10 Critical "Compensable Factors" in Job Descriptions - HR Daily Advisor
Planned discussion with the employee and his manager. Ex. Selection, Labor Relations, Compensation &. Benefits Job descriptions must be kept up to date to make proper analyze data in the -A compensable factor is any factor used. Answer: There is a profound relationship between compensable factors and job specifications. Following are the points shows relationship. the employees and hamper the work of the organization. Relationship between Compensable Factors and Job Specification. Compensable.
Job analysis The systematic process of collecting information related to the specific nature of a job that provides the knowledge needed to define jobs, write job descriptionsand conduct job evaluation. Job description A summary of the most important features, or essential duties and responsibilitiesof a job.
Compensable Factors Matrix : Human Resources
A job description identifies the nature of the work that is performed, specific duties and responsibilities, outcomes of the performance of these duties and responsibilities, and the employee characteristics education, experience, skills, etc. Job evaluation A systematic procedure designed to aid in establishing pay differentials among jobs using a set of compensable factors contained in a job evaluation plan.
During job evaluation, a job is assigned a degree level on each compensable factor in the job evaluation plan based on the amount or extent of a compensable factor that is required by a job. Job evaluation is based strictly on the minimum requirements and essential duties and responsibilities of a job, and not on the level of performance of an individual in a job.
Job Evaluation at the University was carried out by several committees of job incumbents and supervisors that have knowledge of the jobs they were asked to evaluate. Job evaluation plan The job evaluation plan is a document that contains the compensable factorsdegree levelsand job evaluation points that are used in job evaluation. Each job family at the University has its own job evaluation plan because of the unique nature of the work that is performed by the jobs in each job family.
A job is evaluated using the job evaluation plan that is associated with the job family that it belongs to. Job evaluation points The numerical representation of a degree level. Once job evaluation has been completed, the points for each degree level are summed for a joband the total job evaluation points for all jobs are used to create an internal hierarchy of jobs.
The total job evaluation points for a job can also be used to determine the salary range for jobs that do not have salary survey data by using benchmark jobs, or jobs that have salary survey datato establish a dollar value per job evaluation point.
Job family A group of jobs involving work of the same nature but requiring different skill and responsibility levels. Jobs at the University have been divided into four different job families. Job Family 1includes all administrative support and clerical employees and nonexempt accounting, bookstore, and library employees. Job Family 2 includes crafts, trades and service workers. Job Family 3 includes computer operators, programmers, technicians, and Information Technology employees.
Job Family 4 includes executive, managerial, professional, paraprofessional, and administrative employees. Market pay The average salary that is being paid for a job in a defined labor market. Market pay for jobs at the University was determined using salary survey data from a variety of sources including, but not limited to: Merit pay A reward that recognizes outstanding past performance. Merit programs are designed to pay different amounts depending on an individual's level of performance.
Minimum requirements Also referred to as job specifications, the minimum requirements refer to the attributes that an individual must possess in order to perform a job or to be considered for a job. These attributes can include the level of education, type and amount of experience, training, physical abilities, and other skills and abilities.
Pay grade One of the classes into which jobs of the same or similar values are grouped. All jobs in a pay grade have the same salary range - maximum, midpoint, and minimum.
Each job family has its own set of pay grades and associated salary rangesand the midpoint of each salary range represents the market pay for jobs in that pay grade. Keep in mind that the new pay grades and salary ranges bear no relationship to the former pay grades and salary ranges at the University.
The first digit in the pay grade represents the job family that the pay grade is associated with. The second digit identifies the grade level within the job family. Position Work consisting of responsibilities and duties assignable to one employee. In instances when there is only one person with a certain job title or job descriptionthen the position is the same thing as a job.
If however, there are multiple individuals with the same job title or job descriptionthen each individual is in its own position. Discrimination Issues Although jobs and logically job evaluations are both color-blind and sexless, job evaluation has been cited as both a potential source of, and a solution to, discrimination against women and minorities. Discrimination may result from multiple job evaluation plans in the organization, from the choice or weighting of factors, and from stereotypes attached to jobs.
While more research is needed, the evidence so far does not establish the existence of discrimination in job analysis and job evaluation. A study found no evidence of sex discrimination in the use of the PAQ. The National Science Foundation study cited previously maintains that job evaluation may be a solution to problems of pay discrimination. It also suggests some ways of weighting factors to remove potential sex bias. These views will be discussed in more detail in Chapter The job structure is the hierarchy of jobs within the organization, ordered according to their value and importance to the organization.
