Job Analysis support in pay decisions
Job analysis involves collecting information that describes the characteristics and requirements of a certain kind of job. This information may include the required skills, experience, personal behavior and specific duties to be performed among others. It is through the data collected during job analysis that management decisions such as recruitment, staff selection, training and development and performance management (which include compensation) are made. Job analysis makes it possible for the management to make comparisons among various types of work which may differ depending on the required skills, experience, and scope of work as well as ranking in the organization chart. It is on these specifications that the payment decisions are based.
Job analysis allows for job description and evaluation which makes it possible for the management to categorize jobs and develop compensation systems that suit each category of job. In addition, job analysis will be influential during performance appraisals, where the management will decide on whether to adjust pay for the job or otherwise depending on the performance (Prien, Goodstein, and Gamble, 2009, p. 16).
During job analysis, different kinds of work are considered and grouped according to their similarity in terms of education level required, experience, creativity, level of responsibility, amount of responsibility, personnel risk involved and level of independence required. A combination of similar specifications will form similar tasks that will combine to a job. In normal circumstances, similar jobs will attract similar compensation since the scope of work done is uniform.
The data collected during job analysis should be adequate to constitute identification, definition and description of a job. The reliability and acceptability of this information will help to compare jobs and make payment decisions based. Job analysis will not only look at the content of the job which include task inventory and task objective, but also on the employee characteristics such as internal relationship and external relationship.
Employee reaction to Job Evaluation
Job evaluation involves comparing different jobs within the organization, and establishing the difference between them in the organizational structure. This can be done through job ranking or job rating. Different jobs differ due to various factors such as education, experience and level of authority among others, and therefore it becomes important to differentiate them in order to have a concise and stable organizational structure. For instance, using rating system to evaluate jobs may need to look at things like education level required or experience and then rating them proportionately. In addition, job evaluation will give rise to the requirement of job accountability, responsibility and problem solving. It is through the job evaluation that the grading of the jobs will be done.
The ten subordinates should not be afraid of job evaluation as it will serve as a means of clarifying their roles in the organization. The evaluation will help the employees to understand their jobs and the level of accountability required from them through grading. It will also set a system of communication as well as aligning reporting structures.
In most cases, job evaluation will be used as a basis of fixing salaries since there will be clarification of the roles and their rank. In this case, jobs that are ranked high (in terms of responsibility, problem solving decision making) will receive higher compensation than those ranked low.
Usefulness of Person-based approach
Person-based compensation approach requires that the employees pay be made depending on the level of competency and skills held by the employee. Job evaluation using person-based compensation plan is useful in that it is compatible with the lean organizational structure which offers flexibility and specialization. The plan encourages skills and knowledge acquisition and therefore helps to create a multi-skilled workforce.
Person-based approach enhances organizational performance through supporting the flow of work, fair treatment of employees, and ensuring employees direct their behavior towards the organizational goals. In this approach, the level of seniority does not matter as long as the employee has the relevant skills. Since the reward is based on the person’s ability and inherent strength, the structure becomes more acceptable and creates a sense of satisfaction to the employees, thereby motivating them to seek opportunities for higher roles through training.
Person-based approach creates motivation on employees, allowing them to transfer their skills and competencies from one job to another since it is mostly applicable in an organizational structure that promotes horizontal communication. In addition, due to its flexibility, internal interactions which promote teamwork are enhanced and general employee performance improved.
Internal Pay structure, differences between job-based and person-based approach
Every organization is involved in one way or another in designing pay structure or compensation plan. The compensation may be informal or formal depending on the organization. The purpose of the pay structure will differ from one organization to another, but the main reasons are to comply with regulations and solve human resource issues such as employee attraction, retention and motivation. The process of designing the pay structure is important as it should be aimed at addressing the various aspects of the organization including managing the employees, organizational communication structures, comparative pay rates in the market, cash vs. benefits mix, compensation basis (performance or position), and the impact of compensation plan on other organization objective.
Job-based pay structure involves making compensation to employees on the basis of the actual job performed. In this pay structure, value will be placed on a job whereby, and then compensation made on the basis of the rank, although market rates are also considered. The highly valued job will be compensated more than the job in lower grade. Employees in the same job will be paid the same regardless of the skills and abilities they possess.
Person-based pay structure is based on the employee’s skills and competence. An employee will be compensated according to the level of knowledge, amount of skills and the level of competency that the employee portrays in performing his/her job. Usually, employees with high skills, knowledge and competency will be paid more than those with lower. Although market analysis may help design the structure, its lack of popularity in the market makes it complicated.
Pay ranges, grades and pay bands
Pay ranges and grades are modes of compensation that involve setting minimum and maximum levels (brackets) of payment for jobs falling within the same job grade. Job grade on the other hand involve ranking or rating jobs that have the same task, and depending on the evaluation; while pay bands involves clustering various jobs to one broadband depending on the level of responsibility, but they are usually broader than pay ranges. Pay ranges spread between 50-150% while pay bands may spread between 100-400%.
Different organizations will use either pay range or pay band depending on internal structures. For instance an organization will use pay range to ensure that jobs that fall in the same pay grade fall in the same pay range and also to ensure that there is clarity on the organization hierarchy and reporting relationships. According to Worldatwork (2007, p. 100) organizations may use pay ranges to “determine the size and frequency of merit increases” whereby high performing employees being paid high percentage above the midpoint.
Pay bands on the other hand are used by organizations that aim at eliminating the weaknesses of pay ranges such as inflexibility, lack of adjusting to the market changes and failure to promote skill enhancement through lateral movements.
Pay bands may be clustered to form a pay grade that results to internal competitive zones or bands within bands. Since pay bands involve various positions, comparisons should be based on the market or competitive zone (Worldatwork, 2007, p. 101).
References
Prien, et al. (2009). A Practical Guide to Job Analysis. NY, John Wiley and Sons.
Worldatwork. (2007). The World at Work handbook of compensation, benefits & total rewards: a comprehensive guide for HR professionals. NY, John Wiley and Sons.