{"id":2761,"date":"2019-05-19T19:29:55","date_gmt":"2019-05-19T19:29:55","guid":{"rendered":"http:\/\/hr4free.web-romandie.ch\/?p=2761"},"modified":"2019-05-19T19:29:55","modified_gmt":"2019-05-19T19:29:55","slug":"how-to-perform-a-job-evaluation-sample-pay-structure-case-study","status":"publish","type":"post","link":"https:\/\/hr4free.com\/en\/HR-Department-Toolkit\/How-to-Develop-a-Pay-Structure-Sample-Job-Evaluation-Process","title":{"rendered":"How to Perform a Job Evaluation – Sample Pay Structure – Case Study"},"content":{"rendered":"

The company\u2019s pay structure should reflect the HR Department\u2019s strategy, as it ought to incorporate the company\u2019s organizational mission, culture and business model.\u00a0<\/strong>Thus, a\u00a0flat pay structure<\/em>\u00a0with few pay bands may reflect a rather flexible and customer-oriented organization, while a\u00a0hierarchical pay structure<\/em>\u00a0with many overlapping\u00a0pay bands<\/em>\u00a0would rather be characteristic of a pyramidal organization, in which career advancement is mainly obtained through access to promotions.<\/p>\n

TOOLS<\/strong><\/h5>\n

The “point method” job evaluation approach provides the framework for a quantification of each job\u2019s relative importance for the company (internal job value)<\/strong>; this quantification will then provide the basis for the calculation of a\u00a0theoretical salary range<\/em>. One of the advantages of this method is that it allows mitigating the importance given to job titles and promotions. It thus fits well into a\u00a0“flat” structure<\/em>, as it allows highlighting the job holder’s level of skills and responsibilities, independent of the corresponding hierarchical level.<\/p>\n

PRACTICE<\/strong><\/h5>\n

The point method is based on one or several questionnaires that contain an evaluation scale for each of the considered compensation factors.<\/strong>\u00a0These factors, their definitions and possible answers, may be adapted in order to stick as closely as possible to the reality of the company in which the process takes place.<\/p>\n

Phase 1:\u00a0<\/strong>First of all, we must identify the\u00a0job evaluation criteria (sample job evaluation model)<\/a><\/strong>\u00a0that correspond to the company’s areas of activity – the attached document shows Pro Mind Consulting’s standard\u00a0ProJob™ Eval model<\/em>.\u00a0<\/strong>Such criteria must be carefully selected, as they will be applied to all the positions that are included in the evaluation process. Such criteria, called\u00a0“compensation factors”<\/em>, will allow evaluating each job\u2019s value.<\/p>\n

Phase 2:\u00a0<\/strong>We must then attribute\u00a0weightings (sample weighting table)<\/a><\/strong>\u00a0to these compensation factors, reflecting their relative importance for the company. The choice of these weightings is made by the HR Department and represents a strategic decision.<\/p>\n

In order to better understand this, let’s first consider a\u00a0logistics company<\/em>; it will certainly grant more importance \u2013 and hence attribute more points \u2013 to the criteria that belong to the “Processes” axis in our\u00a0job evaluation model (illustration)<\/a><\/strong>. Now, let’s consider a\u00a0financial institution<\/em>; to the difference of the logistics company, it will probably put more weight on the “Finance” axis, due to its stronger financial management-orientation.<\/p>\n

Phase 3:\u00a0<\/strong>Now, let’s analyze each of the company’s\u00a0areas of activity<\/em>, in order to determine\u00a0how many possible answers each compensation factor should offer (sample job evaluation questionnaire)<\/a><\/strong>; the labels of the different answers will also have to be adjusted to the company’s vocabulary and processes.<\/p>\n

Please note that the ratio of each answer’s value to the total of points available has to be the same for each compensation factor.\u00a0Moreover, these ratios are usually identical for all users and are generated by the editor of the software<\/u>.<\/p>\n

Phase 4:\u00a0<\/strong>Appointed evaluators study each job’s\u00a0detailed specifications (or “job description”)<\/a><\/strong>\u00a0and attribute the corresponding points to the compensation factors. Each job\u2019s point value will be determined by calculating the\u00a0weighted average<\/em>\u00a0of the points obtained for the different compensation factors (i.e. by using the weights introduced at step 2).<\/p>\n

