Unit 4 project planning & evaluation

8/2/2019 Unit 4 project planning & evaluation

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UNIT 4

Compensation & JE


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Factors affecting the totalcompensation mix

Internal

Factors

Comp

Mix

External

Factors

BenefitCosts


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Factors affecting the totalcompensation mix

Internal

Factors

Comp

Mix

External

Factors

Comp policy

Worth of job

Employees

relative worth

Employers

ability to pay

BenefitCosts


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Components of employees salary

Salary/Wages

Incentives

Fringe benefits

Perks


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Job Evaluation


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Job Evaluation

Technique for comparing JOBS rather

than employees.

system for comparing different jobs

systematically to assess their relative

worth, so providing a basis for agrading and reward structure.


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Job Evaluation

Job evaluation is, by definition,

subjective. Subjectivity reduces

effectiveness. However, analyticalsystems try to reduce subjectivity.

Effectiveness of job evaluation can also

be affected by external forces (eg market

shortages) and tinkering (eg using perks)


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Job Evaluation

Good remuneration systems must be seen

as fair especially by employees! The

law also demands that jobs of equalworth should attract equal pay. A key

factor in fairness will be linking the

degree of difficulty of the job with thereward. Job evaluation can be used to

assess the relative difficulty of the job.


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Process Of JE

Objective of JE

JOB ANALYSIS

Job Description Job Specification

JE Program Fig :: JOB EVALUATION

Process


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Methods of Job Evaluation

Job-evaluation methods are of two

categories:

(1)Non-analytical and

(2) Analytical


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Non-Analytical Method

Ranking Method

Job-Grading Method


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Analytical Method

Point- Ranking Method

Factor Comparison Method


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Job Evaluation Methods

A. Ranking method: The job ranking method arranges jobs in

numerical order on the basis of the importance of the job's dutiesand responsibilities to the organization. This method, thougheasy to understand, is highly subjective in nature.

B. Classification method: The job classification method slotsjobs into . pre established grades. Higher-rated grades demand

more responsibilities, tougher working conditions and varied jobduties. This method is easy to understand and takes care of allrelevant factors affecting the performance of a job. However, it isnot easy to write all inclusive descriptions of a grade. Further, themethod oversimplifies sharp differences between different jobsand different grades.

C. Factor comparison method: In this method, jobs are rankedaccording to a series of factors such as mental effort, physicaleffort, skill needed, responsibility, supervisory responsibility,working conditions, etc. pay will be assigned in this method bycomparing the weights of the factors required for each job.


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D. Point method: The point system of job evaluation uses a point

scheme based on the compensable job factors of skill, effort,responsibility and working conditions. The more compensable factors a

job possesses, the more points are assigned to it. Jobs with higher

accumulated points are considered more valuable to the organization.

Select key jobs

Identify the factors to all identified jobs such as skill, effort,responsibility etc.

Divide each major factor into a number of sub factors. Each subfactor is defined and expressed in order of importance.

Find the maximum number of points assigned to each job Once the worth of a job in terms of total points is known, thepoints are converted into money values, keeping the wage rates inmind.

Job Evaluation Methods


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.Procedures

Source: John M. Ivancevich, Job Evaluation Procedures, Foundations of Personnel, Copyright 1992 by Richard D. Irwin.


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Advantages and Disadvantages

Job Ranking

1. Advantages: Easy to understand and easy to administer

Sets better rate than the rate based on purejudgments.

2. Disadvantages: Classification is in general terms.

In a complex org. may be a tough task.

Grading is influenced by existing wage

structure.


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Job Classification

ADVANTAGES:

1. Comparatively simple and easy toadminister

2. Evaluation of jobs is more accurate thanunder ranking method.

DISADVANTAGES:

1.Classification is in general terms.

2. Placing of jobs in classes is influenced byexisting wage structure.


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POINT RATING:

Advantages:

1. The graphic or descriptive type of rating scaleshave been accepted as most reliable and valid.

DISADVANTAGES:

1. It is difficult to develop a point rating scheme.

2. Assigning proper weightage to each factor andassigning point value to each degree withoutbeing unfair is a matter of concern.

3. Difficult to explain.

4. Time consuming process.


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FACTOR COMPARISON METHOD

ADVANTAGES:

1. More systematic.2. Evaluation is simpler than by point method.

3. Analysis of bench-mark jobs is verycomprehensive.

DISADVANTAGES:

1. Complicated to apply and explain to workers.

2. The wage rates for bench-mark jobs are

presumed to be correct and all other raes aredetermined by reference to them.


