Compensation Structure

and Differentials


UNIT 11 JOB EVALUATION AND INTERNAL
EQUITY
Objectives
Affer going through this unit, you should be able to:
understand the concept of Internal Equity,



explain the concept of Job Evaluation (JE),
describe and understand the procedure of JE, and
ennumerate different methods of JE.
Structure
11.1 Concept of Internal and External Equity
11.2 Job Evaluation
11.3 Methods and Systems of JE
11.4 Job Analysis and Job Description
11.5 Linking Wage- Fixation
11.6 Implementing Job Evaluation
11.7 Summary
11.8 Review Questions
11.9 Suggested Readings
11.1 CONCEPT OF INTERNAL AND EXTERNAL
EQUITY
The basic binding factor for an employee with the organisation is the compensation
& recognition he gets for the contribution/services he renders to accomplish the
desired output or goals of the enterprise. We, all know that salary (including
allowances) or wages is the prime compensation to an employee in primarily
associating and motivating him to work. Being a social animal, he also compares his
take home-pay with others working along at the work-place and expects an equitable
compensation in relation to similar tasks performed within his organisation. And also,
the approach is also to compare the compensation levels of similar jobs/tasks in the
industry or the region or locality.
This is how the concept of Internal Equity and External Equity have come about. The
basic tenets of Taylor's Scientific Management with respect to human resource
management centre around.
RIGHT MAN FOR THE RIGHT JOB
RIGHT PAY FOR THE RIGHT JOB
Thereby, the man on the job is kept highly motivated to associate himself with the
work through suitable (right) training & placement as well as attractive (equitable)
compensation, so that skill and attitude (motivation) of the employee is most
optimum for discharging his duties. This is where the issue of determining the
relative worth of a job within his organisation to establish internal equity assumes
relevance. The method of determining the internal worth of the jobs is .known as Job
Evaluation, which establishes the rational differentials that are required between jobs,
ultimately leading to a wage-structure across the jobs in the organisation.
Accordingly, Pay/wage surveys in the industry/region attempt to compare the internal
wage structure of an organisation with those prevailing in the market. Such an
External Equity enables the management
-
to evolve a suitable wage structure to attract
required skills/talent and retain them with the organisation.
24


Job Evaluation and Internal Equity
In conclusion, it may be observed that Job-Evaluation is a means to establish the
internal worth of a job relative to others, where as pay/wage-surveys are the means to
evolve suitable wage structure to attract/motivate & retain employees by establishing
External Equity. These two techniques of scientific management would enable the
management to locate the Right man and retain him suitably motivated through Pay
or wages.
25


11.2 JOB EVALUATION
Definition
Job evaluation is over 100 years old. According to a source first attempts at the job
evaluation were made in 1871 by US Civil Services Commission. (Patton, little Field
& Self, 1964). With the advent of Scientific management and Industrial engineering
it is used widely till today, for purposes of determining differentials in remuneration,
particularly for manual jobs and related activities. Defined by British standard
Institution (1969) Job Evaluation is "A generic term covering methods of
determining the relative worth (Equity) of jobs." Job Evaluation is a systematic
(Quantitative and qualitative) method, for determining the relative worth of a job in
comparision with in and outside organisation . It helps to eliminate wage inequities
and to establish a basis for sound salary and wage-structure. Job Evaluation consists
the following:
Job analysis: the process of examining the content of a job, breaking it down into
it's task, functions, processes, operation & elements.






