1. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Chapter 5 Job-Based Structures and Job Evaluation © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.

2. Learning Objectives Job-based structures: Job evaluation Defining job evaluation: Content, value, and external market links “How-to”: Major decisions Job evaluation methods Who should be involved? The final result: Structure Balancing chaos and control 5-2

3. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Job-Based Structures: Job Evaluation Job evaluation Systematically determines the relative worth of jobs Creates a job structure for the organization Is based on a combination of: Job content Skills required Value to the organization Organizational culture External market 5-3

4. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Exhibit 5.1 - Many Ways to Create Internal Structure 5-4

5. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Defining Job Evaluation: Content, Value, and External Market Links Content: What work is performed and how it gets done Structure based on content orders jobs on the basis of the Skills, duties, and responsibilities of the jobs Job value Structure based on job value orders jobs on the basis of the Relative contribution of the skills, duties, and responsibilities to the organization’s goals 5-5

6. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Defining Job Evaluation: Content, Value, and External Market Links Linking content with the external market Value of job content is based on what it can command in the external market Skill level and nature of customer contacts Useful criteria for establishing differences among jobs Higher skill levels or working closely with customers commands higher wages 5-6

7. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Defining Job Evaluation: Content, Value, and External Market Links Technical and process dimensions Job evaluation may be judged according to technical standards Work can be evaluated based on: Skills, effort, responsibilities, and working conditions 5-7

8. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Exhibit 5.2 - Assumptions Underlying Different Views of Job Evaluation 5-8

9. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Exhibit 5.3 - Determining an Internally Aligned Job Structure 5-9

10. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. “How-To”: Major Decisions Establish the purpose Supports organization strategy Supports work flow Is fair to employees Motivates behavior toward organization objectives Single versus multiple plans Use different evaluation plans for diverse work content 5-10

11. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. “How-To”: Major Decisions Benchmark jobs: Include all relevant aspects of work in the evaluation Characteristics of benchmark jobs Contents are well-known and relatively stable Job is not unique to one employer A reasonable proportion of the work force is employed in this job 5-11

12. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Exhibit 5.4 - Benchmark Jobs 5-12

13. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. “How-To”: Major Decisions Diversity in the work can be thought of in terms of : Depth (vertically) Breadth (horizontally) Number of job evaluation plans used hinges on: How detailed an evaluation is required to make pay decisions How much it will cost Choose among job evaluation methods 5-13

14. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Exhibit 5.5 - Comparison of Job Evaluation Methods 5-14

15. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Job Evaluation Methods Ranking Orders job descriptions from highest to lowest Based on a global definition of relative value Types of ranking Alternation ranking: Orders job descriptions alternately at each extreme Paired comparison: Uses a matrix to compare all possible pairs of jobs Disadvantages Criteria is poorly defined Requires evaluators who are knowledgeable about every job under study 5-15

16. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Exhibit 5.7 - Paired Comparison Ranking 5-16

17. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Job Evaluation Methods Classification Series of classes covers the range of jobs Job description is compared to the class descriptions to decide the class it fits Greater specificity of the class definition improves the reliability of evaluation Limits the variety of jobs that can easily be classified Jobs within each class are considered to be equal work and will be paid equally 5-17

18. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Job Evaluation Methods Point method- common characteristics: Compensable factors - Based on: The strategic direction of the business How work contributes to the direction and strategy Factor degrees numerically scaled Weights reflect relative importance of each factor 5-18

19. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Job Evaluation Methods To design a point plan: Conduct job analysis Determine compensable factors Scale the factors Weight the factors according to importance Communicate the plan, train users; prepare manual Apply to nonbenchmark jobs 5-19

20. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Step 1: Conduct Job Analysis Representative sample benchmark jobs is drawn for analysis Content of these jobs is basis for: Defining compensable factors Scaling compensable factors Weighting compensable factors 5-20

21. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Step 2: Determine Compensable Factors Compensable factors Work characteristics that: The organization values Help the organization pursue its strategy and achieve its objectives Based on the strategy and value of the organization Reinforce the organization’s culture, values, business direction May be eliminated if they no longer support the business strategy 5-21

22. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Step 2: Determine Compensable Factors Based on the work itself Acceptable to the stake holders Adapt form existing plans How many Factors Illusion of validity- Belief that factors capture divergent aspects of a job Small numbers- If even one job has a certain characteristic, it is used in the entire work domain 5-22

23. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Exhibit 5.11 - Hay Group Guide Chart— Profile Method 5-23

24. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Exhibit 5.12- Factors in Hay Plan 5-24

25. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Step 3: Scale the Factors Scales reflecting different degrees within each factor are constructed Most scales consist of four to eight degrees Include undefined degrees such as plus and minus around a scale number Interval scaling: Making each degree equidistant from the adjacent degrees 5-25

26. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Step 3: Scale the Factors Criteria for scaling factors: Determine number of degrees necessary to distinguish among jobs Use understandable terminology Anchor degree definitions with benchmark-job titles and/or work behaviors Make it apparent how degree applies to job 5-26

27. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Step 4: Weight the Factors According to Importance Different weights reflect differences in importance attached to each Determination of factor weights Advisory committee allocates 100 percent of the value among factors 5-27

28. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Step 5: Select Criterion Pay Structure Recommend by committee members Uses statistical modeling techniques to determine the weight for each factor Statistical approach is termed policy capturing: To differentiate it from the committee a priori judgment approach Is influenced by weights 5-28

29. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Exhibit 5.15 - Job Evaluation Form 5-29

30. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Step 6: Communicate the Plan and Train Users Manual is developed to: Describe job evaluation method Define compensable factors Provide information to distinguish varying degrees of each factor Users require training and background information on the plan Appeals process may be included Communication is required to build employee acceptance 5-30

31. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Step 7: Apply to Nonbenchmark Jobs Involves applying plan to remaining jobs Plan becomes a tool for managers and HR specialists 5-31

32. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Step 8: Develop Online Software Support Online job evaluation is widely used in larger organizations Can be used by managers and HR generalists 5-32

33. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Who Should be Involved? Managers and employees with a stake in the results Committees, task forces, or teams that include: Representatives from key operating functions Union representatives Compensation professionals 5-33

34. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Who Should be Involved? Design process matters Fairness of the design process helps achieve: Employee and management commitment, trust, and acceptance of results Appeals/review procedures Ensure procedural fairness Procedures should be judged for their susceptibility to political influences 5-34

35. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. The Final Result: Structure Final result of the job analysis – job description – job evaluation process: Structure- A hierarchy of work Organizations commonly have multiple structures: Derived through multiple approaches Applicable to different functional groups or units 5-35

36. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Exhibit 5.17 - Resulting Internal Structures – Job, Skill, and Competency Based 5-36

37. © 2014 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. Balancing Chaos and Control Complex procedures and bureaucracy can diverge focus on objectives Allow flexibility to adapt to changing conditions to: Avoid bureaucracy Increase freedom to manage Flexibility without guidelines increases chaos Balanced guidelines ensure that employees are treated fairly 5-37