Job Evaluation

Presented By:
Ajit Kumar Kar
Job Evaluation

Process to evaluate job to see relative worth or
importance of job.
Job evaluation is evaluation or rating of jobs to
determine their position in job hierarchy.
Job Evaluation process is basis for compensation
management System.
Helps in estimating Basic pay
Once basic pay is determined , Reward, incentive
and benefits are also determined
Why Bother??
The Job Analysis provides the foundation for
almost everything HR is involved in.
Job Descriptions
Employee Selection
Training
Performance Appraisals
Job Classification
Job Evaluation
Job Design
Sources of Job Information
SMEs (Subject Matter Experts)
people who have in-depth knowledge of specific
job under analysis, job skills, and abilities

Job Incumbent
Supervisors
Job Analyst
Methods of Job Analysis
Interviews

Structured Questionnaire / Inventory

Direct Observation

Logbooks / Work Diaries
Objectives Of Job Evaluation

Determines place & position of a job
(Ranks Job)

Clarify responsibility & authority.

Avoid any discrimination against wage
administration.

To ensure employee satisfaction for
compensation
To provide basis for classification of new or
changed jobs.

To manage internal (Different jobs in
organization) & external ( According to
market rate) consistency in compensation

To maintain accurate data.

Principles Of Job Evaluation

Job Dimensions or factors (Knowledge,
Skills, Experience, Responsibility, Working
Condition) have to be properly selected &
rated according to importance.

Factors should be clearly defined to
employees.

The evaluation program should be
explained to all.

Employees must be actively involved in Job
Evaluation Program.

Market factors should be taken into
consideration whole evaluation of jobs
E.g. If there is scarcity of jobs, such job should be
given importance.

Universal Compensable Factors
Skill: the experience, training, ability, and education
required to perform a job under consideration
Universal Factor - Skill
Technical Know-how
Specialized Knowledge
Organizational Awareness
Educational Levels
Specialized Training
Years of Experience Required
Interpersonal Skills
Degree of Supervisory Skills
Universal Compensable
Factors
Effort: the
measurement of the
physical or mental
exertion needed for
performance of a
job
Universal Factor - Effort
Diversity of Tasks
Complexity of Tasks
Creativity of Thinking
Analytical Problem Solving
Physical Application of Skills
Degree of Assistance Available
Universal Compensable Factors
Responsibility: the extent to which an
employer depends on the employee to perform
the job as expected, with emphasis on the
importance of job obligation.
Universal Factor - Responsibility
Decision-making Authority
Scope of the organization under control
Scope of the organization impacted
Degree of integration of work with others
Impact of failure or risk of job
Ability to perform tasks without supervision
Universal Compensable Factors
Working Conditions:
hazards
physical surroundings
of the job.
Universal Factor - Working
Conditions
Potential Hazards Inherent in Job
Degree of Danger Which Can be Exposed to
Others
Impact of Specialized Motor or Concentration
Skills
Degree of Discomfort, Exposure, or Dirtiness
in Doing Job
Process Of Job Evaluation

Gaining acceptance of process
Selecting key jobs for evaluation
Job Description & Job Specification
Selection of evaluation method
Job rating
Assignment of money value to job
Implementation of process
Periodic review
Evaluation & Feedback


Techniques Of Job Evaluation
Non-Quantitative Techniques (2 Types) :
Ranking :
Rank is given to different Jobs
Simplest, Quick, Inexpensive, good For small
Organization
Based on brief Job description
Based on commonsense, guess
Dont have concrete basis
Job specification is not considered
This method ranks job but does not tell
difference between the 2 jobs.
3 Techniques of Ranking :

Relative ranking
A key job is determined & other jobs are
ranked after comparing it with the key job
Paired comparison
Each job is compared with other job and then
Jobs are ranked
Single Factor ranking
Single most important factor of job is
identified & compared with Single most
important factor of other job
Job Classification Or Job Grading
Simple, inexpensive
Jobs are graded
Grades are formed on the basis of
Nature of task/responsibility
Authority associated with job
KSA required
A single grade can be given to different jobs in
organization at a same level
E.g. A grade to jobs of Financial Accountant,
Cost Accountant, management Accountant