Job Description: description of a job based on job analysis.
Job Specification: the statement of the content of job based on job description and
job grading.
Job Grading: ranking of job as a result of job analysis
Job Classification: grouping jobs according to their worth
Job Assessment: the ascription of a monetary value on the basis of job
.
grading.
The methods used for Job Evaluation of workers & managers are marginally different
at the grading & Assessment stages, while the above generic process is usually
followed. Job Evaluation is concerned with the evaluation of the job in terms of its
requirement of skill, responsibilities, effort and other factors in performing the job. It
does not evaluate the man performing the job and it is not related with the quality or
quantity of the output or the speed of working. These are subject matters of merit
rating and work-study.
Rationale
There are number of reasons for it's extended usage. Organisations are becoming
more scientific and systematic through the introduction of various management
strategies and techniques i.e. growth, amalgamation, take-overs, stiff competition,
and in many cases shortage of skilled manpower. All combine to cause a critical
appraisal of the workforce and subsequent rationalisation with the ongoing social,
technological and economic change, the content of jobs are inexorably altering. New
and newer jobs are created every day. Even the shape of traditional jobs have also
changed in due course. . Jobs have become de-skilled and more of systematic and
new specialists have proliferated with the march of "change". The problem is further
exacerbated where traditional notions of skilled, semiskilled & unskilled work still
forms the basis of remuneration. The technology of today has changed the degree of
skill required and redistribute the same to wider exhaust. And the addition of white
collor workforce to traditional workforce has changed the traditional worker to
sophisticated manager of own job work.
Today the jobs are not what they are named and the work is not what it is paid for.So
this is the plinth of pay determination problem - assessing and agreeing the fairness
of pay differentials. Wage or Pay in equities do creep in due to a number of reasons
in our organizations namely


Compensation Structure
Favoritism by the supervisor/manager
26
and Differentials


i
ii
iii
iv
Pressures from employee groups/unions
Scarcity of Skills
Unsystematic approach to pay-structure.
Job Evaluation as a systematic approach brings in better rationalisation in Pay/wage

structure.
Objectives
The purposes that are served by JE are multi-fold considering the issues facing the
organisation at a point of time. However the primary & secondary objectives JE
serves are as below:
Primary Objectives:
To. establish wage level of a plant
To establish relative wage level in a plant.
To bring new jobs to their proper relative parity with existing jobs
To facilitate wage negotiations
Secondary Objectives
To determine qualities (Job-Specification) for new Jobs for employee selection
To determine criterion for merit rating & promotions
To analyse wage rates.
To find scope of automation & improvement
To train new supervisors
To improve working condition as better compensation in lieu. of that.
Activity
Talk to Managers of the departments of a four Companies is your vicinity and
prepare a bring write up as the Significance of job Evolution for an organization.
.
.
.
.
.

.
.
.
.
.
Job Evaluation Procedure
The general step-wise procedure for job evaluation is as under
1. Select the group of jobs
Such as workmen category, office staff, supervisory or managerial as distinct
groups.
2. Study the Job (Job analysis)
i. The jobs are studied by (a) qetting information from the employee about his
work, (b) Observing the work, and (c) Consulting the supervisors of the
employees.


Job Evaluation and Internal Equity
ii. The information gathered from different sources regarding a particular job is
recorded on the Job Analysis Sheet. Full details regarding the content of
work, equipment used, working conditions, qualifications needed to do the
work, time taken to learn the job, supervision received and given, and
responsibilities involved are noted down on the Job Analysis Record.
27


3. Prepare Job Descriptions - approval.
On the basis of detailed information, recorded in thed Job Analysis Sheet, Job
descriptions are prepared. These job descriptions state simply and clearly a
comprehensive picture of the job.
4 Device an evaluation plan - common characteristics/traits
A set of key factors such as education, experience, responsibilities and working
conditions are selected and weightages given to all these factors. Each factor is
generally divided into degrees which indicates the extent to which the factor is
required for successful performance of the job. This constitutes the job evaluation
plan. It is known as the point plan as it involves giving points to each of the jobs
to indicate their relative values.
5. Establish a committee of raters and Rate/Evaluate
A committee of raters jointly rate the jobs by applying the point plan to the job
description. In case
of any difference of opinion among the raters, efforts are made to arrive at a
conclusion by referring to facts stated in the job description, the job analysis, and
in some cases by going back to the work spot.
6 Establish a Committee of raters and Rate/Evaluate
A committee of raters jointly rate the jobs by applying the point plan to the job
description. In case of any difference of opinion among the raters, efforts are
made to arrive at a conclusion by referring to ,facts stated in the job description,
the job analysis, and in some cases by going back to the work spot.
7 Group or Classify the jobs
The point values given to the job on various factors are totalled up and the total
points secured by different jobs are classified into grades. The number of grades
into which they can be classified depends upon the policies of the organisation,
the view of management and union, and the experience and judgement of the
raters.
8 Convert job grades to money value (Wage Survey)
The point values of the jobs are converted into money values on the basis of
wage survey results and finances available for establishing a more equitable
wage differential in the organisation.
9. Obtain approval from Union & Management
10. Establish a suitable grievance Procedure
A report on the job evaluation containing full details regarding the work done and a
set of recommendations is prepared for use, at the time of implementation and in
dealing with any appeals from the employees.
11.3 METHODS AND SYSTEMS OF JOB EVALUATION.
The methods and systems of Job Evaluation
.
are divided in different categories which
are as follows:
A. CONVENTIONAL: A variety of job evaluation systems are in use and all of
them are modifications of four basic systems. These are the ranking system, the
grading
,
system, the factor comparison system, and the point system. All of them are
similar to each other in certain respects and are applicable to all types of jobs at all
levels.
I. Non quantitative
a.. Ranking method
b. Classification method


