JOB EVALUATION & MERIT RATING

DEFINITION• Job evaluation is a process to determine in a

systematic manner & analytically the worth of each job in the organisation based upon the set of carefully selected factors such as skill effort & responsibility demanded by the job & translating these worth of jobs into monetary terms .

OBJECTIVESTo establish a sound wage & salary system by

determining the worth of each job in the factory.To eliminate the wage inequalities.To establish a general wage level for a given factory.To clearly define the line of authority &

responsibility.To formulate an appropriate & uniform wage

structure.To identify the training needs of the employees.To promote a good employee-employer relation.

METHODS1) Ranking Method.2) Classification Method3) Factor Comparison Method4) Point Method

Ranking Method

• The different jobs, depending upon their requirements, responsibilities involved & their importance to the organisation, are ranked, graded or placed from top to bottom.

• ADVANTAGES:-The method is simple & fast.It can be easily mastered & administered.The method is suitable for small organisations.The method does not involve expenses.• DISADVANTAGES:-o There is no commonly accepted base for deciding

the ranks.o The method is not very accurate.o It is not useful for large organisations.o It is the least used method.

Classification or Grading Method

• Jobs are classified or graded in groups & levels of equal skill, difficulty, responsibility, importance & other requirements.

• It may be a production job, a sales job or an office job; each job family can be broken into a number of grades. Each grade carries an appropriate monetary scale.

• ADVANTAGES:-The Method resembles Ranking Method, is simple

& can be easily mastered & administered.It is more accurate as compared to Ranking

Method.• DISADVANTAGES:-o It is not useful for large organisations.o Job classification process is cumbersome & time

consuming.o The method does not involve detailed job analysis.o Sometimes it is difficult to correlate the grade of the

job with the present salary of the worker.

Factor Comparison Method• The method employs a five factor scale for

analysis, comparing & evaluating different jobs.• The five factors are:-SkillMental effortPhysical effortResponsibilityWorking conditions

• The various steps involved in the factor comparison method are as follows :-

Identify a few key jobs in the organisation & record their wages. Key jobs are those representative jobs which are assumed to be correctly or fairly paid.

Analysis the key jobs for each of the five factors mentioned above.

Allocate the salary amongst the five factors in proportion to their requirements, necessity or importance in the job.

This formulates a money rating scales for each of the five factors. Construct a job comparison scale. Analyse the job to be evaluated into the five factors. As per the job requirements, determine the importance of each

factor in the job, fit the same in the job comparison scale & total the monetary values attached to each.

• ADVANTAGES:- Factor comparison method finds the wages. It finds wages by direct comparison. For fixing wages for a new job, this method uses a ready made job

comparison (monetary) scale & thus the wages can be calculated speedily.

• DISADVANTAGES:-o It is complicated method; is not easily understood & hence it is less

popular as compared to point method.o Selection of unfairly paid jobs as key jobs can introduce considerable

error in the wages calculated by this method.o It is difficult to divide each factor into a large number of sub-factors

& unless done so accurate results may not be achieved.o The method depends upon subjective judgement different persons

may attach different monetary values with each factor for the same importance.

Point Method

• The point method bases itself on dividing the jobs into a number of factors which in turn are further subdivided into grades or degrees.

• Each degree is awarded certain points & when such points for all the degrees are totaled they indicate the importance of the job in the organisation; consequently a suitable wage rate proportional to the total points is determined.

• The steps involved in point method are given below:-a) Select a few key jobs which can be taken as

representatives of the jobs to be evaluated in the organization. Key jobs are those which can be clearly defined and are fairly paid.

b) Establish & define job factors whose number may vary between five to ten. Both key jobs & the jobs to be evaluated should have common job factors.

c) Select & define grades or degrees for each factor mentioned under (b). Each grade is allotted certain points.

d) Allocate points to each grade.e) Break the key jobs into factors & factors into grades. Total

up all the grade points for each key job.f) Establish the factors & grades for the job to be evaluated.

• ADVANTAGES:-Since the method involves points(i.e; numerical figures), it is

considered to be more accurate & reliable. It is more precise than any other method of job evaluation.Once grade table has been constructed, the chances of

subjective discretion decrease.The method can be understood without much difficulty. It is the most widely used method.• DISADVANTAGES:-o Analysis of factors & grades involve a large amount of work

experience.o Points allocated to each factor base on more or less

arbitrary grounds.

