Chapter Seven Building Internally Consistent Compensation Systems
Example ofInternally Consistent Compensation Structure Manager of Benefits ($58,000) $60,000 There is a positive relationship between job worth and salaries! $50,000 Benefits Counselor III ($40,000) $40,000 Average Annual Salary $30,000 Benefits Counselor II ($26,000) $20,000 Benefits Counselor I ($20,000) Job Worth (skill, effort, responsibility, working conditions)
Example ofInternally IN-Consistent Compensation Structure There is no relationship between job worth and salaries! $60,000 $50,000 Benefits Counselor II ($45,000) Manager of Benefits ($39,000) $40,000 Average Annual Salary Benefits Counselor I ($32,000) $30,000 Benefits Counselor III ($28,000) $20,000 Job Worth (skill, effort, responsibility, working conditions)
Figure 7-1Internally Consistent Compensation Structure (2 of 3) • Benefits Counselor I • Provides basic counseling services to employees and assistance to higher-level personnel in more-complex benefits activities. Works under general supervision of higher-level counselors or other personnel. • Benefits Counselor II • Provides skilled counseling services to employees concerning specialized benefits programs or complex areas of other programs. Also completes special projects or carries out assigned phases of the benefits counseling service operations. Works under general supervision from Benefits Counselor IIIs or other personnel.
Figure 7-1Internally Consistent Compensation Structure (3 of 3) • Benefits Counselor III • Coordinates the daily activities of an employee benefits counseling service and supervises its staff. Works under direction from higher-level personnel. • Manager of Benefits • Responsible for managing the entire benefits function from evaluating benefits programs to ensuring that Benefits Counselors are adequately trained. Reports to the Director of Compensation and Benefits.
Aspects of Job Evaluation Job Evaluation is: Assumption A measure of job Content has an innate value outside of external market. content A measure of relative Relevant groups can reach consensus on relative value value. Link with external Job worth cannot be specified without external market market information. Measurement device Honing instruments will provide objective measures. Negotiation Puts face of rationality to a social / political process. Establishes rules of the game. Invites participation.
Figure 7-1Phases of the Job Evaluation Process • Choose & train the job evaluation committee. • Select benchmark jobs. • Choose compensable factors. • Define factor degrees. • Determine point values for each factor. • Validate factor degrees and point values. • Evaluate all jobs.
Table 7-1Units of Analysis in the Job Analysis Process (1 of 3) • 1. An element is the smallest step into which it is practical to subdivide any work activity without analyzing separate motions, movements, and mental processes involved. Inserting a diskette into floppy disk drive is an example of a job element. • 2. A task is one or more elements and is one of the distinct activities that constitute logical and necessary steps in the performance of work by the worker. A task is created whenever human effort, physical or mental, is exerted to accomplish a specific purpose. Keyboarding text into memo format represents a job task.
Table 7-1Units of Analysis in the Job Analysis Process (2 of 3) • 3. A position is a collection of tasks constituting the total work assignment of a single worker. There are as many positions as there are workers. John Smith’s position in the company is clerk typist. His tasks, which include keyboarding text into memo format, running a spell check on the text, and printing the text on company letterhead, combine to represent John Smith’s position. • 4. A job is a group of positions within a company that are identical with respect to their major or significant tasks and sufficiently alike to justify their being covered by a single analysis. There may be one or many persons employed in the same job. For example, Bob Arnold, John Smith, and Jason Colbert are clerk typists. With minor variations, they essentially perform the same tasks.
Table 7-1Units of Analysis in the Job Analysis Process (3 of 3) • 5. A job family is a group of two or more jobs that call for either similar worker characteristics or similar work tasks. File clerk, clerk typist, and administrative clerk represent a clerical job family because each job mainly requires employees to perform clerical tasks. • 6. An occupation is a group of jobs, found at more than one establishment, in which a common set of tasks are performed or are related in terms of similar objectives, methodologies, materials, products, worker actions, or worker characteristics. File clerk, clerk typist, administrative clerk, staff secretary, and administrative secretary represent an office support occupation. Compensation analyst, training and development specialist, recruiter, and benefits counselor represent jobs from the human resources management occupation. Source: US Dept. of Labor, The revised handbook for analyzing jobs (Washington, DC: US Government Printing Office, 1991).