Compensation Structure
28
and Differentials


i
ii
iii
iv
v









II. Quantitative
a. Points Rating method
b. Factor Comparision method
B INNOVATIVE/NON-CONVENTIONAL: These systems are quite innovative
and use concepts of management- decision making and related aspects as factors
for establishing internal equity. These are:
Time span of Discretion method
Decision Band Method
Direct Consensus method
Guide Chart Profile method
Urwick Orr Profile method
Ranking Method
In this method simple & easy job-descriptions are made and sorted in the sequential
order of their worth as whole. The jobs common in various organisations are checked
and jobs are ranked/rated by interpolation. All the jobs in an organisation are ranked
in the order of complexity, responsibility and demands they make on the respective
employees. Ranking of all the jobs is made easier by first identifying those that come
at two extreme ends of the scale and locating the rest in the middle-region. A
committee carries out this ranking more than once and the results of repeated ranking
are pooled to arrive at the final ranking. Wherever there is significant discrepancy in
rankings by members of the Evaluation Committee, the matter is settled by mutual
discussion. The final ranking of jobs is based on the average ranking of all members
and the times ranked.
Advantages
It is simplest of all procedures
It is less time consuming
It leaves more room for unions to bargain Disadvantages
Sometimes equal differentials are assessed to adjacent ranks
None of the committee member is likely to be familiar with all jobs
Classification Method
This method is sometimes called as predetermined grading method. A limited
number of job grades are established on the basis of a knowledge about the existing
jobs in the organisation. Each of these grades is defined in terms of general functions
and qualifications required. This is followed by development of job descriptions
which briefly state the nature of duties of each job. These global job descriptions are
matched with the grades, and jobs are classified into one or the other grades.
Advantages
It is comparatively easier method
It is less time consuming
Disadvantages
It is irrational in absence of logic, and nearby jobs are sometimes put in different
classes
It is very hard to determine the pre-requisites of classes.
Point Rating Method
In this method the whole job is analysed through 5-8
f
actors and over 20-50 sub-
factors based on requirements. These factors/sub-factors are given points which totals
out as the overall position of the jobs. Though it is not scientific it is systematic
method. It is the most popular method in use today in judging the relative of worth of
jobs factors. This steps involved in this system so far described are:


Job Evaluation and Internal Equity
29


a
b
i
ii
iii
Job analysis through interview/questionnaire and actual observation.
Writing up of job descriptions from the data collected through job analysis and
checking them up with departments supervisors concerned for accuracy.
The next important step is the selection of an appropriate plan for the jobs to be
evaluated. A plan should contain such job characteristics or factors divided into a
number of degrees which would provide suitable scales for measuring the extent of a
particular characteristic present in the job being evaluated. Further, a plan should be
developed or adopted in such a way as to cover the types of jobs which are to be
evaluated.,'thus, a plan for clerical employees is not suitable for factory operatives. In
such a plan, the inclusion of the factor of physical effort may not be necessary
because of the sedantary nature of the job, but physical effort is an important factor in
almost all factory jobs. After factors have been decided upon they should be defined
to make their meanings clear and unambiguous. Due weightage should be given to
them. Here again one has to be careful in judging the relative weightage of factors.
Thus in a sophisticated process plant the factor of mental/visual effort will have a
higher weightage than the factor of physical effort, because the job of the operator is
mainly to keep watch on instruments and meters at the control panel rather than to go
for heavy physical exertion. Factors are then divided into a suitable number of
degrees between their extremes and each degree is defined to make its meaning clear.
Thus, the factor of education may, in a plan to evaluate factory operatives, have three
degrees between the lowest (which may be defined as ability to follow instructions)
and the highest (a certificate of proficiency in trade from an institution). Point values
are then assigned to each degree. Summing up, it may be stated that this step would
involve:
C. Development of an appropriate plan which involves-
Selection and definition of factors and giving due weightage to them
Deciding on the number of degrees and defining them, and
Assigning point values to degrees
An example of the factors, degrees and points used in a job evaluation plan for the
daily-rated workers of a paper mill is given below:

