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There should be a definite plan to ensure that differences in pay for jobs are based
upon variations in job requirements.
The employees and the trade union, if there is one, should be informed about the
procedures used to establish wage rates.
The wage should be sufficient to ensure for the worker and his family reasonable
standard of living.
Purpose of Compensation
For Employer
Retaining talent
Consistency in compensation
For Employee
Work-life Balance
Mental requirements,
Physical requirements,
Skill requirements,
Responsibility level, and
Working conditions (risk, time, hazards)
Organizational Affordability
Man power planning
Output vs salary ratio
Market Rate for Talent
Economic Conditions
Job Evaluation
Job Specification
Job Description
Time and Motion Study
Market Survey
Demand and Supply- Talent Mapping
Industry wise bench marking
Labor Market
Employer Information
Employer Association
Professional Association
Salary Survey
HR Service Providers
Compensation Administration
JOB EVALUATION: The process of analysing jobs from which job descriptions are
developed.
Job evaluation techniques include the use of interviews, questionnaires, and observation.
A system for comparing jobs for the purpose of determining appropriate compensation levels
for individual jobs or job elements.
JOB DESCRIPTION: A critical component of both compensation and selection systems, job
descriptions define in writing the responsibilities, requirements, functions, duties, location,
environment, conditions, and other aspects of jobs. Descriptions may be developed for jobs
individually or for entire job families.
1865 - Karl Marx wrote in Das Kapital that the value of goods and services is based
on the amount of labor that goes into them
1885 - Frederick Winslow Taylor stated that the content of labor in labor determines
the price of labor
1935 - Edward Hay developed the Hay point factor system
1963 - The Equal Pay Act prohibited discrimination on the basis of sex…for equal
work on jobs, the performance of which requires equal skill, effort, and responsibility
and which are performed under similar working conditions.
1. To involve the people occupying the positions under evaluation. This is especially so if
you think your organizations job descriptions are poorly written or out of date. The
people in positions and their immediate supervisors have the best idea of what the
job is really about.
2. Job evaluation is most effective as a participative exercise and this in itself can
improve employment relations. It is therefore recommended that job evaluation is
introduced or revised jointly by allowing management and employee representatives
to discuss relevant issues initially in a non-negotiating forum
3. To ensure integration of internal fairness and external competitiveness.
A set of compensable factors are identified as determining the worth of jobs. Typically the
compensable factors include the major categories of
Job Evaluation
Internal External
consistency consistency
Industry, national,
Intra-organisation
global
This potential to blend internal forces and external market forces both strength and an
opportunity to job evaluation system.