CHOOSE A JOB-ANALYTIC METHODOLOGY Your choices depend on the kind of job & available resources! Type of data: work vs. worker Method of data collection: interview, survey, observation Nature of the job Time & resource constraints Level of detail Source of data: incumbents, supervisor, prior job description
Testing your applied knowledge:Method of Data Collection Scenario: You need to analyze the three jobs listed below. Due to budget constraints, you can only use one method of data collection for each job analysis: interview, survey, or observation. Take the nature of each job into account and match them to their most suitable method of data collection.
Testing your applied knowledge:Method of Data Collection Answer: The physical nature of the roofer job lends itself to observation; the intangible nature of the CFO, together with his/her scarce time available, lend themselves to an interview; the Senior Scientist is used to describe complex issues in writing, works with lots of complex documents, and therefore should be able to describe his/her job through a survey.
THE TASK INVENTORYDEFINITION: A LIST OF ACTIVITIES OR TASKS CARRIED OUT ON THE JOB • EACH TASK MUST HAVE THREE BASIC ELEMENTS: • VERB, OBJECT, PURPOSE • UPDATES TRANSFERS MASTER FILE TO FACILITATE THE PRODUCTION OF HUMAN RESOURCE REPORTS AT THE PLANT. • ASSIGNS PERSONNEL TO THE DIFFERENT WORK SHIFTS TO MAINTAIN A WORK FORCE THAT SUITS PRODUCTION LEVELS.
HOW MANY TASKS SHOULD A TASK INVENTORY HAVE? • THE ANSWER DEPENDS ON THE KIND OF JOB UNDER CONSIDERATION. • NORMALLY, EVERY JOB CAN BE DESCRIBED WITHIN A RANGE OF 30 TO 100 TASKS. • IN MILITARY OCCUPATIONS OR UNIFORMED JOBS (FIREFIGHTERS, POLICE), INVENTORIES HAVE HUNDREDS OF TASKS. • IN GENERAL, EXTREMELY LONG INVENTORIES ARE TEDIOUS AND CAN PROVOKE DISTORTED RESPONSES DUE TO FATIGUE.
Testing your applied knowledge: Writing Task statements • Prepares architectural plans for all types of buildings and City projects. • Extends blueprint on desk to study its content • Writes electrical work specifications to prepare architectural projects. Scenario: You are putting together a job description based on a number of interviews, observations, and surveys. You are wondering about the level of detail at which you should write the task statements for this job description. Which one of the following statements provides the most practical level of detail for job evaluation purposes?
Answer: It is at times difficult to distinguish between tasks and more general activities such as responsibilities, and also between tasks and simpler activities such as elemental movements.. Tasks are written at an intermediate level of detail; enough to make a valid judgment about the job, but at the same time broad enough not to become obsolete quickly. 1. Prepares architectural plans for all types of buildings and City projects. [this is too broad & does not convey the true nature of the job] 2. Extends blueprint on desk to study its content [this is too specific & it will be a very long and tedious job description] 3. Writes electrical work specifications to prepare architectural projects [this intermediate level is most practical]
PHASES OF TASK ANALYSIS • INTERVIEW WITH SMEs. • REVIEW OF NOTES AND PREPARATION OF TASK INVENTORY DRAFT. • VERIFICATION OF INVENTORY WITH SMEs. • SCALE SELECTION. • CONSTRUCTION OF STRUCTURED INVENTORY. • GATHER RATINGS. • COMPUTE MEANS AND STANDARD DEVIATIONS FOR EACH TASK. • IDENTIFICATION OF MOST IMPORTANT TASKS.