Job evaluation involves comparing jobs to each other or to a standard, and then ranking them by the standard of organizational importance. However, the popularity of job evaluation has declined in recent years. Changes in organizations away from rigid bureaucratic structures, have found job evaluation not a useful a tool.
Many organizations are more directly pricing jobs through market pricing. This has struck at the heart of the idea that pay reflects organizational importance to pay as a competitive tool. The first decision to be made in developing a job evaluation plan, is to decide on the factors that account for the importance of the jobs to the organization, called compensable factors. Second, a decision must be made as to what jobs will be placed into the job evaluation plan — all jobs in the organization or some sub-set of jobs leading to whether there will be one or a number of plans in the organization.
Third, a decision needs to be made as to the type of job evaluation plan that will provide the organization with the best results. Here the organization has a number of choices that have been reviewed in this chapter. Job evaluation plans are categorized as being either non-quantitative or quantitative.
Non-quantitative plans, ranking or classification, 1 rate the job as a whole, 2 clearly rely on the judgments of the evaluator, and 3 are generally simpler and more flexible. These non-quantitative plans are used mainly in small organizations and governmental units.
Quantitative plans, factor comparison and point factor, evaluate the job by the use of factors. These are more difficult to set up, provide a basis for determining their accuracy, and are more popular in industry. Job evaluation has a basic dilemma. On one hand, it is a technical function that requires training and expertise to perform.
On the other hand, the usefulness of job evaluation depends on the acceptance by management and employees of the job structure that results from the process. The best way to obtain acceptance is to allow managers and employees a role in the decision making that creates the job structure.
Chapter 11: Job Evaluation
Too often, job evaluation is seen by managers and employees as some mysterious, incomprehensible process that has a considerable impact on their wages. This was the topic of Chapter Obtaining and evaluating wage surveys is the important first step in designing a market pricing system. The discussion in Chapter 8 on evaluating wage surveys needs to be followed to have an accurate market pricing program. Wage surveys need to match the jobs, industry, and geographical region of your organization.
In addition think about these questions: From which markets do we hire employees? To what markets [organizations] do we lose employees? In which markets would we like to compete? Once the wage surveys are chosen the following steps need to be taken: Select jobs to be priced.
The more jobs in the organization that can be included, the easier the job will be. The requirements for jobs to be included are: Importance to the organization Comparable job in the wage surveys These jobs are the benchmark jobs for the organization. Furthermore, these jobs should represent a wide variety of jobs in the organization both horizontally and vertically. Each organizational job description needs to be compared with the job description or brief in the wage surveys for comparability.
This process is often called leveling. This is an extremely important step. Collect the pricing data off of the wage survey. This includes not only base pay but bonuses and other incentive pay as well as any information on benefits.
This data needs to be adjusted to the time in which you are making the decisions. These processes were discussed in Chapter 8. Match steps three and four so that a price is attached to each job. In order to better deal with these jobs and to deal with non-benchmark jobs, the jobs should be grouped into grades.
This process is explained in Chapter Non-benchmark jobs, those for which there is no market equivalent, are set into the structure by slotting or some alternative job evaluation technique. See Parus for further information on market pricing. As we have noted, the first step in job evaluation is job analysis. Job descriptions are prepared, or secured if already available. Select Raters and Jobs to Be Rated.
Raters who will attempt to make unbiased judgments are selected and trained in the rating procedure. Less training is required for ranking than for other methods of job evaluation. If job descriptions are available, it is unnecessary to select as raters only those people who know all the jobs well; this is probably impossible except in very small organizations.
If all the jobs in the organization are to be ranked, it may be wise to start with key jobs. Another approach is to rank jobs by department and later combine the rankings. Select Compensable Factor s. Although ranking is referred to as a "whole-job" approach, different raters may use different attributes to rank jobs. If judgments are to be comparable, compensable factors must be selected and defined. Even as broad a factor as job difficulty or importance is sufficient, so long as it is carefully defined in operational terms.
Seeing that raters understand the factors on which jobs are to be compared, will help ensure that rankings are made based on those factors. Although straight ranking is feasible for a limited number of jobs 20 or lessalternation ranking or paired comparison tends to produce more consistent results.