DEFINITION

• Merit rating is a systematic & orderly approach to assess the relative worth of an employee working in a n organization in terms of his job performance, integrity, leadership, intelligence, behaviour, etc.

OBJECTIVESi. Merit rating provides a record of the worth of employees,

they, therefore, can be put on the most appropriate jobs depending upon their capabilities.

ii. Merit rating unfolds the limitations of an employee & thus helps in employee improvement.

iii. Merit rating records form a basis for: Wage increase Promotion Special assignments Training Transfer Discharge

METHODS

Rating Scale MethodCheck List MethodEmployee Comparison Method

JOB ROTATION

• Job rotation involves shifting a person from one job to another, so that he is able to understand and learn what each job involves. The company tracks his performance on every job and decides whether he can perform the job in an ideal manner. Based on this he is finally given a particular posting.

• Job rotation is done to decide the final posting for the employee e.g. Mr. A is assigned to the marketing department whole he learns all the jobs to be performed for marketing at his level in the organization .after this he is shifted to the sales department and to the finance department and so on. He is finally placed in the department in which he shows the best performance

• Job rotation gives an idea about the jobs to be performed at every level. Once a person is able to understand this he is in a better understanding

Advantages of Job Rotation

1. Avoids monopoly :- • Job rotation helps to avoid monopoly of job and enable the

employee to learn new things and therefore enjoy his job2. Provides an opportunity to broaden one’s knowledge :-• Due to job rotation the person is able to learn different job in the

organization this broadens his knowledge 3. Avoiding fraudulent practice :- • In an organization like bank jobs rotation is undertaken to prevent

employees from doing any kind of fraud i.e. if a person is handling a particular job for a very long time he will be able to find loopholes in the system and use them for his benefit and indulge ( participate ) in fraudulent practices job rotation avoids this.

Disadvantages of Job Rotation 1. Frequent interruption :- • Job rotation results in frequent interruption of work .A person who is

doing a particular job and get it comfortable suddenly finds himself shifted to another job or department .this interrupts the work in both the departments

2. Reduces uniformity in quality :- • Quality of work done by a trained worker is different from that of a new

worker .when a new worker I shifted or rotated in the department, he takes time to learn the new job, makes mistakes in the process and affects the quality of the job.

3. Misunderstanding with the union member :- • Sometimes job rotation may lead to misunderstanding with members of

the union. The union might think that employees are being harassed and more work is being taken from them. In reality this is not the case.

JOB ENLARGEMENT• Job enlargement is another method of job design when any organization

wishes to adopt proper job design it can opt for job enlargement. Job enlargement involves combining various activities at the same level in the organization and adding them to the existing job. It increases the scope of the job. It is also called the horizontal expansion of job activities.

• Job enlargement can be explained with the help of the following example – If Mr. A is working as an executive with a company and is currently performing 3 activities on his job after job enlargement or through job enlargement we add 4 more activities to the existing job so now Mr. A performs 7 activities on the job.

• It must be noted that the new activities which have been added should belong to the same hierarchy level in the organization. By job enlargement we provide a greater variety of activities to the individual so that we are in a position to increase the interest of the job and make maximum use of employee’s skill. Job enlargement is also essential when policies like VRS are implemented in the company.

Advantages of job enlargement1. Variety of skills :- • Job enlargement helps the organization to improve and increase the

skills of the employee due to organization as well as the individual benefit.

2. Improves earning capacity :- • Due to job enlargement the person learns many new activities.

When such people apply foe jobs to other companies they can bargain for more salary.

3. Wide range of activities :- • Job enlargement provides wide range of activities for employees.

Since a single employee handles multiple activities the company can try and reduce the number of employee’s. This reduces the salary bill for the company.

Disadvantages of job enlargement

1. Increases work burden :- • Job enlargement increases the work of the employee and

not every company provides incentives and extra salary for extra work. Therefore the efforts of the individual may remain unrecognized.