FACTORS AND DEGREES DEFINED FOR EDUCATION
This factor appraises the educational requirement considered necessary to perform
the job satisfactorily. A formal education or schooling may not be essential, but such
requirement is expressed in terms of equivalent years of schooling. The knowledge
might have been acquired by self-study or practical knowledge


Compensation Structure
I DEGREE
30
and Differentials


Ability to follow verbal instructions in local language for performing manual tasks of
either repetitive or closely supervised non-repetitive nature and also to count
numbers.
II DEGREE
Ability to read and write words in English and to perform simple arithmetical
calculations. Some trade knowledge in paper making, finishing, etc., equivalent to
primary school education.
III DEGREE
Ability to read and write simple. English, perform arithmetical calculations involving
use of fraction, decimals, etc.; use shop
,
tools and understand simple drawings, good
trade knowledge in 'beating, chalk mixing, etc., equivalent to class VIII standard in
High School.
IV DEGREE
Ability to read and write; perform mathematical calculations; understand detailed
sketches and proficiency in a trade like fitting, welding, etc., equivalent to
Matriculation standard.
V DEGREE
Background education suitable for understanding all aspects of a trade which may be
considered equivalent to a certificate course from Industrial Training Institute or a
first-class certificate of compentency from a Government Department.
Similar, factor and degree definitions are prepared for all other factors in the plan.
The next step in the process is the actual evaluation of jobs. Appropriate degree for
each factor is determined for each job, and point values are assigned to each degree.
The total of these point values represents the worth of an individual job. All types of
jobs covered by the plan (daily rated in the example) are thus evaluated and finally
grouped into classes according to the ranges of values between jobs having minimum
and maximum values and their clustering.
Continuing with the illustration cited earlier, two jobs are evaluated below:
Sweeper Point Turner
Degree Degree Point
Education 1 14 4 56
Experience 1 21 3 60
Initiative & Ingenuity 1 8 4 32
Physical effort 2 20 2 20
Mental demand 2 16 4 32
Responsibility for Mat./Prod./Process 8 3 24
Respon. For Tools & Equiipment 1 4 4 16
Respon. For Work of others 1 4 2 8
Respon. For Safety of others 1 4 2 8
Surroundings 3 36 3 36
Hazards 2 16 3 24
Total Points 150 316
According to the classification indicated below, the above jobs fall in classes A and
D respectively.


Job Evaluation and Internal Equity
Class Point range
A = 140-190
B = 191-240
C = 241-290
D = 291-340
E = 341-390
F = 191 & over
31



The point valtths finally arrived at are then covered to monetary values for
determining the wage rates of the jobs. A minimum wage rate can be decided upon
(may be after negotiation with union) for jobs .having the lowest point values and a
maximum rate for those with highest point values. Wage rates for all jobs can be
fixed between this rate range. Similarly, suitable wage grades or scales can be
worked out for other classified jobs after evaluation. The resulting wage structure
will reflect the true differential in the worth of jobs.
It may be stated that though at times criticisms are leveled against job evaluation, as
the process involves certain amount of subjective judgement, nevertheless, this is
perhaps the best technique evolved so far to reduce wages inequities.
Advantages
It is the most sophisticated system.