Steps :
Analyzing Organization Hierarchy
Determining different dimensions of job
Defining Grades as Grade l, Grade ll on the
basis of Job dimension & Organization
Hierarchy
Classifying jobs under different Grade
Assigning Monetary value to different grades
Quantitative Techniques

Point Rating Method :
Widely used, accurate, dependable
Different scales for different jobs
All managerial jobs : on One scale
All operational jobs : on Second scale
All clerical jobs : on third scale
Wage differentials are systematic
Wage Differentials : Difference in wages paid for same
or similar work due to different reasons

Different Steps are
Determine job factors or compensable factors (KSA,
Effort, Responsibility)
Determine sub-factors
Effort : Mental Effort, Physical Effort
Responsibility : Towards Organization, Towards Co-workers,
Towards Customers
Define Degree statement or Profile Statement
Describe requirements of each sub-factors
There are normally up to 5 degrees associated with each Sub-
factor

Degree1 Degree2 Degree 3 Degree 4 Degree 5
Experience less than
6 months 6 to 1 yr 1-2 yr 2-3 yr 3yr & more
Points 20 40 60 80 100

Assign points to factors, sub-factors & degree
Preparation of chart
Applying the point system
Points helps in determining the pay scale of each
job
Factor Comparison method
Determine factors (between 4 to 7 factors across
different jobs)
Hourly pay, mental requirement, Physical requirement,
Responsibility, Working conditions
Identify Key jobs or bench mark jobs
Secretary (Benchmark job) : Receptionist, stenographer
(similar jobs)
Factor of each benchmark job is compared & ranked
If for secretary if Hourly pay is 8.65 , it will be distributed
among different factors on the basis of importance
Factors are assigned monetary value
Decision Band Method
In this value of job depends on decision
making requirements
In all jobs incumbents has to make some kind
of decision.
DBM distinguishes 6 level of decision making
or Decision bands
Advantages Of job Evaluation
Logical & Objective method of Ranking Jobs.
Makes Wage Administration simpler
Facilitates entry of new jobs in organizational Wage
structure.
If Job maintenance electrician is benchmark job, so
when new job comes for a computer maintenance
electrician, Factors, points , wage can be easily
determined on the basis of benchmark jobs.
Helps in Comparing Organizational wage structure
with competitors.
Information Collected For Job Evaluation can be
used for Selection, Transfer, Promotion of
employees
Limitations Of job Evaluation
Changing Technology brings changes in jobs and
these changes makes Job Evaluation technique
outdated.
If not properly implemented, it may give rise to
grievances
J E brings rigidity in pay system.
In J E scale 4 scales are there : 10,000, 15000, 20000,
25000.
If a new employee joins and deserves at least 12000
But cannot be given as in JE scale 10000 is fixed for a
new employee.
Time taking
Compromise by JE committees due to different
interests groups (Management, Unions)
Concept Of wage & salary
Administration
Concept Of wage & salary
Administration
Basic wages & salaries are defined as Hourly,
weekly, Monthly pay.
Total compensation (incentives, benefits) is
calculated, once basic wage/salary is fixed.
Compensation should be
Fair
Maintain principle of Equity
Match employee expectancy
Purpose of wage & salary
Administration
Attracting talented Resources
Retaining & motivating Employees
Financial Management
If compensation is rational, it will reduce employee
turnover
Legal Requirements

Concept of Different Wages
Minimum wages
Fixed by Government, Enforced by Law
Sufficient wage top fulfill minimum existence
Applicable to all workers & governed by Minimum Wage
act, 1948
Based on 6 Norms
While calculating Min wage it should be considered that 3
persons are dependent on one earner
Minimum Food requirements
Clothing (4 people), House rent ( Government Housing Scheme)
Fuel, lightening, other items( 20 % of min wage)
Children education, medical requirement, provision for old
age/marriage (25 % of min wage)

Fair wages
Higher than minimum wage
Less than Living wage
According to profit of company
According to increase in production
Paid according to financial capacity of
employer/Organization.
Living Wages
Highest in Value
Not only bare essentials of Food, Cloth, Shelter
But also,
Education of children
Protection against ill-health.
Requirements of social needs, like marriage.
Insurance against old age.