THE JOB ANALYSIS INTERVIEWPresentation • INTRODUCE YOURSELF SPECIFYING THE DEPARTMENT OR CORPORATION THAT YOU ARE REPRESENTING. • CLARIFY THE PURPOSE OF THE INTERVIEW; REMEMBER THAT THE INTERVIEWEE IS PROBABLY FEELING THREATENED. • GIVE EXAMPLES OF APLICATIONS OF THE INFORMATION TO BE GATHERED. THESE EXAMPLES WILL HELP REDUCE RUMORS ABOUT THE JOB ANALYSIS PROJECT. • GIVE EXAMPLES OF THINGS THAT WILL NOT BE DONE WITH THIS INFORMATION. • EMPHASIZE THE IMPORTANCE OF OBTAINING ACCURATE INFORMATION ABOUT THE JOB. • INDICATE THAT THE INFORMATION GATHERED WILL BE SUBJECT TO VERIFICATION BY OTHER SOURCES AND INFORMANTS.
THE JOB ANALYSIS INTERVIEWCore Interview ASK THE INTERVIEWEE TO DESCRIBE HIS/HER ACTIVITIES ON A TYPICAL DAY AT WORK, FROM BEGINNING TO END. INSIST ON A SEQUENTIAL DESCRIPTION OF ACTIVITIES SO THAT THE ORDER OF TASKS IS CLEAR. LET THE INTERVIEWEE KNOW THAT YOU WILL KINDLY INTERRUPT HIM/HER WHEN S/HE DESCRIBES ACTIVITIES THAT ARE NOT CLEAR TO YOU. INTERRUPT ONLY WHEN NECESSARY. DO NOT LET THE INTERVIEWEE TALK FOR LONG PERIODS OF TIME; ASK QUESTIONS SO THAT THE INTERVIEWEE UNDERSTANDS THAT YOU WISH TO OBTAIN AN OBJECTIVE AND DETAILED DESCRIPTION OF THE JOB.
THE JOB ANALYSIS INTERVIEWCore Interview REMEMBER THAT THE GOAL OF THE INTERVIEWEE IS TO GENERATE A LIST OF JOB TASKS; THUS, ASK FOR CLARIFICATION WHEN THE ACTION (VERB), OBJECT , OR PURPOSE OF THE ACTION ARE UNCLEAR. PAY SPECIAL ATTENTION TO THE USE OF VERBS THAT INDICATE A HIGH LEVEL OF MENTAL ACTIVITY (E.G., COORDINATE, DIRECT, RATIONALIZE); IT IS OFTEN EASY TO FIND A SIMPLER VERB THAT BETTER REFLECTS THE TRUE NATURE OF THE TASK.
INVENTORY VALIDATION NORMALLY, A MEETING IS HELD WITH A GROUP OF SUBJECT MATTER EXPERTS (SMEs). EACH EXPERT RECEIVES A COPY OF THE PRELIMINARY INVENTORY AND IS ASKED TO (a) ADD NEW TASKS OR TASKS THAT ARE NOT PRESENT IN THE INVENTORY, (b) ELIMINATE OBSOLETE OR INACCURATE TASKS, (c) CHANGE TASKS THAT HAVE CHANGED. THE GOAL IS TO REACH AN AGREEMENT AMONG THE EXPERTS REGARDING THE FINAL INVENTORY.
DEVELOPMENT OF A STRUCTURED QUESTIONNAIRE ONCE THE INVENTORY IS DEVELOPED, IT IS NECESSARY TO OBTAIN INFORMATION ABOUT THE MOST IMPORTANT TASKS, THE MOST DIFFICULT TO LEARN TASKS, ETC. THIS INFORMATION IS OBTAINED THROUGH THE RATINGS PRODUCED BY THE SMEs ON A STRUCTURED INVENTORY THE STRUCTURED INVENTORY SHOULD BE DEVELOPED SO THAT IT IS EASY TO COMPLETE. THE PROCESS OF RATING FORMATION MUST BE CLEARLY DEFINED, AND AT LEAST AN EXAMPLE SHOULD BE PROVIDED.
