CH 9 FOR PROJECT

Chapter 7: Evaluating Jobs (Job Evaluation)

○ Job Analysis: obtain job information

○ Job Evaluation: rank jobs based on value to the organization
○ Job Description is a summary of the duties, responsibilities, and reporting relationships
that pertain to a particular job.
○ Job specifications: employee qualifications deemed necessary to successfully perform
the duties the job involves.
○ KSAOs “knowledge,” “skills,” “abilities,” and “other” characteristics necessary for job
performance.
Methods of Job Analysis
1) Observation
○ Observation involves watching the employee as the job is performed and noting the kinds
of activities performed, with whom they are performed, and with what tools or
equipment. The extreme version of this process is the time-and-motion study
○ Useful for jobs in which the activities can be easily observed and for which the work
cycle is short (supplemental)
2) Questionnaires
○ An open-ended questionnaire asks the respondent (either the supervisor or the job
incumbent) a series of questions, such as the purpose and main duties of the job.
○ A closed-ended questionnaire asks the respondent to select from a list the phrases that
best describe the job.
○ Questionnaire is both reliable (i.e., that two independent observers would answer it in the
same way) and valid (i.e., that the information collected accurately reflects reality.)
3) Functional Job Analysis
○ An attempt to develop generic descriptions of jobs using a common set of job functions.
(1) who performs what, (2) to whom or what, (3) with what tools, equipment, or
processes, (4) to achieve what purpose or outcome.
○ Identifying Job Families: jobs that are related to one another and then to cluster them in
“job families.”
○ The key thing relating to jobs in a job family is that the level and type of skill
and/or knowledge required for the jobs in that family is quite similar.
Methods of Job Evaluation
1) Ranking/Paired Comparison
○ Ranking method involves asking a group of “judges” (e.g., managers, human
resource specialists) to examine a set of job descriptions and to rank jobs
according to their overall worth to the organization.
○ Paired comparison method, in which each job is compared with every other
job, one pair at a time. The number of times each job is ranked above another job
is recorded, and these pair rankings are used as the basis for ranking the entire set
of jobs.
2) Classification/Grading
○ establishes and defines general classes of jobs (e.g., managerial, professional,
technical, clerical) and then creates a series of grade descriptions for each class.
Different grades possess different levels of knowledge and skills, complexity of
duties, supervision, and other key characteristics.
3) Factor Comparison Method
 ○ used less often than the other methods. This method identifies several major
factors against which all jobs in a job class can be assessed and then rates the
extent to which each factor is present in each of a large set of “key jobs” thought
to be properly compensated at present.
4) Statistical/Policy Capturing Method
○ perhaps the most complicated method of job evaluation. This method uses
questionnaires to gather information about the task elements of each job to be
evaluated, as well as the typical time spent on each task and the relative
importance of each task.
5) The Point Method
○ The most widely used system of job evaluation.
○ create a hierarchy of jobs. As discussed in the next chapter, this hierarchy of jobs
is then transformed into a set of pay grades and pay ranges, based on the market
rates of certain key or benchmark jobs.

Applying Job Evaluation Results

● Employees Below the Range
○ Employees who are currently paid below the new pay ranges for their jobs are
referred to as “green-circled employees,” and they should be moved up to at least
the minimum of the pay range for their jobs as soon as possible..
● Employees Above the Range
○ A trickier problem is what to do with individuals who are currently being paid
above the maximum of the new pay range for their jobs. The most direct way to
address this inequity would be to reduce their pay to the maximum of the job’s
pay range.

