 |
 |
SERVICES TUNED TO TODAY'S WORLD |
|
|
|
Job Evaluation Systems:
|
Paying employees less than the work they perform is worth is false value at best. And the hidden cost of paying employees more than necessary is a double whammy. It is wasteful on a common-sense level, but it is even more harmful because of its impact on employees who see other employees whose jobs have less responsibility than theirs being paid above what they perceive as fair. If productivity increases are to achieve their desired effect, they must be accompanied by a sound system of compensation that assures that each payroll dollar brings the best possible return in terms of employee good will, sense of satisfaction, and sense of fairness. |
There is a time- and experience-tested tool that addresses these issues fully, effectively, and inexpensively. It is the process of job evaluation.
If an organization is to remain competitive and able to attract and keep a staff of competent and motivated employees, it must achieve two objectives.
External Equity
Maintaining external equity means that the organization's levels of pay compare favorably and competitively with the salaries offered by comparable organizations within the competitive labor market for similar jobs. Essentially, external equity is achieved by making certain that highly visible generic positions are being paid at levels that salary surveys and other data indicate are going rates in the marketplace from which employees are recruited. Maintaining external equity appears relatively simple. For example, when salaries for such a barometer position as Registered Nurse are advertised and publicized at a given level, an organization can respond accordingly. Similarly, salaries of an X-ray or laboratory technologist can be ascertained and adjustments in salary made.
Many organizations maintain external equity and believe that this is sufficient to satisfy employees. They also may be living under the delusion that this is all that is necessary to have a sound corporate compensation program. This is a costly self-deception. |
Obviously, it is necessary to be competitive in order to attract new employees, but there is an element of compensation even more important to employees, particularly in relation to improving the retention of key employees. In fact, if an organization has a choice between two elements, the maintaining of external equity would come in second. We are referring to internal equity.
Internal Equity
A cornerstone of good employee relations is the paying of salaries that each employee believes reflect his or her level of responsibility and value compared with those of other employees. When employees believe that management is not recognizing their contributions or service to the hospital, external equity drops in importance. More significant is the fact that even if there is sound external equity, an employee who believes his or her salary is not "fair" will find fault with the organization's overall pay structure and most likely will conclude that external equity, or competitiveness, also is poor.
When internal equity is not present, employees become soured on management, and the cost of maintaining external equity largely is wasted because employees may not believe that it exists. An employee's sense of the organization's entire pay policy is tainted by perceptions of how that individual is treated. |
It is reasonable to assume that every successful major organization maintains external equity. Without the salaries to attract workers, these organizations couldn't survive. It is just as reasonable to assume that every organization that considers itself to be successful and a leader in its field has developed and maintained a strong internal equity as well. What these organizations have in place is some form of job evaluation.
By definition, job evaluation is a method of determining the relative worth of every position in the organization to all others. It is a compensation tool that recognizes the inherent responsibility and functions of each job and determines how they compare with the responsibilities and duties of other jobs. Proper placement is the key step in constructing salary scales that reflect the relative worth of jobs to the organization in a pattern that is seen as fair by employees.
A job evaluation should be seen as an investment and not as a cost. Its value in ensuring sound employee relations is far greater than any start-up cost, and from a more pragmatic view, the economies realize as payroll dollars are used more effectively provide an excellent return on investment. On a straight bottom-line calculation, the cost of a job evaluation program should be paid back in less than three to three-and-a-half years.
Job descriptions are often maligned, but when it comes to job evaluation, they are the indispensable core on which all pay scales should be built. The job description is no more than a photograph of what the person does, and though it has many valuable uses (in orienting and training new employees, serving as a focus for performance appraisal, clarifying duties between manager and employee, etc.), it is the only assurance management has that payroll dollars are being spent for responsibilities and not for job titles or false assumptions.
Though job descriptions should have a consistent style and format, it is more important that they be accurate, no matter how they are written. And because employees know their jobs better than anyone, including their supervisors, the involvement of employees in the preparation of job descriptions should be mandatory. In this way, there is the highest assurance that the job description is accurate, while the employee's participation tends to build in greater acceptance of the end results.
While sound job descriptions are frequently best developed with outside assistance, they also can be developed by the human resources department. In smaller organizations with few employee relations specialists, recruiting a number of job description writers from throughout the staff is a practical alternative. Every organization has people who enjoy writing and who are good at it. They can be taught how to write job descriptions, thus providing the organization with a permanent in-house capability.
