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Position Evaluation is the Position Evaluation is the foundation of foundation of

Pay Program DesignPay Program Design

Exempt Pay Program Exempt Pay Program DesignDesign

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Job Evaluation Job Evaluation ProcessProcess

Position Description StatementJob Responsibilities,KSA's and Qualifications

Position Evaluation

Job content and/or Market pay rate analysis

Job Value $

Pay rate & grade assignment

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To establish an objective, orderly, and sequential pay grade structure based on the value of job/s.

To ensure development of a pay structure that provides for internal equity.

To assist in determining competitive pay rates.

To comply with Equal Pay Act and FLSA rules.

Position Evaluation Position Evaluation GoalsGoals

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Job Evaluation is a process for assessing the value relationships between jobs.

Job Evaluation is a method (job content or market evaluation) to determine the relative level of jobs.

Job Evaluation is a formal methodology for setting wage rates and pay grades by a employer.

What is Job Evaluation ?What is Job Evaluation ?

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Compensable FactorsCompensable Factors

Compensable Factors are specific job content features, and requirements common to most jobs, such as Responsibility and Skill.

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Universal Compensable Universal Compensable FactorsFactors

Universal Compensable Factors are specified by the Equal Pay Act as :

» SKILL – Ability to do, knowledge, etc,

» EFFORT - measure of mental exertion

» RESPONSIBILITY – job scope

»WORKING CONDITIONS - physical surroundings and hazards of a job

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Common Universal Common Universal Factors Used by Pay Factors Used by Pay

ProgramsPrograms

BASS

Skill

Responsibility

Accountability

HAY and PURVES

Know-How

Problem-Solving

Accountability

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Common Universal Common Universal Factors Used by Pay Factors Used by Pay

ProgramsPrograms

NEMA - NMTA» Skill» Effort

»

Responsibility

» Job Conditions

EQUAL PAY ACT» Skill» Effort»

Responsibility» Working

Conditions

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Common Universal Common Universal Factors Used by Pay Factors Used by Pay

ProgramsPrograms

Knowledge

Supervisory Controls

Guidelines

Complexity

Scope and Effect

Personal Contacts

Purpose of Contacts

Physical Demands

Work Environment

Factor Evaluation System

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Compensable Factors Compensable Factors ComponentsComponents

It is normal practice to classify these factors into the three major categories below:

Universal Factors

Defined by Equal Pay Act. Sub Factors of Universal Factors

key job content and requirement attributes of a particular Universal factor defined more precisely.

Levels on a objective measurement scale to identify the specific amount of a factor required for the job.

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Hay System Factors Hay System Factors and and sub factorssub factors

exampleexampleKnow How: This factor describes

"Know-how is the sum total of knowledge and skill, however acquired, needed for acceptable performance." - Hay Group

•Professional Skills •Managerial

•Human Relations

Problem Solving:Problem solving is the original, self-starting thinking required by the job for

analyzing, evaluating, creating, reasoning & arriving at and making conclusions.

Thinking Challenge Thinking Environment

Accountability:The opportunity a job has to bring about results and the importance of

those results to the organization.Freedom to Act

Impact Magnitude

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Whole Job Ranking

Position Classification / Predetermined Grading

Market Pricing

Point Factor and Market Pricing

Point Factor

Job Evaluation MethodsJob Evaluation Methods

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Whole Job RankingWhole Job Ranking

Comparing the whole job by determining the overall value of specific jobs or classes as they compare with one another.

Works best when comparing jobs in the same occupation or the same organizational unit when evaluators are intimately familiar with all jobs being ranked.

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WHOLE JOB RANKINGWHOLE JOB RANKING

Whole Job Ranking Is The Quickest To Perform Of All The Methods, But It Has Three Significant Disadvantages:

» A lack of substantiation data to justify the final results.

» It provides no yardstick for measuring the relative value of jobs.

» The personalities of incumbents tend to get in the way of the evaluators' judgement.

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Classification SystemClassification System

Jobs are classified into an existing grade structure hierarchy. Each level in the grade structure has a description and associated job titles. Each job is assigned to the grade/category providing the closest match to the job. To ensure equity in job grading and wage rates, a common set of job grading standards ( Factors) and instructions are used to define each job classification.

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Position ClassificationPosition Classification

Advantages Simple. The grade definitions standard (factors) and structure exists independent of the jobs. New jobs can be classified more easily.

Disadvantages Developing Classifications is time intensive. The standard (factors) may have biases. Some jobs may appear to fit within more than one grade/category.

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Market PricingMarket Pricing

Most organizations usually understand that they must offer market based competitive pay rates in order to attract and retain competent employees.

There are two basic methods to recognize market wage rates.

Pure market pricing

Guide line Market pricing method

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Market PricingMarket Pricing

Pure Market Pricing Pay Survey The organization develops brief narratives

that describe job activities and incumbent requirements.

The organization conducts pay rate survey of other organizations having employees who perform similar work assignments in the same labor market.