Chapter 8: Evaluating Jobs (Point Method)

Point Method
● Identify key characteristics (compensable factors) that differentiate the value of various jobs.
● Develop a measuring scale for each factor (scaling)
● Weight each factor according to its importance
● Apply the job evaluations system to every job under the JE system, and rank list the jobs.s
● Test resulting jobs hierarchy for reliability, validity and market fit, revising where necessary
Compensable factors: Characteristics of jobs that are valued by the organization and differentiate jobs
from one another
○ Skill: ability to do detailed or routine work
○ Effort: mental effort; attention, concentration, dealing with difficult people, handling
complaints
○ Responsibility: accountability and accuracy
○ Working conditions: cleaning up after others?
Scaling the Factors
● Several “degrees” (or "levels”) are established for each factor
○ Degrees represent gradations in the extent to which a certain factor is present in a
particular job being rated
○ For example, five possible “degrees” or levels for the factor of “consequences of error”
○ Each degree needs to be defined and arranged so that degree 2 always contains more of
that factor than degree 1
Job evaluation system
1. Inconsistent construct formation
2. Factor overlaps
3. Hierarchical grounding
4. Gender bias

Validity: the extent to which a measuring instrument measures what we intend it to

Reliability: the extent to which a measuring instrument consistently produces the same measurement
result when measuring the same thing
Benchmark job: a job in the firm’s job evaluation system for which there is a good match in the labour
market data
Market comparator job: a job in the market data that matches a benchmark job within the firm’s job
evaluation system
Market line: a regression line that relates job evaluation points to market pay (in dollars) for the
benchmark jobs
Pay policy line: the intended pay policy for the organization, generated by adjusting the market line for
the intended pay level strategy of the organization
Correlation coefficient: a statistic that measures the extent to which plots of two variables on a graph fall
in a straight line
Correlation coefficient can range from +1 to –1
○ +1 or –1 occurs when all the plots fall in a straight line
○ +1: Positive relationship between job evaluation points and pay rates
○ –1: Negative or inverse relationship between job evaluation points and pay rates
Base pay structure: The structure of pay grades and pay ranges, along with the criteria for movement
within pay ranges, that applies to base pay
Pay grade: A grouping of jobs of similar value to the organization, grouped by point totals.
Pay range: The minimum and maximum pay rates (in dollars) for jobs in a particular pay grade
● Equal interval approach
○ Method to establish pay grade widths, in which the points are spread equally for all pay
grades
● Equal increase approach
○ Method to establish pay grade sizes, in which each pay grade increases in width by a
constant number of points from the preceding pay grade
● Equal percentage approach
○ Method to establish pay grade sizes, in which each pay grade increases in width by an
equal percentage from the preceding pay grade
● Broadbanding
○ Practice of reducing the number of pay grades by creating large or “fat” grades,
sometimes known as “bands”
● Intergrade differentials
 ○ Difference between the range midpoints of adjacent pay grades in a pay structure,
expressed in dollars
● Integrate differential percentage
○ Calculated by dividing the intergrade differential of each pay grade by the midpoint of
the previous pay grade
● Range spread
○ The difference between the maximum and the minimum pay level, in dollars, for a given
pay range
● Range spread percentage
○ A percentage calculated by dividing the range spread for a given pay range by the
minimum for that pay range
○ Three most common criteria:
■ Experience
■ Seniority
■ Performance
○ A person’s initial placement in the pay range may be determined by previous experience,
i.e seniority AND performance.
● Just noticeable difference (JND)
○ The amount of pay increase necessary to be considered significant by employees
receiving the increase
○ The minimum income necessary to help a worker enjoy a decent standard of living
■ allow working families to escape poverty;
■ create healthy childhood development;
■ encourage gender equality;
■ lessen severe financial stress and allow for a minimum level of economic security
■ enable all individuals to partake in the social, cultural, and civic life of the
community.

