufficiently flexible to absorb downturns and adequately reward when performance is good =======================================
POSSIBLE NEGATIVE ASPECTS
1. Single Mindedness – “you get what you pay for” – no more, no less. The activities that are rewarded get done, to the exclusion of other activities that are not rewarded. Example: The dysfunctional behaviors that are observed when a sales representative is put on straight commission. 2. Control – externalities can control the outcomes, positive or negative. There can be windfall affects(the bull market improving the stock value of all stock options) or negative externalities(a bear market or recession that lowers the value of all stocks). Employee performance results may be magnified or diluted by these effects.
3. Measurement error – some measures can be “gamed” or manipulated and may not reflect “true” performance. Sales reps can withhold sales and report it in a different period so they are not penalized by a cap on sales commissions. Managers can use “creative accounting” measures to report greater profits than were actually experienced by the firm.
4. Inflexibility – managers or employees may resist change of the basis of compensation because they are comfortable with current basis for pay and want to avoid risk of taking reduction in earnings in new system.
5. Misalignment of incentives – if pay emphasis is on a goal that is no longer relevant, that goal will continue to be emphasized until the pay system places emphasis on a different objective.
For example, managers may emphasize short-term goals, even if long-term goals are more relevant, until the pay system recognizes long-term goals to a greater extent than short-term goals. The reward mix for complex jobs with several goals must reflect the relative value of attaining the mix of goals.
6. Line of Sight problem - division performance and corporate performance should be reflected in the pay system. If division performance and corporate performance are closely linked than both division and corporate performance should contribute incentives to the managers’ pay for performance plan. If division performance is independent of corporate performance, then the emphasis should be on rewards for meeting division goals.
############################################################
- Clynt
- Posts: 14
- Joined: Sat Feb 01, 2014 9:39 pm
2 posts • Page 1 of 1
-
- Related topics
- Replies
- Views
- Last post
-
-
Wage slavery, Gas prices, Marx, Afro's?
by delton » Tue Mar 06, 2012 11:36 pm - 0 Replies
- 81 Views
- Last post by delton
Tue Mar 06, 2012 11:36 pm
-
Wage slavery, Gas prices, Marx, Afro's?
-
-
Wage slavery, Gas prices, Marx, Afro's?
by lundie » Tue Mar 06, 2012 11:36 pm - 4 Replies
- 212 Views
- Last post by rickie
Tue Mar 06, 2012 11:56 pm
-
Wage slavery, Gas prices, Marx, Afro's?
-
-
Amazon Is A Us Company--why Aren't Us-based Mturkers Paid, The Equivalent Of Legal Min. Wage For Time Worked?
1, 2by Amhuinn » Mon Jan 20, 2014 10:58 pm - 10 Replies
- 88 Views
- Last post by huxly
Sun Mar 23, 2014 8:56 am
-
Amazon Is A Us Company--why Aren't Us-based Mturkers Paid, The Equivalent Of Legal Min. Wage For Time Worked?
Powered by phpBB® Forum Software © phpBB Group