2. Increasing frustration of the employee :-• In many cases employees end up being frustrated because

increased activities do not result in increased salaries. 3. Problem with union members :-• Many union members may misunderstand job enlargement

as exploitation of worker and may take objection to it.

JOB ENRICHMENT• Job enrichment is a term given by Fedric Herzberg. According to him a few motivators

are added to a job to make it more rewarding, challenging and interesting. According to Herzberg the motivating factors enrich the job and improve performance.

• In other words we can say that job enrichment is a method of adding some motivating factors to an existing job to make it more interesting. The motivating factors can be

a) Giving more freedom.b) Encouraging participation.c) Giving employees the freedom to select the method of working.d) Allowing employees to select the place at which they would like to work.e) Allowing workers to select the tools that they require on the job.f) Allowing workers to decide the layout of plant or office.• Job enrichment gives lot of freedom to the employee but at the same time increases

the responsibility. Some workers are power and responsibility hungry. Job enrichment satisfies the needs of the employees.

Advantages of job enrichment1. Interesting and challenging job :-• When a certain amount of power is given to employees it makes the job more challenging

for them, we can say that job enrichment is a method of employee empowerment.2. Improves decision making :-• Through job enrichment we can improve the decision making ability of the employee by

asking him to decide on factory layout, method and style of working.3. Identifies future managerial caliber :-• When we provide decision making opportunities to employees, we can identify which

employee is better that other in decision making and mark employees for future promotion.

4. Identifies higher order needs of employees :-• This method identifies higher order needs of the employee. Abraham maslow’s theory of

motivation speaks of these higher order needs e.g. ego and esteemed needs, self actualization etc. These needs can be achieved through job enrichment.

5. Reduces work load of superiors :-• Job enrichment reduces the work load of senior staff. When decisions are taken by juniors

the seniors work load is reduced.

Disadvantages of job enrichment1. Job enrichment is based on the assumptions that workers have

complete knowledge to take decisions and they have the right attitude. In reality this might not be the case due to which there can be problems in working.

2. Job enrichment has negative implications ie. Along with usual work decision making work is also given to the employees and not many may be comfortable with this.

3. Superiors may feel that power is being taken away from them and given to the junior’s. This might lead to ego problems.

4. This method will only work in certain situations. Some jobs already give a lot of freedom and responsibility; this method will not work for such jobs.

5. Some people are internally dissatisfied with the organization. For such people no amount of job enrichment can solve the problem.

WAGES & INCENTIVES

TERMINOLOGY

• Wages• Nominal Wages• Real Wages• Living Wages• Fair Wages• Minimum Wages

CHARACTERISTICSA good wage system should be acceptable to both

employees & management.It should guarantee a minimum wage to the

employee.It should able to keep the worker motivated.It should provide a scope for employees to get

reward for their additional or extra effort.It should be consistent & should not be altered

frequently.It should believe in equal work & equal pay.

FACTORS1) Labour market2) Legal & statutory restrictions.3) Organisations ability & willingness to pay.4) Bargaining capacity of the employer & employee.5) Prevailing wage structure in the specific sector or

industry.6) Workers skill, knowledge & experience.7) Wage levels in the specific sector or industry.8) Cost of living.

TYPES OF INCENTIVES

1. Financial incentives:- these are the rewards paid to the employee & efforts in cash.

2. Non financial incentives:-these are non-monetary incentives(other than cash). These may include gifts, discount coupons, special holidays, etc.

WAGE INCENTIVE PLAN

• Taylor’s Differential Piece Rate System• Gantt Task & Bonus Scheme• Halsey Premium Plan• Rowan Premium Plan• Bedaux Point Premium Plan• Emerson’s Efficiency Plan

ROWAN PLAN• This plan was devised by James Rowan of Glasgow in

the year 1901. the plan provides each workman a guaranteed minimum wage plus bonus for certain portion of the time saved, the proportion of the time payable for incentive being the ratio of actual time taken to the standard time.

• Earnings under this scheme are, Bonus = (Tt/Ts)*(Ts-Tt)* R Earnings = R*Tt + (Ts-Tt)/Ts * R * Tt = Tt + R[1+(Ts – Tt)/Ts]

• ADVANTAGES:-1. Encouragement to slow workers & trainees.2. Employer will get the partial benefit of increased

output.3. A good protection against loose standards• DISADVANTAGES:-1. It is more complex compared to other incentives

schemes.2. The sharing concept is not favoured by workers &

so unpopular amongst workers.

