Topic7.1c2 compensation how_to_createa_market-competitive_payplannew

1. HUMAN RESOURCES
MANAGEMENT
HOW TO CREATE A MARKET-
COMPETITIVE PAY PLAN
Dyah Pramanik, MM
[ ]
Copyright © 2011 Pearson Education,
Inc. publishing as Prentice Hall
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2. Quantitative Job
Evaluation Methods
• Factor Comparison Job Evaluation Method
Step 1. Obtain job information
Step 2. Select key benchmark jobs
Step 3. Rank key jobs by factor
Step 4. Distribute wage rates by factor
Step 5. Rank key jobs according to wages
assigned to each factor
Step 6. Compare the two sets of rankings to
screen out unusable key jobs
Step 7. Construct the job-comparison scale
Step 8. Use the job-comparison scale

3. 8–3
1. Mental Requirements
Either the possessionof and/or the active
application of the following:
• (inherent) Mental traits, such as intelligence,
memory, reasoning, facility in verbal expression,
ability to get along with people, and
imagination.
• (acquired) General education, such as
grammar and arithmetic; or general
information as to sports, world events,etc.
• (acquired) Specialized knowledge, such as
chemistry, engineering, accounting,
advertising, etc.

4. 2. Skill Requirements
• (acquired) Facility in muscular coordination, as in operating
machines, repetitive movements, careful coordinations, dexterity,
assembling, sorting, etc.
• (acquired) Specific job knowledge necessary to the muscular
coordination only; acquired by performance of the work and not
to be confused with general education or specialized
knowledge. It is very largely training in the interpretation of
sensory impressions.
Examples
• In operating an adding machine, the knowledge of which key to
depress for a subtotal would be skill.
• In automobile repair, the ability to determine the significance of
a knock in the motor would be skill.
• In hand-firing a boiler, the ability to determine from the
appearance of the firebed how coal should be shoveled over
the surface would be skill.

5. 3.Physical Requirements
• Physical effort, such as sitting, standing, walking, climbing,
pulling, lifting, etc.; both the amount exercised and the
degree of the continuity should be taken into account.
• Physical status, such as age, height, weight, sex, strength,
and eyesight.

6. 4.Responsibilities
A. For raw materials, processed materials,tools, equipment, and property.
B. For money or negotiable securities.
C. For profits or loss, savings or methods’ improvement.
D. For public contact.
E. For records.
F. For supervision.
G. Primarily the complexity of supervision given to subordinates; the
number of subordinates is a secondary feature. Planning, direction,
coordination,instruction,control, and approval characterize this kind of
supervision.
H. Also, the degree of supervision received. If Jobs A and B gave no
supervision to subordinates, but A receivedmuch closer immediate
supervision than B, then B would be entitled to a higher rating than A in
the supervision factor.
To summarize the four degrees of supervision:
Highest degree—gives much—gets little
High degree—gives much—gets much
Low degree—gives none—gets little
Lowest degree—gives none—gets much

7. 5.Working Conditions
• Environmental influences such as
atmosphere, ventilation, illumination, noise,
congestion, fellow workers, etc.
• Hazards - from the work or its surroundings
• Hours

8. TABLE 11–A1 Ranking Key Jobs by Factors1
11 is high, 4 is low.
Mental
Requirements
Physical
Requirements
Skill
Requirements Responsibility
Working
Conditions
Welder 1 4 1 1 2
Crane operator 3 1 3 4 4
Punch press operator 2 3 2 2 3
Security guard 4 2 4 3 1

9. TABLE 11–A1 Ranking Key Jobs by Factors1
11 is high, 4 is low.
Mental
Requirements
Physical
Requirements
Skill
Requirements Responsibility
Working
Conditions
Welder 1 4 1 1 2
Crane operator 3 1 3 4 4
Punch press operator 2 3 2 2 3
Security guard 4 2 4 3 1

10. TABLE 11–A3 Comparison of Factor and Wage Rankings
Mental
Requirements
Physical
Requirements
Skill
Requirements Responsibility
Working
Conditions
A1 $2 A1 $2 A1 $2 A1 $2 A1 $2
Welder 1 1 4 4 1 1 1 1 2 2
Crane operator 3 3 1 1 3 3 4 4 4 4
Punch press operator 2 2 3 3 2 2 2 2 3 3
Security guard 4 4 2 2 4 4 3 3 1 1
1Amount of each factor based on step 3.
2Ratings based on distribution of wages to each factor from step 5.

11. TABLE 11–A4 Job (Factor)-Comparison Scale
Value
Mental
Requirements
Physical
Requirements
Skill
Requirements Responsibility
Working
Conditions
0.20 Crane Operator Crane Operator
0.30 Punch Press Operator
0.40 Welder Sec. Guard Sec. Guard Welder
0.60 Sec. Guard
0.80 Punch Press Operator
1.00 (Plater)
1.20 Sec. Guard
1.30 Punch Press Operator
1.40 Crane Operator Sec. Guard (Inspector) (Plater)
1.50 (Inspector) (Inspector)
1.60 Punch Press Operator
1.70 (Plater)
1.80 Crane Operator (Inspector)
2.00 Crane Operator Punch Press Operator Welder
2.20 (Plater)
2.40 (Inspector) (Plater)
3.00 Welder
4.00 Welder

12. The Point Method of Job Evaluation
Step 1. Determine clusters of jobs to be evaluated
Step 2. Collect job information
Step 3. Select compensable factors
Step 4. Define compensable factors
Step 5. Define factor degrees
Step 6. Determine relative values of factors

13. FIGURE 11–A2 Example of One Factor (Complexity/Problem Solving)
in a Point Factor System
Level
Point
Value Descriptionof Characteristics and Measures
0 0 Seldom confronts problems not covered by job routine or organizational policy;
analysis of data is negligible. Benchmark: Telephone operator/ receptionist.
1 40 Follows clearly prescribed standard practice and demonstrates straightforward
application of readily understood rules and procedures. Analyzes noncomplicated
data by established routine. Benchmark: Statistical clerk, billing clerk.
2 80 Frequently confronts problems not covered by job routine. Independent judgment
exercised in making minor decisions where alternatives are limited and standard
policies established. Analysis of standardized data for information of or use by others.
Benchmark: Social worker, executive secretary.
3 120 Exercises independent judgment in making decisions involving nonroutine problems
with general guidance only from higher supervision. Analyzes and evaluates data
pertaining to nonroutine problems for solution in conjunction with others.
Benchmark: Nurse, accountant, team leader.
4 160 Uses independent judgment in making decisions that are subject to review in the final
stages only. Analyzes and solves nonroutine problems involving evaluation of a wide
variety of data as a regular part of job duties. Makes decisions involving procedures.
Benchmark: Associate director, business manager, park services director.
5 200 Uses independent judgment in making decisions that are not subject to review.
Regularly exercises developmental or creative abilities in policy development.
Benchmark: Executive director.

14. TABLE 11–A5 Evaluation Points Assigned to Factors and Degrees
First-Degree
Points
Second-Degree
Points
Third-Degree
Points
Fourth-Degree
Points
Fifth-Degree
Points
Decision making 41 82 123 164 204
Problem solving 35 70 105 140 174
Knowledge 24 48 72 96 123

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