Straight ranking involves ordering cards one for each job on which job titles or short job briefs have been written. In case more information is needed by raters, it is useful to have the actual job description at hand. Alternation ranking provides raters with a form on which a list of job titles to be ranked are recorded at the left, and an equal number of blanks appear at the right.Job Evaluation-Analytical Method Saber Hussain 11-May-2016
The raters are asked to record at the top of the right-hand column the job title they adjudge the highest, and also cross out that title in the list to the left. Then they record the lowest job in the bottom blank and continue in this manner with the remaining jobs in between, crossing out the job titles from the left-hand list along the way. In paired comparison, raters compare all possible pairs of jobs.
One way to do this is with a pack of cards on which job titles have been recorded, as in straight ranking. Raters compare each pair of jobs at least once. The card of the job adjudged higher is checked after each comparison. After all comparisons have been made, the raters list the jobs, starting with the job with the most check marks and ending with the job with the least. A similar approach is to use a matrix like the one in Figure For each cell in the matrix, the raters provide a check if the job listed on the left is higher than its counterpart on the top.
The number of times a job is checked tabulated in the "Total" column on the right indicates its rank. Although this method of comparing pairs of jobs is less cumbersome, the number of comparisons increases rapidly with the number of jobs.
It is advisable to have several raters rank the jobs independently. Their rankings are then averaged, yielding a composite ranking that is sufficiently accurate. A job comparison matrix Job Classification System Classification methods customarily employ a number of compensable factors. These typically emphasize the difficulty of the work, but also include performance requirements.
The terms used in grade descriptions to distinguish differing amounts of compensable factors create a necessity for judgments to be made. For example, distinguishing between simple, routine, varied, and complex work and between limited, shared, and independent judgment is not automatic. While the judgment involved in such distinctions may produce the flexibility just cited as an advantage, it may also encourage managers to use inflated language in job descriptions and job titles to manipulate the classification of jobs.
Developing a job classification system requires these steps: If it is to function properly, classification, like all other job evaluation methods, must start with job analysis. A description is developed for each job. Sometimes key jobs are analyzed first and their descriptions used in developing grade descriptions; then the other jobs are analyzed and graded.
Job descriptions are reviewed to distill factors that distinguish jobs at different levels. This is often done by selecting key jobs at various levels of the organization, ranking them, and seeking the factors that distinguish them. Obviously, the factors must be acceptable to management and employees. Determine the Number of Classes. The number of classes selected depends upon tradition, job diversity, and the promotion policies of the organization.
Organizations tend to follow similar organizations in this decision. Those favoring more classes argue that more grades mean more promotions and employees approve of this.
Those favoring fewer classes argue that fewer grades permit more management flexibility and a simpler pay structure. Obviously, diversity in the work and organization size increases the need for more classes.
This is a matter of defining classes in sufficient detail to permit raters to readily slot jobs. Usually this is done by describing levels of compensable factors that apply to the jobs in a class.
Often, titles of benchmark jobs are used as examples of jobs that fall into a grade.
Writing grade descriptions is more difficult if one set of classes is developed for the entire organization, than if separate class hierarchies are developed for different occupational groups.
More specific class description eases the task of slotting jobs, but also limits the number of jobs that fit into a class. A committee is usually assigned the writing of class descriptions.
It is often useful to write the descriptions of the two extreme grades first, then those of the others. The committee charged with writing grade descriptions is often also assigned the task of classifying jobs. This involves comparing job descriptions with class descriptions.
The result is a series of classes, each containing a number of jobs that are similar to one another. The jobs in each class are considered to be sufficiently similar to have the same pay. Jobs in other classes are considered dissimilar enough to have different pay. Classification systems have been used more in government organizations than in private ones.
Most are designed to cover a wide range of jobs and are based on the assumption that jobs will be relatively stable in content. Although classification tends to produce more defensible and acceptable job structures than ranking, it may substitute flexibility for precision.
It is easy to understand and communicate, but its results are non-quantitative. Factor Comparison Plans Several variations in the basic method of factor comparison have appeared in response to one or more of the disadvantages of the basic system.
Understanding these modifications requires an understanding of the basic method. For that reason, it is discussed first. As in other job evaluation methods, the first step is to secure job information. Sometimes only key jobs are analyzed prior to construction of the job-comparison scale.
But all jobs to be evaluated are eventually subjected to job analysis. Job descriptions are written in terms of the five universal factors. Note that the factors and their definitions govern the job description. For this reason, the organization will want to determine if its jobs can be described in these terms. It will do this by analyzing some key jobs and deriving compensable factors.
With job information at hand, the job evaluation committee selects 15 to 25 key jobs. This step is critical because the entire method is based upon these jobs. The major criterion for selection, as we have noted, is the essential correctness of the wage rate.