This is the least costly method....It is easy to explain..…and judicially defensible.

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Market PricingMarket Pricing

Market Pricing Guide Line Method

This approach permits the influences of internal equity to interact with existing market rates when determining the rate of pay for jobs of an organization.

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Market PricingMarket PricingMarket Pricing Guide Line Method Market Pricing Guide Line Method

StepsSteps

Step One:

»Establish a GUIDE LINE SCALE of salary ranges that includes a series of salary grades and a minimum, mid-point, and maximum rate of pay for each using a 5% mid-point differential.

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Market PricingMarket Pricing

Step Two: » Develop realistic job descriptions

that include job scope data.» Identify benchmark jobs. (40% to

60% of jobs)

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Market PricingMarket Pricing

Step Three:

»Use comprehensive market pricing survey when matching benchmark jobs to other comparable employers jobs.

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Market PricingMarket Pricing

Step Four: » Develop HORIZONAL GUIDE LINE

displays that relate to job evaluations conducted in the third step.

» Two or more vertical guide line displays to ensure internal equity within the pay structure.

» Guideline Market pricingrequires costly software

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Market Pricing ToolsMarket Pricing ToolsCollege and University Professional Association (CUPA)- Current system.

Customized Salary Surveys of Peer Institutions Performed by HR

Salary data-on-demand software products including CUPA & Economic Research Institute

BLS Professional Occupation surveys

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Market Pricing Market Pricing Advantages & DisadvantagesAdvantages & Disadvantages

Advantages Include: Measure college pay rates against the pay

rates of similar organizations. Selects benchmark positions by level from

across the college for market pricing. Ensures pay structure based on external

market pay rates for equivalent positions.Major Disadvantage: May under value jobs that are very

important to the organization.

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Point Factor Point Factor Position EvaluationPosition Evaluation

Point factoring evaluation systems evaluate jobs against common factors ( Universal and sub factors). The job content of each position is evaluated against the selected factors and then represented as a numeric value. These values are then compared to a pre-defined salary structure (grades) to determine the appropriate pay range assignment.

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Point Factor Point Factor Position Evaluation Position Evaluation

Systems Systems

Lott's Point Method

Benge's Factor Comparison

Hay's Profile Method

NEMA Method

Factor Evaluation System

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Point Method FactorsPoint Method FactorsA Point Factor Method uses a set of

compensable factors to determine the value of jobs. Each factor has given numeric (point) values.Typically the compensable factors may include the major categories of:

Skill –ability, knowledge Responsibilities – fiscal ,supervision Effort -mental Working Conditions

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Compensable Factors PointsCompensable Factors Points

The total points assigned compensable factors

are determined by the wage spread between the

highest and the lowest paid position within an

organization. The highest paid job is given the

most points for each factor. The spread in total

points between highest and lowest paid jobs is a

recognition of the full point range between

positions within the organization.

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Factor Point Score Factor Point Score DifferencesDifferences

The compensable factor weights and

measurement scales determine job point-

score differences and thereby result in an

established structure of jobs with different

pay rates or ranges for each job.

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Point Determining MethodPoint Determining Method

Factor Column1 Column 2 Column 3

Order of Ranking

Percentage of Highest Factor

Calculation Weight of Factor

Responsibility 100% 100/300 33%

Skill 80% 80/300 27%

Effort-mental 80% 70/300 27%

Work Conditions

40% 40/300 13%

Totals 300 % 100%

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Calculating Total PointsCalculating Total Points

Point Spread between highest and lowest paid positions Ex. $100,000/$20,000 =5

Thus, according to normalizing chart on previous slide the highest paid position should receive 5 times more points than lowest paid position.

Ex $100,000 = 3000 total points divides as follows: 999 points for Responsibility 831 points for Skill 831 points for Effort-mental 399 points for Work Conditions

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Point Factoring Point Factoring MethodsMethods

AdvantagesStatistically assigns position to a salary band.

Legally Defendable Factors

DisadvantagesRequires consultant services or costly software for Regression Analysis to combine with market pricing.

The pay for each factor is based on rater judgments. High training investment to develop a small team of job

raters to manage the tool.Costly implementation and maintenance.

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» The Job Evaluation method selected may use either market data or job content factor data to set up a pay range structure. Each of these evaluation methods may be used independently and still result in a equitable pay system. The position evaluation method selected may also use the more complex and costly approach of combining job content factor data with market pricing data to create a equitable,objective and uniform organizational pay structure.

Selecting A Job Evaluation Selecting A Job Evaluation MethodMethod

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Job Evaluation StepsJob Evaluation StepsThe Fox Lawson consultant report has recommended selection of a “simplified classification system” which uses “broadly defined classes”.Step one is to select compensable factors.Step two is select “simplified” classification system

and job evaluation process using either compensable factors and/or market pricing.Step three is to select benchmark jobs for evaluation.Step four is to construct pay grades based on the

evaluation of benchmark jobs.