All the outcome is in hard fact numbers
Disadvantages
It is time consuming
Satisfying Benchmark jobs for the degrees are required to be put forth for rating
effectively.
Factor Comparision Method
Here important factors or elements of jobs are evaluated in terms of monetary value
and relative jobs are positioned in terms of those factors & values. The factors
usually considered in this system are five in number. Mental requirement, skill ,
physical requirements, Responsibility and working conditions.
The system involves detailed job analysis, ranking jobs in respect of pre-determined
factors, apportioning the total money paid to the different factors of the job, fitting
key jobs into the system, and locating all other jobs in relation
,
to the key jobs. The
main features of the system consist of evaluating important elements of the job in
terms of money value and establishing the relative positions of jobs in terms of
specific factors.
Advantages:
Internal comparision & External comparision of job within and out of the
industry are considered.
Monetary units are used for comparision
Disadvantages:
Conflict may arise on the valuation of each factor
It is difficult of apportion the total wage in various factors
Comparative Merits of Factor Comparison and Point Systems
Both the systems are fundamentally analytical and quantitative in their
approach. Unlike the ranking and grading systems, these are based on detailed
analysis of jobs and assessment of the different factors of the job.
Factor comparison system ranks jobs in relation in each other, while the point
system relates each job to a descriptive scale and arrives at a numberical value.
There is no clearly stated and defined scale used in factor comparison, whereas
the point system defines the factors, their degrees and the point values, in
specific terms.


Compensation Structure
These stages are more clear in the case of the point system than in factor
comparison.
32
and Differentials








Money units are used as an integral part of the factor comparison system. It is
difficult for the employees to understand the justification. The point system
makes no reference to money units.
The ranking of jobs is easier on the point system. The basis for ranking is the
number of points obtained by each job. Such ranking is difficult in the factor
comparison.
While using the point system, it is fairly common to use a variety of factors
depending upon the requirements of the organisation.
Both the systems recognise the need for giving weightages to factors. But the
point system uses point values for giving weightages to different factors. Use of
numerical values provides for greater flexibility and clarity.
The factor comparison system can be applied to a wider range of jobs including
the Executive positions, while the point system is applicable to a smaller range.
The point system is usually restricted to evaluation of jobs at the operative level.
In practice however, even the factor comparison system is restricted to this level.
The essential nature of Executive jobs is such that the factors in either system
cannot help in assessment.
Other Methods
These methods are sophisticated and are based on subtle aspects of management like
decision making etc., but are required to evaluate some Managerial and/or special/
conceptional types of jobs. Well known management consultancy organisations have
evolved through innovation such systems, when confronted with Executive
Compensation packages
a. Time Span of Discretion Methods
This system uses the concept that all make decisions in their work and the effect of
such a decision on the work/organisation is felt after a certain period for taking up a
follow-up action. Here "the longest possible time for which discretion (decision' to .
fructify) could be exercised without direct managerial review" is considered, as the
key factor in determining the levels. For e.g. A decision taken by a board member
may get reflected after a few years, as against a supervisors in a week and a worker in
a few hours similarly.
Unskilled worker - few hours
Marketing Manager- 2-3 years
Board of direction- 10 years
b. Decision Band Method
Here, type of decision to be made by the job is considered and placed in the
applicable band. The Bands are:
Band E- Policy Making decisions i.e. Top Management
Band D- Programming decisions i.e. by Senior Managers
Band C- Interpretive decisions i.e. by middle managers
Band B- Routine decisions i.e. by skilled operators on line
Band A- Automatic decisions regarding when, how & where i.e. by semi-Skilled
operators
Band O- Defined decisions by unskilled workmen.
c. Direct Concensus Method
Here the workman & evaluator reach to the value by mutual concensus.
d. Guide Chart Profile method
This method is also called Hay MSL method. Its operational distinction is that it
attempts to combine job evaluation with external comparision of market rates as a