However, the jobs should represent the entire range of jobs to be evaluated and be stable in content. Next, key jobs are ranked on each of the five factors. Committee members individually rank the jobs and then meet as a committee to determine composite ranks.
These jobs are called tentative key jobs. They remain tentative until they are eliminated in later steps or become "true" key jobs. Distribute Wage Rates Across Factors. The next step is to decide, for each key job, how much of its wage rate should be allocated to each factor. This should be done individually and the results merged into one committee allocation.
Compare Vertical and Horizontal Judgments. This involves crosschecking the judgments in steps 3 and 4. If a key job is assigned the same position in both comparisons, the judgments reinforce each other.
If they do not, that job is not a true key job. Making this comparison may involve ranking the money distribution as well, and then comparing the two ranks. This table identifies jobs that are not true key jobs, allowing them to be eliminated from the scale; and it indicates adjustments in the money distribution that would permit sufficient similarity in rankings to retain a job as a benchmark.
Construct the Job-Comparison Scale. The job comparison scale incorporates the corrected money distribution allocations to the key jobs For an example, see Figure This is done by comparing the job descriptions of non-key jobs, one factor at a time, with jobs on the scale to determine the relative position. The evaluated wage for each non-key job is the sum of the allocations to the five factors. Once evaluated, a non-key job becomes another benchmark to use in evaluating the balance of the jobs.
Variations of the Basic Method We have seen that factor comparison concepts are used in other job evaluation plans. The potential bias from the use of dollar-and-cent units, for example, has been met by multiplying monetary values by some constant, resulting in points. Job-comparison Scale The Percentage Method This is a more fundamental modification of basic factor comparison.
It addresses the disadvantage of monetary units and may be used in case of doubt about the corrections of wage rates for key jobs. The percentage method employs vertical and horizontal comparisons of key jobs on factors, as does the basic method. In fact, the two methods are identical in their first three steps. At this point percentages are assigned to the vertical rankings by dividing points on each factor among the key jobs in accordance with their ranks.
The money distribution in the basic method becomes a horizontal ranking of the importance of factors in each job.
This ranking is also translated into percentages by dividing points among the factors in accordance with their ranks. Comparison of vertical and horizontal percentages involves expressing each percentage as a proportion of a common base. Then either the horizontal or the vertical percentage for each factor in each job, or an average of the two, forms the basis of the job-comparison scale.
In practice, the percentages recorded in the scale are usually adjusted from a table of equal-appearing intervals of 15 percent.
Compensable Factors Matrix
Hay, who developed the percentage method, argued that 15 percent differences are the minimum observable in job evaluation. Profiling A profile is a distribution in percentage terms, of the importance of factors in a job. This distribution is used like the percentage method already described.
The well-known Steel Plan, for example, was developed by deriving factor and degree weights statistically, by correlating job rankings by factors with existing wage rates of key jobs. The plan is tailored to the organization. Profiling is used to adjust the guide charts and to check on the evaluation of jobs. The plan may be used for all types of jobs and is increasingly used for all jobs in an organization. The universal factors in the Hay plan are know-how, problem solving, and accountability.
These three factors are broken down into eight dimensions. Know-how skill involves 1 procedures and techniques, 2 breadth of management skills, and 3 person-to-person skills. The two dimensions of problem solving are 1 thinking environment and 2 thinking challenge. Accountability has three dimensions: A fourth factor, working conditions, is sometimes used for jobs in which hazards, environment, or physical demands are deemed important.
The heart of the Hay Plan is its guide charts use of 15 percent intervals. Although these charts appear to be two-dimension point scales, the Hay Group insists that, except for the problem-solving scale, they may be expanded to reflect the size and complexity of the organization. It also states that the definitions of the factors are modified as appropriate to meet the needs of the organization. Profiling is used to develop the relationship among the three scales and to provide an additional comparison with the points assigned from the guide charts.
Jobs are assumed to have characteristic shapes or profiles in terms of problem-solving and accountability requirements. Sales and production jobs, for example, emphasize accountability over problem solving. Research jobs emphasize problem solving more than accountability.
Typically, staff jobs tend to value both. Installation consists of 1 studying the organization and selecting and adjusting guide charts, 2 selecting a sample of benchmark jobs covering all levels and functions, 3 analyzing jobs and writing job descriptions in terms of the three universal factors, 4 selecting a job evaluation committee consisting of line and staff managers, a personnel department representative, often employees, and a Hay consultant, and 5 evaluating benchmark jobs and then all other jobs.