SAMPLE OF STRUCTURED QUESTIONNAIRE Now, please rate the following tasks using the time spent and importance scales previously described by circling the appropriate number. Leave tasks that you do not perform blank: Example: Review newspapers to identify 1 2 3 4 5 6 7 1 2 3 4 5 6 7 business communications and events. TASKS Time spent Importance ________________________________________________________________ ADMINISTRATIVE TASKS 1. Plan calls to key accounts. 1 2 3 4 5 6 7 1 2 3 4 5 6 7 2. Document daily sales information on computer system. 1 2 3 4 5 6 7 1 2 3 4 5 6 7
IDENTIFICATION OF TASKS OF INTEREST IT IS NECESSARY TO COMPUTE THE MEAN AND STANDARD DEVIATION FOR THE RATINGS ACROSS ALL THE INVENTORY RESPONDENTS: The mean helps us identify the tasks with the highest scores (most important, most difficult to learn, etc.) The standard deviation helps us evaluate to what extent there is an agreement on the importance or difficulty of learning the task.
WHICH ONES OF THE FOLLOWING TASKS WOULD YOU CONSIDER MOST IMPORTANT? Testing your applied knowledge: Task inventory
Answer: The first task is important on the average, but its large standard deviation indicates that SMEs do not agree on how important it really is. In contrast, the third task is important and every SME agrees that is the case (see its small standard deviation):
KSAO Knowledge, Skill, Ability, Other Characteristic. Every KSAO should have three basic elements: 1. What is it? (K, S, A, O) 2. In what context is it needed? 3. At what level or degree of precision is it needed?
Testing your applied knowledge: Good KSAO Writing Scenario: During a job analysis interview, a job incumbent tells you that his job requires a great deal of “writing ability” and of “communication skills.” Would you use these terms in the list of KSAOs required for this job? Did I already mention that my job requires the ability to walk on water?
Testing your applied knowledge: Good KSAO Writing Answer: Terms such as “writing ability” and “communication ability”are too broad and misleading; they are missing the basic KSAO elements: “what is it, in what context, and to what level/degree/precision.” They should be specified in more concrete terms such as for instance: Ability to register information in a standardized manner so that it can be understood by others. Ability to put together clear and concise sentences and paragraphs when preparing a written report. Ability to take notes describing an event so that others are able to interpret them later. Ability to transcribe alphanumeric information in an accurate manner.
KSAO Inventory • To identify KSAO requirements, try to answer the following questions: • Describe the characteristics of the good and the bad performers. • Identify someone who is clearly superior to the other workers. What characteristics explain this superiority? • Think about examples of good and bad performance; what determined them? • If you were hiring for this job, what kind of characteristics would you look for? • What kinds of things would you expect that those being trained for this job should learn?
Table 7-10Characteristics of Benchmark Jobs • The contents are well known, relatively stable over time, and agreed upon by the employees involved. • The jobs are common across a number of different employers. • The jobs represent the entire range of jobs that are being evaluated within a company. • The jobs are generally accepted in the labor market for the purposes of setting pay levels. Source: G.T. Milkovich and J.M. Newman, Compensation 5th ed. (Homewood, IL: Richard D. Irwin, 1996).
Table 7-13Federal Government Factor Evaluation System (1 of 2) • 1. Knowledge required by the position • a. Nature or kind of knowledge and skills needed • b. How the skills and knowledge are used in doing the work • 2. Supervisory controls • a. How the work is assigned • b. The employee’s responsibility for carrying out the work • c. How the work is reviewed • 3. Guidelines • a. The nature of guidelines for performing the work • b. The judgment needed to apply the guidelines or develop new guides
Compensable Factors - A Definition (1 of 2) • Compensable factors are paid-for, measurable qualities, features, requirements, or constructs that are common to many different kinds of jobs. • These factors are qualities intrinsic to the job and must be addressed in an acceptable manner if the job is to be performed satisfactorily.
Compensable Factors -A Definition (2 of 2) • In addition to being quantifiable, compensable factors should be relatively easy to describe and document. • Those involved in using compensable factors to measure job worth should consistently arrive at similar results.