A number of basic techniques can be employed, the most suitable being determined by the characteristics of the organization, including its size, the number of jobs involved, the time available for the study, the past experience of those responsible for the effort, and other organizational traditions.
1. Qualitative Systems
Qualitative methods of job evaluation are distinguished by the fact that they involve the analysis of jobs as a whole. There is no attempt to isolate the components that comprise the position. Essentially there are two qualitative systems.
Ranking
Straight ranking of jobs is the simplest of all job evaluation methods; however, it is effective only where there re relatively few positions to be evaluated (customarily less than 30) and where it is possible to make logical comparisons between jobs with common characteristics, such as clerical, technical, etc. Ranking jobs can be as simple as placing job tittles on 3x5 cards, followed by a sorting process that places the jobs in order of their importance to the organization.
To simplify ranking and to make it possible to rank a maximum number of positions, a technique called paired comparisons can be used. As illustrated in Figure 21-1, a matrix is constructed such that jobs are listed on both vertical and horizontal axes. Comparisons now are made between two jobs at a time, an easier and less ambiguous process than attempting to rank a number of jobs at the same time. When each job has been compared with others, it is then possible to add up the relative rankings for each to determine the final listing.
When rankings have been completed, jobs that are considered to be relatively close to each other are grouped, and these groupings are turned into salary grades.
 |
Classification System
This second qualitative approach can be used where an organization has a larger number of positions and where the nature of these jobs may be dissimilar.
In the classification system, jobs are sorted, much as books are sorted in a library. Different categories are defined that describe the level of complexity and the relative importance. For example, the highest classification level might be defined as one that requires a Ph.D. level of education, extensive background and experience in several professional or technical disciplines, and the ability to solve problems of complex nature and that has a critical impact on the organization. In contrast, the lowest classification level might include jobs that are simple and routine in nature, requiring only an ability to read and write, and that consist of duties and functions that can be learned easily in a short period of time.
When the classifications have been defined, and this can be a difficult and challenging assignment, jobs are then reviewed and placed into the correct classifications, just as books are placed according to categories on a library shelf. After they have been placed in appropriate classifications, the jobs are then ranked. The result is a listing of all jobs in the organization from top to bottom. The grouping of jobs into grades would then follow, guided by the classifications.
2. Quantitative Systems
Health care organization usually are more complex and contain so many jobs that using a qualitative process is impractical. In such cases, one of two quantitative approaches is usually selected. Both of these approaches break the jobs down into compensable parts so that it becomes possible to evaluate the total worth of a job by adding up the values of its compensable parts.
Factor Comparison
This method of job evaluation, which has fallen into disuse, is based on a process that compares the degree a compensable factor is present in a particular job with the degree to which it is present key benchmark jobs. Called factor comparison, this process first involves identifying these key benchmark jobs and dividing them into their compensable factors; each factor is then assigned a dollar value, based on the job's total worth in the competitive marketplace.
Alternatively, if a market survey is not used, it is possible to divide each key job into component factors by identifying the percentage each factor represents as a part of the whole. For example, education, experience, working conditions, etc., would each be considered worth a certain percentage of the total value of the job. When these percentages have been established, comparisons are made to other jobs, also by the compensable factors. The committee or individual responsible for job evaluation determines whether other jobs have more or less of that particular factor and assigns a percentage. (When these percentages are totaled, they might add up to more than 100% or less than 100%.)
When all jobs have been evaluated, a salary survey of the market is conducted for each of the key benchmark jobs. When salaries have been established for them, other jobs are slotted in at rates that maintain the same percentages. For example, if the hourly salary for a key benchmark job has been established at $9 and another job is valued at 90 percent of the key job, that second job will be given a salary of $8.10 per hour.
The difficulty with this approach is that in the volatile employment market that exists in a very rapidly changing business environment, the key jobs do not remain constant. Thus, making comparisons to changing key jobs can throw the entire wage structure into disarray. It is for this reason that the point system described below has become the most frequently used method of job evaluation today.