Job Evaluation and Internal Equity
unified package. It concerns only managerial jobs. One of the main feature is the
measurement of accountability & know-how to the organisation by the job.
33


e. Urwick-Orr Profile Method
Here the point & ranking methods are applied with an addition of concensus method.
It is not a new method but an advancement in evaluation with the addition of
employees! union to a very high degree.
Activity: Evaluate the jobs of Constable in Army, Police & Para-Military and Traffic
Police by any two methods
11.4 JOB ANALYSIS JOB DESCRIPTION
Job Analysis
American Management. Association. says "Where it is difficult to describe the
common characteristics of a group of positions that are to be allocated to the same
class in the process of classification, it is often possible to adoopt the expedient of
explaining the kind of ability, kind of experience, kind of skills etc. that a person
qualified to handle the work must posses. The first step in the process of
classification is, therefore, learn all that is practical to learn regarding the duties of
each position in the service. National Personnel Association defines job analysis as
"the process which results in establishing the component of a job and ascertaining the
human qualifications necessary for it's successful performance."
Job analysis, which is the first step in the job evaluation process, consists of
analysing the jobs in detail. The idea of such analysis is to find out all relevant facts
in respect of the job. Job analysis is carried out by gathering information in respect of
the job either through interviews or questionnaires. Where the workers are illiterate
or unable to express themselves in written languages, pertinent job information is
collected through interviews. On the other hand, the information is collected through
questionnaires, wherein the workers fill up particulars about their jobs.
The nature of information gathered through job analysis the requirements of skill in
performing the job, responsibilities involved, and the surroundings in which it is
performed. The job is studied and watched when actually performed, to give a clear
picture of the tasks involved and the skills, abilities and knowledge required.
Verification with supervisor is necessary for the accuracy of the job facts. The data
obtained through job analysis are recorded on what is known as a job analysis sheet.
The analysis format may vary depending upon the nature of jobs analysed for e.g.
factors related to physical skill aspects can be covered for workman as against
managerial facets of decision making and responsibility for planning etc. for
supervisory level.
Job Description
A designation by itself does not give a clear idea as to what is involved in a job and
the situation in which it is carried out. Sometimes different jobs have the same
designation, and on other occasions very similar jobs are carried out under different
titles. It is essential that the jobs are described accurately in order that any one using
the job description can get a clear and" definite-picture of the work involved. The
validity and accuracy of any job evaluation is mainly dependent upon a reliable job
description which truly reflects what is being done by the employees.
Job descriptions are used for a variety of purposes such as selection of employees,
training, prevention of accidents, and job evaluation. Job description is further
description of jobs based on job analysis sheets and essentially contains:
Identification data


Summary of Job
Work Performed


Compensation Structure
Responsibilities of Tools, Equipment, Materials, Reports and Records, Work of
others & Results.
34
and Differentials





Work Environment/Health Hazards
Required qualities
The on the job data is collected by a combination of approaches which essentially
include: i) Observation- based on Work Study & Time Study Principles ii)
Interviewing the Employee iii) Questionnaire Method and iv.) Consulting
Supervisors. For illustration a typical job-descriptions aga cashier is given below.

Activity
Having gone through the job description of a cashier, now write down the job
descriptions of the following:
i Plumber
ii Bus Conductor
iii Mason
iv Electicion
11.5 LINKING WITH WAGE FIXATION
After all the jobs have been evaluated, checked, and reviewed, the next step is to link
the wages to points and derive a final wage structure. The major steps involved in
this are: (I) Deriving the company wage curve, (ii) Job Classification, and (iii)
Pricing of jobs. The wage curve is a graphic relationship between the job points and
the corresponding wages paid to the job. The points evaluated for each job is plotted
on


Job Evaluation and Internal Equity
the x-axis, and the corresponding wages on the y-axis. When all the jobs have been
plotted a scatter diagram would be obtained.
35


