Discrimination in salaries for similar jobs often reflects in disgruntlement and dissatisfaction among workers and often leads to high turnover of workers quitting the job, work stoppages, jealousies, heated arguments between management and workers. Managers may apprehend and express dissatisfaction over the informal way of assigning pay packet for a particular job. Identifying compensable factors plays a central role in equitable job evaluation. A job is usually compared with all such similar jobs before a compensable factor is arrived at. For example the HR Manager may choose to include ‘decision-making’ for a Manager’s job, though this may seem inappropriate while defining an Operator’s job. So how to conduct a good job evaluation and what is its importance, Prabir Jana from NIFT, New Delhi along with Team StitchWorld explains, highlighting some aspects when searching for a ‘suitable post’.
Job evaluation is mostly a judgmental process and demands close cooperation among supervisors, HR specialists, employees and union representatives. An HR Manager can use two basic approaches to compare several jobs – First, he can take an intuitive approach. He might decide that one job is more important than the other and might not go deeper digging into the logic on that. As an alternative, he can also compare the jobs by focusing on certain basic factors the jobs have in common. Compensation management specialists call these basic factors as compensable factors. They are the factors that establish how the jobs are compared to one another and which ultimately determines the remuneration package for each job.
Compensable factors are classified into soft skills and hard skills. The blue collar job requires more hard skills than soft skills while the white collar jobs require more of the soft skills. Based on how much of hard skills and how much of soft skills are required for a job, the weightage of compensable factors changes. Secondly, same compensable factor may be relevant for two jobs but with different intensity levels which may be expressed in percentage as explained in this write-up. For example communication ability is more required for a Supervisor than a Sewing Operator. However, it is a debatable question whether jobs should be categorized first into either blue collar or white collar jobs before arriving at the compensable factors.
Another way to deal with the situation is to give more weightage to soft skills while evaluating white collar jobs and hard skills when going for blue collar jobs.
Some employers develop their own list of compensable factors. However, most of them use factors popularized by packaged job evaluation systems. For example, the Equal Pay Act focuses on four compensable factors – Skills, Effort, Responsibility and Working conditions. The method popularized by the Hay consulting firm focuses on three factors: Know-how, Problem solving and Accountability. In 2004, Walmart instituted new wage structure based on knowledge, problem solving skills and accountability requirements.
The Equal Pay Act focuses on four compensable factors – Skills, Effort, Responsibility and Working conditions. The method popularized by the Hay consulting firm focuses on three factors: Know-how, Problem solving and Accountability
Preparing for the Job Evaluation
After identifying the need for job evaluation, an evaluation committee comprising people who are familiar with the job needs to be formed. There are two reasons for forming a job evaluation committee. First, the committee must involve several people who are familiar with the jobs in question, each of whom may have a different perspective regarding the nature of the jobs. Secondly, the composition of the committee is important. The group usually comprises five members, most of whom are employees.
Management has the right to serve on such committees, but employees may view this with suspicion. However, an HR specialist can usually be justified on the grounds that he or she has a more impartial outlook than line managers and can provide expert assistance. One option is to have this person serve in a non-voting capacity. Once appointed each committee member should receive a manual explaining the job evaluation process, and instructions that explain how to conduct the job evaluation.
Also, since employees may fear that a systematic evaluation of their jobs may actually reduce their pay rates, getting employees to cooperate in the evaluation is an important step
The evaluation committee performs three main functions. First, it usually identifies 10 or 15 key benchmark jobs. These will be the first jobs to be evaluated and will serve as the anchors or benchmarks against which the relative importance or value of all other jobs can be compared. Secondly, the committee may select compensable factors although the HR department will usually choose these as part of the process of determining the specific job evaluation techniques the company will use. Finally, the committee performs its most important function i.e. actually evaluating the worth of each job. This article shows a combination of applying weightage and intensity of compensable factors in job evaluation.
Selection of compensable factors
Compensable factors are identified and defined based on the company’s objectives and values. Some of the commonly used compensable factors are:
1. Skill: This factor measures the job knowledge, dexterity, ability to communicate, analytical ability.
2. Effort: This factor measures physical and mental requirements.
3. Responsibility: This factor measures impact on the organization, supervisory authority, decision making, accountability, level of contact with others.
4. Working Conditions: This factor measures hazardous or adverse conditions in work.
5. Communication and Interpersonal Skills: This factor measures the extent to which the job requires employees to explain, negotiate, persuade and generally convey intended meanings and information to others. Both, the type of messages or information to be conveyed and the media such as computer, telephone, etc. to be used, should be considered when assigning degree ratings.
6. Technical Knowledge and Application: This factor measures the extent of specialized knowledge and required experience in using that knowledge. Assigning of degree ratings should take into consideration the level of expertise, as well as the scope of application of that knowledge.
7. Problem-Solving and Decision-Making: This factor measures the extent of decision latitude and the use of independent approaches to solving problems encountered on the job. Degree ratings should be assigned based on the complexity of the problems (i.e., how much they require routinized vs. non-routinized decision processes) and the impact of the decision on the achievement of organizational goals.
8. Planning and Organizing: This factor measures the extent to which tasks, activities, outcomes, and time must be prioritized, sequenced, and scheduled. Degree ratings should be assigned based on the total requirements of the job for planning one’s own and/or another’s work processes, task time allotment, or daily activity schedule.
Benchmarked blue collar jobs
Sewing Operator, Cutting Master, Sampling Master, Pattern Maker, Cutting Room Supervisor, Sewing Room Supervisor, Finishing Room Supervisor, Machine Mechanic, In-line Checker, Ironing Operator, Packers, etc.
Actual evaluation of job requires deep understanding of all compensable factors and all job requirements. The Table-1 shows that for evaluating blue collar jobs compensable factors are sub-categorized into skill, effort, responsibility and knowledge and based on the intensity of each compensable factor required for any job, they are further categorized into four columns 100%, 75%, 50% and 25%. For example, a skilled sewing operator may acquire 25% to 50% intensity of job knowledge and 25% of ability of communication, whereas a supervisor will require 50% intensity of job knowledge and 75% of ability of communication. Similarly all compensable factors for benchmark jobs were mapped based on intensity and eventually score points. Higher the points scored, higher the remuneration. In the Table given, the relevant compensable factors for a Sewing Operator is highlighted in yellow while same for a Supervisor is highlighted in green to show how compensable factors change for different jobs.
In this example an Operator’s compensable factors are being mapped with total point of 40. Similarly when a Supervisor’s compensable factors are mapped the total point scored is 65. This is derived by the formula:
Compensable factor = Σ (Weightage of skills X percentage intensity of the skill required for the job)
Organizations can use this method to evaluate other benchmark jobs like quality controller, patternmaker and set remuneration objectively.
It should be kept in mind that matrix for compensable factors for blue collar jobs and white collar jobs may be different. Also, since employees may fear that a systematic evaluation of their jobs may actually reduce their pay rates, getting employees to cooperate in the evaluation is an important step. To conduct a fair and just evaluation, the company can let the employees know that as a result of the impending job evaluation program, pay rate decisions will no longer be made just by management’s whim; that job evaluation will provide a mechanism for considering the complaints they have been expressing, and that no present employment rate will be adversely affected as a result of the job evaluation.