Universal Compensable Factors • Skill: the experience, training, ability, and education required to perform a job under consideration - not with the skills an employee may possess
Universal Factor - Skill • Technical Know-how • Specialized Knowledge • Organizational Awareness • Educational Levels • Specialized Training • Years of Experience Required • Interpersonal Skills • Degree of Supervisory Skills
Universal Compensable Factors • Effort:the measurement of the physical or mental exertion needed for performance of a job
Universal Factor - Effort • Diversity of Tasks • Complexity of Tasks • Creativity of Thinking • Analytical Problem Solving • Physical Application of Skills • Degree of Assistance Available
Universal Compensable Factors • Responsibility:the extent to which an employer depends on the employee to perform the job as expected, with emphasis on the importance of job obligation.
Universal Factor - Responsibility • Decision-making Authority • Scope of the organization under control • Scope of the organization impacted • Degree of integration of work with others • Impact of failure or risk of job • Ability to perform tasks without supervision
Universal Compensable Factors Working Conditions: • hazards • physical surroundings of the job.
Universal Factor - Working Conditions • Potential Hazards Inherent in Job • Degree of Danger Which Can be Exposed to Others • Impact of Specialized Motor or Concentration Skills • Degree of Discomfort, Exposure, or Dirtiness in Doing Job
Table 7-13Federal Government Factor Evaluation System (2 of 2) • 4. Complexity • a. The nature of the assignment • b. The difficulty in identifying what needs to be done • c. The difficulty and originality involved in performing the work • 5. Scope and effect • a. The purpose of the work • b. The impact of the work product or service • 6. Personal contacts • 7. Purpose of contacts • 8. Physical demands • 9. Work environment Source: US Civil Service Commission, Instructions for the factor evaluation system ( Washington, D.C.: US Government Printing Office, 1977).
Example of pay structure $80 $40 Salary 0 200 400 Points
Figure 9-1Pay Structure for Clerk Jobs (1 of 5) 26,000 Market Pay Line 24,000 21,000 Annual Salary ($) 18,000 15,000 12,000 250 Clerk I 500 Clerk II 750 Clerk III 1,200 Chief Clerk Job Evaluation Points
Figure 9-1Pay Structure for Clerk Jobs (2 of 5) • Clerk I • Employees receive training in basic office support procedures, the operation of office equipment, and the specific activities of the unit. tasks assigned are simple and repetitive in nature and are performed in accordance with explicit instructions and clearly established guidelines. Sample duties include: Files materials in established alphabetical order and prepared new file folders and affixes labels. Clerk Is must possess a high school diploma or equivalent.
Figure 9-1Pay Structure for Clerk Jobs (3 of 5) • Clerk II • Employees work under general supervision in support of an office. They perform routine office support tasks that require a knowledge of standard office procedures and the ability to operate a variety of office equipment. Sample duties include: Prepares simple factual statements or reports involving computations such as totals or subtotals and composes memos requesting or transmitting factual information. Clerk IIs must possess a high school diploma or equivalent and one year work experience performing simple clerical tasks.
Figure 9-1Pay Structure for Clerk Jobs (4 of 5) • Clerk III • Employees work under general supervision in support of an office. They perform office support tasks requiring knowledge of general office and departmental procedures and methods and ability to operate a variety of office equipment. Sample duties include: Reconciles discrepancies between unit records and those of other departments and assigns and reviews work performed by Clerks I and II. Clerk IIIs must possess a high school diploma or equivalent, two years work experience performing moderately complex clerical tasks, and completed coursework (five in all) in such related topics as word processing and basic accounting principles.
Figure 9-1Pay Structure for Clerk Jobs (5 of 5) • Chief Clerk • Employees work under direction in support of an office. They perform a wide variety of office support tasks that require the use of judgment and initiative. A knowledge of the organization, programs, practices, and procedures of the unit is central to the performance of the duties. Chief clerks must possess a high school diploma or equivalent, four years work experience performing moderately difficult clerical tasks, and an associate’s degree in office management.