Point values from the three guide charts are added, yielding a single point value for each job. Profiles are then constructed and compared on problem solving and accountability, as an additional evaluation. Note that the Hay plan is independent of the market. Also an organization using the plan must rely heavily on an outside consultant for both installation and maintenance.
Point Factor Plans The steps in building a point-factor plan are as follows: As in all other job evaluation methods, this step comes first. All jobs may be analyzed at this point, or merely a sample of benchmark jobs to be used to design the plan.
A job description is written for each job analyzed. When job information is available, compensable factors are selected. Although the yardsticks on which jobs are to be compared are important in all job evaluation methods, they are especially important in the point-factor method.
Because a number of factors are used, they must be the ones for which the organization is paying. Factors must be defined in sufficient detail to permit raters to use them as yardsticks to evaluate jobs. Such definitions are extremely important because the raters will be referring to them often during their evaluations. When the factors chosen are specific to the organization, the task of defining them is less difficult. Also, it is often argued that definitions may be more precise when the plan is developed for one job family or function.
There seems to be a growing tendency to define factors in more detail. See figure for an example. Determine and Define Factor Degrees. As we have noted, the rating scale for each factor consists of divisions called degrees.
Determining these degrees would be like determining the inch marks on a ruler. It is necessary first to decide the number of divisions, then to ensure that they are equally spaced or represent known distances, and finally to see that they are carefully defined.
The number of degrees depends on the actual range of the factors in the jobs. If, for example, working conditions are seen to be identical for most jobs, and if jobs that differ from the norm have very similar working conditions, then it is sufficient to have no degrees.
If, on the other hand, seven or even more degrees are discernible, that number of degrees is specified. A major problem in determining degrees is to make each degree equidistant from the two adjacent degrees.
This problem is solved in part by selecting the number of degrees actually found to exist and in part by careful definition of degrees. Decision rules such as the following are useful: Limit degrees to the number necessary to distinguish between the jobs. Use terminology that is easy to understand. Use standard job titles as part of degree definitions. Make sure that the applicability of the degree to the job is apparent.
Determine Points for Factors and Degrees. Only rarely are compensable factors assigned equal weight. It is usually determined that some factors are more important than others and should bear more weight. Factor weights may be assigned by committee judgment or statistically. In the committee approach, the procedure is to have committee members 1 carefully study factor and degree definitions, 2 individually rank the factors in order of importance, 3 agree on a ranking, 4 individually distribute percent among the factors, and 5 once more reach agreement.
The result is a set of factor weights representing committee judgment. The weights thereby reflect the judgments of organization members and may contribute to acceptance of the plan. The committee may then complete the scale by assigning points to factors and degrees.
Next a decision is usually made on the total points possible in the plan — say Applying the weights just assigned to this total, yields the maximum value for each factor. For example, a factor carrying 30 percent of the weight has a maximum value of points. Thus the highest degree of this factor carries points. Assigning points to the other degrees may be done by either arithmetic or geometric progression.
In the former, increases are in equal numbers of points from the lowest to the highest degree. In the latter, increases are in equal percentage of points. Arithmetic progression is found in most point plans, especially those designed for one job family rather than the entire organization. But just as different factors usually have different numbers of degrees, some factors may employ geometric progression.
Because it is usually assumed that all jobs include some of a factor, the lowest degree is usually assigned some points. A simple way of assigning points to degrees is as follows: Set the highest degree of a factor by multiplying the weight of the factor by the total possible points.
Set the minimum degree of the factor using the arithmetic or percentage increase figure. Subtract these two figures. Divide the result by the number of steps numbers of degrees minus one. Add this figure successively to the lowest degree. The result of this procedure is an arithmetic progression. Using logarithms and following the same calculations produces a geometric progression.
In the statistical approach to weighting factors, benchmark jobs are evaluated and the points assigned are correlated with an agreed-upon set of wage rates. Regressing this structure of pay rates on the factor degrees assigned each job yields weights that will produce scores closely matching the agreed-upon wage rates.
Factor weights were developed statistically in the Steel Plan, which was mentioned in our discussion of factor comparison. The same approach is used to develop weights for factors derived from quantitative job analysis. The statistical approach is often called the policy-capturing approach.
Whether developed by committee decision or by the statistical method, the rating scales are often tested by evaluating a group of benchmark jobs. If the results are not satisfactory, several adjustments are possible. Benchmark jobs may be added or deleted. Degrees assigned to jobs may be adjusted. The criterion — the pay structure — may be changed; or the weights assigned to factors may be changed.