Basic wage Plan
Time Wage Plan
Paid for no. of hours
Earn more for overtime
Piece Wage Plan
Paid on the Basis of no. Of products manufactured
Disadvantage : Go Slow (As productivity per worker increases
workers adopt this strategy to prevent management for laying off
workers), Quality can be compromised.
Payment By Results
Wage for each piece of work is fixed
Paid once work is completed
E.g. Decoration of function hall
Skill Based Pay
Paid on the basis of no. of skills possess, expertise
Competency Based Pay
On the basis of KSA of individuals.
Broad Banding
Method of grouping jobs with similar duties,
responsibilities and determining pay that makes
compensation system more flexible.
Broad banding reduces no. of salary levels
Evolved as organization want to flatten their
hierarchies
It has fixed minimum and maximum level, which
overlaps with each other.
If salary band for entry level is 10,000- 18,000 then
salary band for next level can be 12,500-22000
Traditional Narrow band, salary band for entry
level will be 10000-12000 & for next level : 12500-
14500
Advantages

Gives manager a free hand to fix
the pay of individual workers

It reduces employee resistance to
being shifted laterally in
organization

Helps organization to avoid
unnecessary distinction based on
level or status
Variable compensation
Designed to pay in accordance with performance
not in accordance with position.
Some plans are
Production incentives, profit sharing
Gain sharing, Bonus
Variable plans are paid at different levels
Worker level (Piece rate, Time rate)
Manager Level (Creative ideas, achievement of target)
Group level (Reward to whole group)

Executive compensation

To attract and retain chief executives
Criticism : Huge pay package for executives when
company is not doing well

Effective Executive compensation Plan:
Linked with organizational objectives
Restrictive stock option Plan : An employee will be given
right to buy shares but not possession of them till certain
requirements are met
Plan should be transparent
Should be made known to all stakeholders
Wage Differentials

Difference in wages paid for same or similar
work due to different reasons

Work schedule, Knowledge, experience,
Organization capacity. Different business
trend( IT employees are paid more), different
country
National wage Policy
Focus to remove discrimination in wage and salary
levels
In India, due to diversity across different regions, it is
not possible to have a common national wage policy.
Wage fixation depends on no. of criteria's
Local conditions
Cost of living
Paying capacity (Organization, industry, state)
There is regional minimum wage , that is revised regularly
and it is linked with cost of living
Theories/Surveys For wage & salary
Administration
Theories
Minimum wage theory
Bargaining theory of wages
Bargaining power determines wage fixations
Surveys
Working class family income & Expenditure Survey
Helps to analyze income & expenditure data to design center
specific report (state Wise)
Enables to revise Consumer Price index numbers
Occupational Wage survey, Contract labor Survey, Survey
of labor conditions, Annual survey of industries
Wage fixing Institutions & Authorities

Most wage Fixation is done by
Collective Bargaining & Negotiation
Some Government Authorities (pay Commissions &
Wage Boards) determines
Pay Commission : A temporary commission is set
up, generally in 5 years (Neutral)
Earlier there was Wage Board (Tripartite)

Rewards
Extrinsic : Promotion,
Bonus

Intrinsic : Challenging
Assignments,
Recognition
Monetary (Bonus,
Incentives)
Non- Monetary : Club
Memberships
Incentives : ESOP, Annual Performance Incentives
Benefits : Memberships , scholarship for children,
Reimbursement of Medical Expenses, pain vacation
Types of Incentive Plans
Short Term Plans : Employee performance for
short period (day, week, month)
Halsey plan
Rowan Plan
Barth System of Wages
Task- Bonus System
Point Rating System
Progressive Bonus
Halsey plan

This plan tries to combine the merits of time and piece
rate systems and eliminate their limitations.
A certain amount of work is fixed as a standard output,
which is to be completed in a prescribed time.
If completes work before prescribed time employee
gets percentage of wages as extra earnings.
E.g. A worker completes the work in 6 hours, where
prescribed time is 8 hours and hourly rate is Rs.5
Plan percentage of wages ( for those 2 hours) be fixed
at 50%
Extra wage worker has received is = Plan percentage
* Time saved * Hourly Rate
* 2 * 5 = Rs. 5 (He will get Rs.5 for those 2 hours)
Worker eventually earns = Rs.35