Point Method
The most widely used and popular approach to job evaluation is a system whereby points are awarded to each job, based on the extent to which the job possesses compensable factors as compared with an objective standard rather than another job. For example, different amounts of points would be given for varying levels of education required. Likewise, for a factor isolating the amount of mental demands (nature and complexity of decision making, application of education, etc.) inherent in the job, varying numbers of points would be awarded that reflect the extent to which these mental demands must be met in order to carry out the job functions.
This method is preferred because objectivity is built in and because the system can remain in place over a long period of time, even though individual jobs used in the factor comparison method may have changed. Exhibit 21-1 shows how several degrees are defined and points allocated to them.
 |
Obviously, after points are totaled, there is a complete ranking of all jobs that becomes the basis for determining job grades and eventually salary scales.
Hybrid Approaches
Experienced compensation consultants frequently develop and perfect hybrid plans that can be fine tuned to an organization. This generally is not done by the organization itself because the process usually requires a sophisticated compensation administrator. An error in developing the basic plan can be costly in terms of the program's not achieving its goals. In fact, a poorly designed job evaluation system can be counterproductive and further diminish the organization's employee relations and economic health. It is best to use tried and tested plans or to bring in competent, experienced consultants.
An organization can develop its own in-house evaluation system; however, if a quantitative approach is to be used, the task of developing a program can be formidable, unless there is a program that is available for adoption. If improper assumptions are made when evaluation values are determined, the results can prove to be unusable. Certainly, an in-house program can be fine tuned to the organization, but because results have to be validated, developing a custom program can be time consuming and costly.
To avoid these difficulties, many an organization either recruits trained compensation specialists as part of its human relations department or retains a compensation consultant to set up a program and train its staff to maintain the system after installation. In the short as well as long run, retaining an experienced consultant is usually the most cost effective method if the consultant will train the organization's staff and then turn the system over to them, A consultant who controls the evaluation process permanently prevents the organization from developing the strength derived from the training of its personnel. In fact, the greatest return on the investment of money and energy results from the selection of a consultant who is willing to delegate most of the work to the organization's staff after training them.
Whomever is selected to supervise the process, consideration always should be given to the use of a committee for the actual scoring. Using a single individual, whether an employee or a consultant, can reduce the probability of success and employee support. Moreover, a single individual's values and decisions are easily subject to question and attack by employees, and that single individual does not ensure lasting validity because if he or she is replaced by someone with a different perspective and value system, the scoring of jobs can take different directions. And if the individual doing the evaluation is neither respected nor seen as knowledgeable, the level of acceptance can drop to an unacceptable point. A committee made of of five to eight well-respected senior managers who represent all viewpoints of the organization can assure that the final scores will have the best balance and will be supported by employees who feel their values and interests are represented. A committee also ensures that scoring is consistent over a long period of time: even if committee members are replaced periodically, the value system that has already been established is maintained by the remaining committee members and is taught to the replacements.
The committee, most commonly chaired by the human resources executive, should represent as close to 80 percent of the population of the organization as possible. This immediately builds a high probability of success because if the committee members agree on the results, they have, in fact, solved most of the potential problems that might arise later. Deliberations by a committee might take longer than those carried out by a single individual, but the extra time is more than made up for by good results that assure that the organization has the most sound internal equity system possible.
As with any good system or mechanical device, careful maintenance is needed if job evaluation is to continue functioning smoothly over a long period of time. Too frequently, an organization makes a sizable investment in a job evaluation program, and then if fails to appoint a specialist capable of keeping the program current and in good working order.
A number of things happen over time. New jobs are created, current jobs change, and responsibilities decrease and increase. Each of these happenings requires new evaluations, re-evaluations, and perhaps placements into new or different grades.
No matter how large an organization is, it should have an individual trained in the administration of the job evaluation program. Large organizations can have compensation specialists with training and education, as well as experience in the process. Smaller organizations should invest in the training of an individual on the essentials of compensation administration, though that individual might have access to expert advice from the outside to ensure that the program is maintained, that salary surveys are conducted properly, and that adjustments in the scales are done within sound compensation parameters.
Job evaluation is a proven, sound, and
extremely cost-effective approach to stretching payroll dollars and guaranteeing good
employee relations. Job evaluation strategies can be tailored to every type of
organization and to all characteristics of an employee work force. And as business
competition increases, job evaluation should be seen as an indispensable tool for
obtaining the greatest return on payroll dollars and achieving the highest level of
employee productivity.
|
This site created and hosted by: The Internet Business Exchange, Inc.
|
