Running head: CURRENT EVENT PAPER 2, JOB EVALUATION AND WAGE ADMINISTRATION 1

Current Event Paper 2, Job Evaluation and Wage Administration

Cheryl M. Calaustro
HRD 502 Introduction to Human Resources Management
McDaniel College

CURRENT EVENT PAPER 2, JOB EVALUATION AND WAGE ADMINISTRATION 2
Tardiness, absenteeism, turnover and strikes are a result of employee unhappiness.
More often than not, the foundation for most employees perceptions of fairness, or equity, of
the pay system including base wages and salaries, is the root of unhappiness. In Fred Eargles
article, Job Evaluation and Wage Administration for Beginners, the author states that
company hiring and retention rates are a direct function of its job evaluation and wage
administration system (2005). Correctly implementing these two human resource functions
requires careful research and analysis of internal structures and national standards which will
curb financial losses due to decreased employee insubordination and turnover.
Jobs and Wages Review
The primary objective of any base wage and salary system is to establish a structure for
the equitable compensation of employees, dependent on their jobs and their level of
performance (Byars &Rue, 2011). The analysis of jobs, grouping and comparison to other jobs
within the system is known as job evaluation. The implementation of job evaluation has four
steps: job analysis, job description, evaluation or classification and job pricing (Eargle, 2005).
Wage administration, on the other hand, encompasses proper compensation of employees
through rate setting, incentives, promotion policies and fringe benefits. The use of a point
system is commonly used not only to classify jobs but aid in assigning wages (Eargle, 2005).
The article stresses that data research is needed to make accurate judgments of jobs
and wages. The use of multiple, extensive sources as well as firsthand observation will also
help to inform evaluators. Eargle goes on to state that it is important to distinguish between
rating the job and rating the person performing the job (2005). While these two activities are
CURRENT EVENT PAPER 2, JOB EVALUATION AND WAGE ADMINISTRATION 3
linked, job evaluation is focused on job requirements the duties, responsibilities, demands
and work conditions (Eargle, 2005). Much data can be generated to inform job evaluation and
wage administration; it is up to the evaluators to turn the data into useful information (Eargle,
2005). Finally, job evaluation and wage administration systems should be fluid and adapted to
properly describe the jobs within the company in relation to market standards. No one point
scale can be used to evaluate all jobs (Byars &Rue, 2011).
Guam Applicability
In 2010 the Hay Group, an international management and consulting firm, evaluated the
existing jobs and salaries of the Government of Guam. At its conclusion, the Hay study
recommended that salaries be increased for all employees of the government (Hart, 2010). The
current Government of Guam pay structure was found to be uncompetitive and inappropriately
positioning employees in relation to the marketplace. The study recommended the
implementation of a broadbanding compensation plan that would move employees to the next
highest step in the salary range or to bring employees up to the minimum of market salary
ranges (Pangelinan, 2011). Typical Guam Government wages were found to be approximately
as high as 70% behind the industry average (Pangelinan, 2011). It will cost the island $18
million for the government to get back on track and compete with the national average (Hart,
2010). Adherence to a job evaluation and wage administration system would facilitate ease of
administration for both classification and compensation purposes (Pangelinan, 2011).
The last comprehensive classification, evaluation and compensation study of Guam
Government jobs was nearly two decades ago (Hart, 2010). This extreme example illustrates
the need and importance for an effective job evaluation and wage administration program. The
CURRENT EVENT PAPER 2, JOB EVALUATION AND WAGE ADMINISTRATION 4
maintenance of internal equity and external competitiveness enables the government to attract
and retain high quality employees to fulfill agency needs and accomplish agency missions. The
alternative will only incubate employee unrest, an unstable workforce and loss of resources and
revenue (Eargle, 2005). The base wage and salary system often reflects the atmosphere of the
entire organization. If the base wage and salary system is perceived as being fair and equitable,
the organization is usually viewed in the same light. The reverse is also true. It is therefore
critical that an organization develop and maintain a sound base wage and salary system to
preserve social and financial well being (Byars & Rue, 2011). In conclusion, it is prudent to be
consistent with the application of job evaluation and wage administration systems as it will
result in employee happiness through the reinforcement of a work culture where employees
are recognized and rewarded competitively as compared to the market for achievement of
their expected objectives and goals. Organizational success will result as a consequence.

CURRENT EVENT PAPER 2, JOB EVALUATION AND WAGE ADMINISTRATION 5
References
Byars, L. & Rue, L. (2011). Human Resource Management. (10th ed.). New York: McGraw-Hill
Irwin.
Eargle, F. L. (2005, November-December). Job evaluation and wage administration for
beginners: improve your company's hiring and retention with a job evaluation and wage
administration program. OfficeSolutions, 22(6), 26+. Retrieved July 12, 2013 from
http://go.galegroup.com/ps/i.do?id=GALE%7CA139349765&v=2.1&u=west41605&it=r&
p=AONE&sw=w.
Hart, Therese. (2010, September 3). Hay Study Group: Raise GovGuam wages. Marianas
Variety. Retrieved July 12, 2013 from http://mvguam.com/island-stir/14065-hay-study-
group-raise-govguam-wages.html.
Pangelinan, V. (2011). The Office of Senator Vincent (ben) Cabrera Pangelinan. In Hay Study.
Retrieved July 12, 2013, from
http://www.senbenp.com/wordpress/Analysis%20PR%20Packet.pdf.