Chapter 9: Evaluating the Market

Labour Markets
● The price (wage) for a particular type of labour depends on the demand for that labour relative to
its supply, constrained by the ability of employers to pay.
○ Wages fall in businesses unless the employer is facing financial difficulties and wage
cutting is seen as a necessity.
○ Wage cuts often have negative consequences for the employer, such as increased
turnover and reduced employee performance.
■ New firms may take advantage of a labour surplus by hiring employees at a
lower rate than existing employers are paying.
Ability to Pay
● Where labour scarcity, private sector employers are willing to increase the price of labour until
price = the value received from that labour ( net revenue generated)
● In practice, employers' key considerations are:
○ Company profitability
○ Importance of labour to the organization
○ Proportion of labour costs to total costs
○ In the public sector, the organization’s ability to pay is determined through collective
bargaining & potential strike action:
■ How essential is the service
■ How willing are public officials and the general public to endure a strike
 ■ Size of budget available
■ Easier to obtain a budget increase.
Impact:
● Public sector > private sector for jobs at the lower end of the job hierarchy
● Private Sector > public sector for jobs at the higher end of the job hierarchy

Compensating differential: a higher level offered by an employer because of undesirable aspects of

employment
○ i.e seasonal employment, cost of living, poor working conditions, poor industry
reputation

Relevant Labour Market

● Market comparator firms: firms selected as comparators when constructing a sample of market
data
○ Competitors in the same labour market
○ Competitors in the same product/service market
● Occupational grouping: how specialized and industry-specific is the occupational group
○ Geographic scope of the market
○ Local, regional, national, or international

Sources of Data
● Third party surveys- through others
○ Industry groups
○ Government agencies
○ Websites
○ Compensation consultants
○ Compensation data websites
● In-house surveys- carry out your own
○ Formal i.e consulting
○ Informal, i.e help wanted ad

Steps in a Survey
● 1. Identify the jobs to be surveyed
○ Selecting jobs and asking employers to compare their jobs with these jobs
○ Jobs should be well understood & numerous in the job market
○ Survey 10-15% of your Jobs
○ Job title is provided, and a brief job summary
○ Employers are asked to provide compensation data
○ When selecting these jobs, it is important to represent a variety of job families and to
provide examples within each family at both the entry level and the top level.
2. Determine what information to collect
-general AND job specific questions
● Personal Interviews
○ Provide the best-quality information
○ Very costly
● Telephone Interviews
○ Much cheaper than personal interviews
 ○ Produce a higher quality of information than questionnaires since there is an opportunity
to confirm job matches and to clarify survey questions.s
● Questionnaires
○ Cheapest method
○ Least reliable method; no control over who is filling out the surve,y and no way of
knowing whether it is being done correctly
● Internet Surveys
○ Can facilitate the tabulation of data
○ Facilitates contact with respondents throughout the survey process
○ Generate quicker responses and higher response rates than mail surveys
○ Cost less and yield data of no less quality than that produced by mail surveys
3. Determine whom to survey
○ Name, number, location of employees
4. Determine how to collect the data
● Analytics
○ Minimum
○ Maximum
○ Midpoints
○ Mean base pay
○ Performance pay
○ Indirect pay
○ Total compensation
Mean: A measure of central tendency of a set of values derived by summing the values and dividing by
the number of values
Weighted mean: A measure of central tendency of a set of values that adjusts the average based on the
number of cases to which each value pertains
Median: The middle value in an ordered list of values
Quartiles: Division of an ordered list of values into either four groups or 10 groups (deciles)
Interquartile range: A measure of pay dispersion across employers, calculated by dividing the
difference between the 25th and 75th percentile values by the value of the 25th percentile
Compa-ratio: A measure of distribution of employees within their pay range calculated by dividing the
mean base pay by the midpoint of the pay range
○ Inspecting the data
○ Drawing inferences from the data
○ Examining the pay range distribution
○ Applying the data
Aging the data: The process of adjusting compensation data to bring it up to date with the period in
which the new compensation will take effect

● Limitations
○ Data may not fit all of the organization's jobs, especially if organized differently from the
norm.
○ May omit important information
○ May vary dramatically in quality of job matches and methodology
 ○ Developed when compensation systems were simpler
○ Firms may provide other important benefits that are difficult to price out; they may
include these when reporting indirect pay, others do not.
○ Bias in the sample of firms
○ Surveys attempt to reflect the value placed on jobs by the labour market, but the use of
these surveys assumes that the market values jobs fairly