In our example, the evaluator has selected the 1st answer for the “Design and development of solutions” factor, which brings 135 x 2.5% = 3 points to the corresponding position. Similarly, if the evaluator chooses the 1st answer for the “Financial management” factor, this will bring 135 x 10% = 14 points to the corresponding position. As a reminder, the weightings 2.5% and 10% are the same as those of\u00a0weighting table (illustration)<\/a><\/strong>\u00a0that was introduced at Phase 2.<\/p>\n

Phase 5:\u00a0<\/strong>All jobs must now be sorted out hierarchically according to their\u00a0point value<\/em>. The resulting table will have to go through a 2-step internal validation process. First, the evaluation of each department’s jobs will have to be accepted by the corresponding\u00a0Heads of Departments.<\/em>\u00a0Second, the\u00a0Board of Directors\u00a0<\/em>will have to accept the final hierarchy of the company’s job values. Obviously, two types of objections may arise at this stage:<\/p>\n

    \n
  1. Objections regarding the hierarchy of job values within a department:\u00a0<\/strong>in this case, we must go back to phase 4 and reevaluate all the concerned jobs until the\u00a0 Head of\u00a0 the corresponding department is satisfied with the hierarchy of job values under his\/her supervision.<\/li>\n
  2. Objections regarding the hierarchy of job values between different departments:<\/strong>\u00a0in this case, Board members must engage in a negotiation that will lead to a modification of compensation factors’ weightings.<\/li>\n<\/ol>\n

    Phase 6:\u00a0<\/strong>Once all objections have been lifted, the Chief HR Officer will be able to set up a\u00a0pay structure<\/em>\u00a0based on the final\u00a0hierarchy of the company\u2019s jobs\u00a0<\/em>according to their point values. Each position will be included into a\u00a0pay band (sample pay structure)<\/strong><\/a>\u00a0according to the interval in which its point value lies.<\/p>\n

    Finally, the comparison of the company’s salaries with the wages paid to the holders of similar positions on the\u00a0labor\u00a0market<\/em>\u00a0will allow identifying the jobs that are either over- or under-paid in comparison to\u00a0market standards\u00a0<\/em>(i.e.\u00a0salary benchmarks<\/em>).<\/p>\n

    CASE STUDY<\/strong><\/h5>\n

    Here is a\u00a0sample comparison table (illustration)<\/a><\/strong>\u00a0that allows comparing the company\u2019s pay structure with the value of the corresponding positions on the job market. Such data (“salary benchmarks”) may for example be gathered from\u00a0compensation surveys<\/em>.<\/p>\n

    Also, the following graph shows the\u00a0distribution of the organization’s salaries vs. their point values (illustration)<\/a><\/strong>\u00a0– i.e. the relative importance of each job within the organization. The aim of this chart is to make sure that salaries increase approximately in proportion to each job’s point value. When this is the case, the shape of the graph will be close to a line.<\/p>\n

    Moreover, if relevant\u00a0market data<\/em>\u00a0is available, it will be possible to draw the\u00a0distribution of the organization’s salaries vs. their value on the job market (illustration)<\/a><\/strong>\u00a0– i.e. compare the pay structure of the organization to that of its competitors. This approach is of interest as it allows checking whether your wages are competitive on the job market.<\/p>\n

    In this example, we observe that two points land completely off the mark.<\/strong>\u00a0In this case, the\u00a0Chief HR Officer<\/em>\u00a0will have to closely examine these two jobs and investigate the cause(s) of their misevaluation. Every time some jobs turn out to be clearly over- or undervalued as compared to the benchmark, some\u00a0corrective action<\/em>\u00a0has to be taken. Once all the necessary corrections have been made, the brand new\u00a0pay structure<\/em>\u00a0is ready for implementation!<\/p>\n","protected":false},"excerpt":{"rendered":"

    The company\u2019s pay structure should reflect the HR Department\u2019s strategy, as it ought to incorporate the company\u2019s organizational mission, culture and business model.\u00a0Thus, a\u00a0flat pay structure\u00a0with few pay bands may reflect a rather flexible and customer-oriented organization, while a\u00a0hierarchical pay structure\u00a0with many overlapping\u00a0pay bands\u00a0would rather be characteristic of a pyramidal organization, in which career advancement […]<\/p>\n","protected":false},"author":3,"featured_media":340,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[176],"tags":[252,331],"class_list":["post-2761","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-job-analysis-and-evaluation-process","tag-corporate-strategy","tag-pay-structure"],"yoast_head":"\nHow to Perform a Job Evaluation - Sample Pay Structure - Case Study - HR4Free<\/title>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"How to Perform a Job Evaluation - 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