TAYLOR’S DIFFERENTIALPIECE RATE SYSTEM

• This plan was developed by F.W.Taylor. Under this system a standard output for the day is fixed based upon the accurate time & method study.

• The employee’s who achieve this standard or produce more than the standard are given higher rates than those who fail to reach the standard. It considers both time & output, the differential rates are paid based upon the quantity produced.

Characteristics 1. The day’s wage or earning is not guaranteed.2. Two piece rates are applicable- lower piece rate for

output below standard output & higher piece rate for output exceeding the standard output.

3. Lowe piece rate is considered for below standard performance workers & higher piece rate for standard & above standard performance.

• ADVANTAGES:-Worker is paid as per his efficiency & he is paid only for

production time & not for idle time.Clerical work is kept at minimum.Reduce the supervision to the minimum.Encourage the workers to produce more to earn more. It ensures better utilisation of the resources.• DISADVANTAGES:-o Workers in order to earn more will not care much for quality

of the work.o Quantity orientation makes the worker to work fast, in due

course he may neglect safety measures.o The decrease in demand may have an adverse effect on the

employees.

EMERSON’S EFFICIENCY PLAN• Under this plan,I. Days wages irrespective of the output performance is

guaranteed.II. A standard output based on past performance is taken as

100% efficiency.III. Actual output of the worker is compared with standard

output to calculate the efficiency.IV. An incentive bonus is paid to the workman of his output

exceeds, 2/3rd (66.67%) of the standard performance (100%).

Efficiency % =(actual o/p for the period/std. o/p for the period) * 100

Earnings in this method are computed as under:-

1. Efficiency below 66.67% - No bonus, only time wages.

2. Between 66.67% to 100% -Time wages + bonus at different %

increasing.3. Over 100% - Time wages + 20% bonus + 1%

bonus for each 1% increase in efficiency beyond 100%.

HALSEY’S 50-50 PLAN• It is a gain sharing plan standard times are

established based upon the past experience.• The plan guarantees to worker a certain base rate &

in addition a certain percentage of time he has saved on the job.

• Earnings in this scheme are computed as follows:- Bonus Earned = ½ *(Ts – Tt) * R.

• ADVANTAGES:-It guarantees the fixed wage to slow workers & at the

same time additional payment to efficient workers.Product cost saving.Simple in operation & worker can compute his days

earning without any difficulty.• DISADVANTAGES:-o The plan does not give the bonus on the time saved

but it gives bonus only on % of time saved.o Any mistake in computing standard time affects the

worker’s earnings.o Incentives is not much attractive to workers.

BEDAUX PLAN

• This system is applicable when the manufacturing involves variety of short cycle jobs of varying work contents.

Characteristics1. Based upon the work measurement study, the standard

time is established for each job in terms of points. One point equals one minute, i.e. a standard hour consists of 60 points.

2. Guaranteed wage rate is paid up to standard performance.

3. Guaranteed wage rate plus incentive bonus is paid for above standard performance.

4. The incentive bonus is paid at the fixed proportion for the time saved. As per this plan, 75% of the points saved multiplied by one sixtieth (1/60th ) of the workers hourly rate is paid on incentive.

Advantages

1. Plan is simple in design & easy to operate.2. It is really gives incentives to higher

production.3. This brings in a competitive spirit amongst

the workers to produce more.

GROUP TASK & BONUS SYSTEM

• This scheme was proposed by henry gantt. In this system a minimum wage is guaranteed for those workers who cannot reach bonus level.

• The standard output is fixed based upon the careful study.

• If the worker achieves the standard output or produces more than the standard output, he is provided with an extra allowance between 25% to 50% of the hourly rates.

Characteristics1. Minimum day’s wage is guaranteed irrespective of

the performance of the worker.2. The actual output of the worker is compared with

the standard output to calculate efficiency.3. Time wages without bonus are paid below

standard performance.4. Time wages plus an increase in wage rate is

considered at standard performance.5. A high piece rate is considered in place of time

wages above standard performance.