Chapter 10: Evaluating Individuals

● Performance Appraisal: evaluate the overall level of job performance displayed by individual
employees and ways to link the resulting appraisals to financial rewards.
Why?
○ Administrative Reasons
○ Developmental
○ Supervisory
○ Symbolic
● Reliability: two different raters, judging independently, will come up with similar ratings of a
given individual
● Validity: then the individuals identified by performance appraisal as the most effective
employees are, in fact, the best performers.
Types of Errors
● Central Tendency
○ occurs when appraisers rate all employees as “average” in almost everything. Less
commonly, some raters have the opposite tendency—to rate all individuals as either
extremely good or extremely bad, with nobody in the middle.
● Halo Effect
○ occurs when one characteristic for a given individual is judged to be either very good or
very bad, which then prejudices the rater to rate all characteristics of that individual at the
same level.
● Recency
○ tendency to place excessive weight on recent behaviour, with earlier employee behaviour
having faded from memory.
● Contrast
○ one employee who is either exceedingly good or exceedingly bad, which causes the
appraiser to rate other employees either worse (or better) than they deserve.
● Similarity
○ tendency for appraisers to rate individuals who are similar to themselves more highly
than those who are different.
● Beauty Effect
○ Performance appraisals can be biased by the appraisee's perceived physical attractiveness.
● Leniency
○ valuators tend to be more lenient and rate all subordinates highly
● Harshness
○ others may be inherently harsh (the harshness effect), rating all subordinates poorly.
Appraisal Methods
 ● Ranking and Forced distribution
○ Paired Comparison: determines the rank order of all employees in a unit by comparing
each employee with each of the other employees in the unit
○ Forced Distribution:a method that stipulates the distribution of employees across the
performance categories
○ Graphic Rating: a method in which they use a numerical scale to rate employees on a
series of characteristics
● BARS
○ Appraisal method that provides specific descriptors for each point on the rating scale
● BOS
○ Appraisal method under which appraisers rate the frequency of occurrence of different
employee behaviours
● MBO
○ An approach to management that involves setting employee goals and providing
feedback on goal accomplishment
● Field review
○ Short period of direct observation of the job performance of the individual being rated
● Combination approaches
○ Involves aggregate information on employee outputs from various touchpoints. (check in
every few months with supervisor)
Sources
● Superiors
● Peers
● Self
● Customer

360 Degree Feedback

○ An appraisal system that uses feedback from superiors, peers, subordinates, and possibly
customers
■ Adv: fair, accurate, credible
■ Dis: must be voluntary, complex
○ Multisource: Use standardized forms that provide numerical ratings of the appraisee
along numerous dimensions.
720 Degree Feedback
○ addressing the complaints surrounding 360-degree feedback
○ more focused on ongoing development.

Performance Management: Method for improving employee performance based on org goal-setting for
individuals or groups, feedback on progress, encouragement and support, and rewards for success.

SMART goals: Specific, Measurable, Achievable, Relevant, Timely

1. Goals are tied to the strategy and key success factors of the business.
-have TRUST between employee and supervisor
2. Measures are the primary indicators of success.
3. Feedback is the data used to determine progress toward goals.
4. Reinforcement is the active encouragement and support for action.
5. Rewards are what the individual or team receives for achieving desired
Results.
Designing a System
1. What should be the objectives of the system?
2. What is the most appropriate measurement system?
3. How frequently should appraisals be conducted?
4. How are appraisals to be linked to pay?
5. How should feedback be provided?
6. How is procedural justice to be achieved?
7. How are raters to be trained and evaluated?
8. How is the system to be evaluated?

Steps
● Define Objective
● Determine PM system
● Frequency of Appraisals
● How to link to Pay i.e merit pay grid
● Feedback
● Rater Evaluation