Job analysis offers valuable information for developing a compensation system in terms of what duties and responsibilities need to be undertaken. The worth of a job to the organization is as ascertained through Job evaluation. Since the whole process is largely subjective a committee is appointed to collect information and come up with a hierarchy of jobs according to their value. The evaluation is done through the use of market pricing or thorough the use of ranking point or factor comparison methods.
While job evaluation is internal equity, wage and salary surveys ensure external equity. A wage and salary survey provides information as to what other organizations that compete for employees are paying. The survey could be over all of the jobs within an organization (obviously costly and hence avoided) or limited to benchmark jobs, jobs that are used to anchor the company’s pay scale and around which other jobs are slotted, based on their relative worth to the firm. The benchmark jobs have the following basic characteristics:
1) Many workers in other companies have these jobs
2) They will not be changing in the immediate future in terms of tasks, responsibilities etc.
3) They represent the full range in terms of salary such that some are among the lowest paid in the group of jobs, others are in the middle range and some are at the high end of the pay scale.
Formal and informal surveys (through telephone, for example) could be undertaken to collect data on benefits like insurance, medical leave, vacation pay etc. offer a basis on which to take decisions regarding employee benefits. Published sources also provide valuable information regarding industry wise trends in salary structures in and around the country. The published sources in India include:
1) Reports published by the Ministry of Labour
2) Pay commission reports.
3) Reports of wage Bonds appointed by Government.
4) Reports of employees and employer’s organizations
5) Trade journals of specific industry groups etc.
One of the major problems with these sources is the comparability of jobs in the survey to jobs in the organizations. To overcome the limitations of published surveys, conduct your own surveys of important jobs. The following survey methods are generally used to collect relevant wage related information:
1) Key job matching: Under this method, similar key jobs are identified between the organization and the relevant wage particulars about those comparable jobs that are collected.
2) Key class matching: Similar classes of jobs are identified and the necessary data about those classes are collected.
3) Occupational method: Certain basic occupational groups like clerks, officers, managers are identified and then the necessary data is collected.
4) Job evaluation method: All the parties participating in the survey method, use the same method and same mechanism for evaluating similar jobs.
5) Broad classification method: Under this method braid groups of relatively homogeneous jobs i.e. by industry, by profession or by geographical and then collect relevant information about these jobs.
Group similar jobs into pay grades:
In this step, similar jobs (in terms of ranking or number points as ascertained by the job evaluation committee) are grouped into grades for pay purposes. The organizations can now focus on, say 10 to 12 pay grades instead of hundreds of pay rates. A pay grade consists of jobs of approximately equal difficulty importance as determined by job evaluation. If the point method is used, the pay grade consists of jobs falling within a range of points. Ten to sixteen grades per job cluster (factory jobs, clerical jobs), is common