A line of best fit is obtained for the plotted points either by drawing a freehand line or
by statistical computations. Least squares trend and the second degree curve are the
statistical computations normally made.
The ultimate object of job evaluation is to determine equitable wage rates for each
job. For this the points would have to be connected into monitory values.
Establishing pay-rates for each job, though possible, is extremely difficult to operate,
and makes administration of the wage structure cumbersome. Hence the normal
practice is to classify the jobs into a definite number of categories and establish a
wage rate for each category which will be applicable to all the jobs falling in that
category.
The jobs are arranged as per their evaluated points in an ascending or a descending
manner. This will facilitate in determining the point range for each classification.
The number of categories with regard to factory jobs vary from 5 to 11 with 7 to 9
categories being the common number adopted in most of the industries. When the
final classification is established, it may be represented as follow:
Point Range Category
475 and above VI
400-474 V
325-399 IV
250-324 III
175-249 II
100-174 I
When all the jobs in the company have been classified into a definite number of
categories, each category needs to be fixed with proper wage-scales. For this it is
necessary to ascertain whether the existing wage structure of the company is sound,
reasonable, and comparable with the practices obtaining in other industries. This is
done through a wage or pay survey.
11.6 IMPLEMENTING JOB EVALUATION
It has been found that the idea of carryinging out Job Evaluation work mostly comes
from either the top management or the members of senior management. Often it is
the Personnel Manager who takes the initiative in putting the idea across to the
consideration of management. After the idea is accepted by the top management and
the employee representatives, there are three alternatives open for getting the job
done. The entire work is carried out by (1) the company employees, or (2)
consultants or (3) jointly carried out by company employees and consultants.
Whatever be the scheme adopted for use it presupposes the establishment of a Job
Evaluation Committee. This committee usually consists of management
representatives drawn from various departments. Some companies invite union
representatives to serve on the committee. Acceptance of the invitation and continued
participation in committee work by the union representatives is a communication of
their acceptance of the scheme and also helps in keeping them informed of what is
going on. There are occasion when the union representatives participate in rating the
jobs.
Usually the committee obtains the assistance of other specialists in preparing job
descriptions and developing a suitable job evaluation scheme. Outside consultants
may render this help directly or by training the company employees to carry out the
different aspects of the work involved.
The main function of the committee is to maintain liaison with management, different
groups of employees and specialists at work. They check up progress of work at
periodic intervals and carry out rating of jobs and classify them. However it is
possible for the committee to carry out the entire work. The committee serves in an
advisory capacity.



36
Compensation Structure
and Differentials


The Job Evaluation Committee completes a stage when it presents a report containing
job descriptions, evaluation system, classification of jobs, results of wage survey,
tentative formula for conversion of points into monetary terms and procedure for
implementation. All the time and efforts spent upto this stage proves to be useful only
if the recommendations are implemented by the management. There are several
factors that contribute to the nature and extent of implementation of the
recommendations.
In most cases, work up to the point of preparation of reports runs fairly smoothly, and
from that point onwards, the situation becomes more difficult and critical. The
continued interest of the management and the union makes it possible to tide over
their difficulties at the stage of implementation, in fact, the degree of cooperation
during implementation is a consequence of continued cooperation from all the parties
concerned right from the beginning In addition the development of proper attitudes,
there is also need for developing procedures for maintaining the system including a
grievance handling system. These procedures are fairly simple and are practiced in
companies where the job evaluation system is continuously in use. In spite of
thorough work prior to the preparation of report and advance planning for
implementation, problems of various kinds come up. These problems can be dealt
with keeping in mind the limits set by the Job Evaluation System.
11.7 SUMMARY
Job Evaluation work aims primarily at establishing a rational and fair basis for
developing a suitable wage structure. There are other advantages derived from this
work. Improvements in organisation procedures, better personnel administration and
improved morale are some of the results of developing a wage structure on a factual
bais.
11.8 REVIEW QUESTIONS
1. What is internal equity & How is it relevent ?
2. Job Evaluation is a continuous process. Explain why?
3. Write down the procedure of Job Evaluation.
4. Name down the various methods of systems of Job Evaluation. Also write
advantages and disadvantage of any two.
5. Explain Job Analysis and Job Description.
6. Write Short Notes on:
i Time-Span of Discretion Method
ii. Decision Band Method
iii. Job Assessment
iv. Point Rating Method
7. "Job Evaluation is not a
.
Scientific but a.Systernatic Procedure". Explain it.
11.9 SUGGESTED READINGS
1. Wage Systems by G.K.Suri
2. Hand book of Salary and Wage Systems by Angela M. Bowey
3. Wages in India by Subramanian
4. Wage Determination by Sinha PRN
5. Job Evaluation - A Critical Review by Bryan Livy
6. Job Evaluation Methods - by Lytle
7. Job Evaluation Vol 1 & 2 by Peterson