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Benefits of Job Evaluation

It offers a systematic procedure for

determining the relative worth of jobs. An equitable wage structure is a naturaloutcome of job evaluation.

Helps resolve wage related grievances.

It links the pay with the requirements ofthe job.

It points out possibilities of moreappropriate use of the plants labor force

by indicating jobs that need more or lessskilled workers than those who aremanning these jobs currently.

Method What facet of job How is job evaluated Type of Major Major


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Method What facet of jobis evaluated

How is job evaluated Type ofmethod

Majoradvantages

Majordisadvantages

Ranking Wholejob( compensable

factors areimplicit)

Jobs are subjectivelyordered according torelative worth

Non-quantitative

Relativelyquick and

in-expensive

Entirelysubjective

ClassificationWhole job Compare job todescription of jobgrades

Non-quantitative

Readilyavailableand in-expensive

Cumbersome system

Factorcomparison

compensablefactors of job

Compare job to keyjobs on scales ofcompensable factors

QuantitativeEasy touse

Hard toconstruct ;Inaccurate

over time

Point Methodcompensablefactors of job

Compare job tostandardizeddescriptions of degreesof universal

compensable factors

QuantitativeAccurateand stableovertime

May becostly


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Job Evaluation Advantages

Provides a systematic and rational procedurefor valuing each job

Ensures a degree of equity and objectivenessin remuneration

Job descriptions generated are useful forother activities

Helps motivation and morale Both employee and employer needs are

addressed

Scope for union/employee involvement


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Job Evaluation Disadvantages

Lack of allowance for differences in

performance

Assessment can be costly & time-consumingespecially at the start

Assessment can be inaccurate or

approximate

Its still subjective!


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The HRM Functions

Job loyalty has declined over the past decade.

maintenance

safety and health: has a big effect on their commitment

communications and employee relations: keep employees

well-informed; provide a means of venting frustrations


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Benefits

Benefit An indirect compensation given to an employee or group of

employees as a part of organizational membership. Health benefits in the U.S. are provided by employersThis is unique

Benefit costs are being shifted even more on employers bystate and federal governments

Strategic Perspectives on Benefits Benefits vs. Salaries- which is preferred for addition or

subtraction?

Benefits influence employee decisions about employersRetentionAbsenteeismRecruitment

Benefits are increasingly seen as entitlements.

Benefit costs average over 40% of total payroll costs.

B fit D i


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Benefit Design

HR Decisions Affecting Benefit Design: How much total compensation?

Lag, Meet or Lead the Market

What part of total compensation should benefits comprise?

What expense levels are acceptable for each benefit?

Which employees should get which benefits? Legal, Ethical and Business reasons for decisions

What are we getting in return for the benefit? (ROI)

How will offering benefits affect turnover, recruiting, andretention of employees?

How flexible should the benefits package be? Flexibility is high today due to the different familial structure in U.S.

families than has been historically prevalent

What happens to ROI when the plan is more flexible?


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Types of BenefitsTypes of Benefits

S it B fit


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Security Benefits

WARN- 60 days announcement during masslayoffs pending egregious shocks to thecompany

Workers Compensation Benefits provided to persons injured on the job.

Unemployment Compensation

A Federal/state payroll tax that funds stateunemployment systems.

Involuntary unemployment and actively seeking workis required for persons to claim benefit.

Supplemental Unemployment Benefits

(SUB) A union-negotiated benefit provision that pays a

supplemental amount to laid-off employees who aredrawing unemployment compensation.

S it B fit ( td)


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Security Benefits (contd)

Severance Pay

A security benefit voluntarily offered byemployer to employees who lose their jobs.

Payments are determined by the

employees level within the organizationand years of employment.

Other benefits (e.g., outplacement andcontinued health insurance) may be offered

in lieu of cash severance payments.

Oth B fit


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Other Benefits

BenefitsBenefits

RelocationRelocation

ExpensesExpenses

Life, Disability,Life, Disability,

Legal InsurancesLegal Insurances

EducationalEducational

AssistanceAssistanceSocial andSocial and

RecreationalRecreational

Family-OrientedFamily-Oriented

BenefitsBenefits

Family-CareFamily-Care

BenefitsBenefits

Credit UnionsCredit Unions

Purchase DiscountsPurchase Discounts

Stock InvestmentStock Investment

Fl ibl B fit


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Flexible Benefits

Flexible Benefit Plan

A plan (flex or cafeteria plan) that allowsemployees to select the benefits theyprefer from groups of benefits establishedby the employer.

Problems with Flexible Plans

Inappropriate benefits package choices

Adverse selection and use of specificbenefits by higher-risk employees

Higher administrative cost

Unit 4 project planning & evaluation

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