Rowan Plan
Worker is guaranteed a minimum wage on time
basis.
A standard time is fixed.
If worker completes it before time, he earns more
for the time saved.
Extra earnings of worker = Time saved * Time
taken * Hourly Rate /Standard Time
= (2*6*5)/8 = 7.50
Total earning = 30 + 7 . 50 = 37.50

Barth System of Wages
Not guarantee of a minimum rate
Not guarantee any wage for Time Saved.
Wages =

Standard Time * Time Taken * Hourly Rate
=
8 * 6 * 5 = 6.9 *5 = 34.5
Task- Bonus System
Used for groups
Emphasize on team work and co-ordination
Here, task of each group member is pre-
determined and he has to achieve it to earn a
Bonus above his standard pay.

Using Gantt Method
A bonus is paid over and above
Time Wage (No. of hours worked)
Using Taylor Method
The rate of piece wage is
raised once task is
accomplished
Point Rating System
Job is rated in terms of a standard time.
After the end of specified time, day or week the
output is assessed.
Organization fix its standard time value as 10
units of production per hour
Let no. of working hour per day is 8 and hourly
rate is Rs.5
At the end of day worker produces 100 Units i.e.
equivalent to 10 hours of production as per
standard time value
Worker is paid Rs. 50 @ Rs. 5 /hr.

Progressive Bonus
In this system of incentive payment, earnings
increase at a progressive rate once the output
crosses the minimum or standard output.
Payment of bonus starts at a specified level of output
say 75% of the standard output.

A minimum or standard output is fixed
If able to achieve 75% of output- Receive Bonus
Worker who produce above this level are paid
bonus, which increases slowly at first then rapidly
.
Worker who do not achieve minimum output are
paid daily wages at hourly rate.
Long term plans

Employee performance for a long period
Annual Bonus
Profit-Sharing Plan
Distribution Plan
Deferred Plan
Combination Plan
Gain Sharing
Employee Stock plans
Employee Stock Purchase Plan :
Acquire share but cannot sell as shares are in lock-in-period
Restricted Stock plan
Employee Stock Option scheme:
Option to acquire share at future dates.
Stock Appreciation Rights
Phantom Stock
Protects holder against any depriciation in value of stock
Premium Priced Options

Non-Monetary Incentives

Recognition
A challenging Assignment
Additional Responsibility
Free gifts, Free Vacations
Awards for Exceptional performance
Guidelines For Effective Incentive
Plans
Linked with employee
performance
Communicated to all.
Employees suggestions should
be valued
Include monetary & non-
monetary incentives


Possible to measure value of non-monetary
plans
Incentive plan should be flexible
Should minimally affected by external factors
like stock market performance & industry
performance
Employee Benefits
Employee Benefits
Free & subsidized lunch
Medical facility
Pain Holiday /vacation
LTA (Leave travel
Allowance)
Travel cost is covered,
Entire cost is not covered
Retiral Benefits : PF
Gratuity, Pension
Employee Insurance
Educational allowances,
Merit scholarships
Subsidized Quarters
Transportation facility
Recreational facilities
Get credit card at subsidized
fee
Tax Assistance
Interest free loan
Cafeteria, rest rooms
Study Leave
Company Sponsored Study
Club Membership
Maternity Leave
Childcare Centers

History & Evolution of Employee
Benefits
Ahmedabad based Calico Mills started: Medical
Benefits
Tata : Medical Unit
Delhi Cloth Mills : Housing schemes
Indian Parliament passed may law
Gratuity act, bonus Act, factories act, etc
Trade Union became stronger

Modern Concepts in Employee
Benefits
Golden parachute
Provided to Top Executives when company is
taken over by another firm resulting in loss of job
If job is terminated due to merger, acquisition
employee will receive large benefits in form of
cash bonus, stock options
Cash Bonus, Stock Options, Continuation of the
salary, Retirement benefits
Severance payments
Offered to employees who retire or give resignation
Can be given to employees who are fired
Stock options
Retirement benefits
Assistance in searching new jobs
Medical, dental , life insurance
Payment for unused vacation & Sick Leave
Payment based on years of service

Cafeteria Benefit Plan
Employee are given choice in selecting most suitable schemes
Employee chooses benefits that best fits their needs