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Compensation Policy
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Objectives

To get insight into micro concept of compensation. understand internal consistency and external parity understand job evaluation and Job pricing. know Four Basic, Traditional Systems of Job Evaluation

To

To To

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Job Evaluation
Consist

of

Job Analysis Description Specification Grading Classification Assessment/Job Pricing

Job Job Job Job Job

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Rationale
Favoritism Pressure Scarcity

by the supervisor

from employee group/union of skills approach to Pay structure

Unsystematic

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Job Evaluation Procedure


Study

of the jobs in the organization what the organization "is paying for"

JA

Deciding job

hierarchy

Select

a method of appraising the organization's jobs jobs to develop a job structure


assigning

Comparing

decision makers, reaching and recording decisions, and setting up the job hierarchy.

To

arrive at a wage structure

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Indian way of JE
In

India, the National Institute of Personnel Management, has laid down the following steps which should be taken to install a job evaluation programme:
Analyse Select

and Prepare Job Description

and Prepare a Job Evaluation Plan Jobs

Classify Install

the Programme the Programme

Maintain

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Factors in job evaluation


Training

level or qualifications requirements and skills requirements of tasks

Knowledge Complexity Interaction

with various levels of the organization and independent judgment authority and responsibility

Problem-solving Accountability

Decision-making Degree

of supervision required requirements

Cross-training

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JA
Includes Job

purpose: Job duties Job criteria / results Records and Reports Supervisor Authority Working instruments Health and safety Working conditions Responsibilities Knowledge Skills/ Experience Abilities required on JA

More

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Techniques of JE
Conventional Non-quantitative

Ranking method Classification method

Quantitative

Point rating method Factor comparison

Innovative/Non-Conventional Time

span of discretion method Band

Decision Direct

consensus

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Conventional Method
Non-quantitative

Ranking method

Under this system, all jobs are arranged or ranked in the order of their importance from the simplest to the hardest, or in the reverse order, each successive job being higher or lower than the previous one in the sequence

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Conventional Method
Non-quantitative

Classification method /Grading

A number of pre-determined grades or classifications are first established by a committee and then the various jobs are assigned within each grade or Grade descriptions are the result of the basic job information which is usually 'ed from a job analysis

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Grading example

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Conventional Method

Quantitative Method:
Point

rating method:

This

method is the most widely used type of job evaluation plan. It requires identifying a number of compassable factors (i.e., various characteristics of jobs) and then determining degree to which each of these factors is present in the job. different of points is usually assigned for each degree of each factors. the degree factor is determined, the corresponding number of points of each factor are added and overall point value is obtained.

Once

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Factor Comparison
Developed

in 1926

Benchmark

jobs and its method of comparing jobs and fixing wage rates. and describe clearly the factors to be generally recommended:
requirements

Select

used .
Factors Mental Skill

requirements requirements

Physical

Responsibilities Working

conditions

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Factor Comparison
Steps

for factor comparison method


benchmark jobs benchmark jobs by factors money values to factors

Selecting Ranking

Allocating Ranking

the other jobs and wage fixing

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Non-Conventional Method
Time

Span of Discretion Methods

Uses

concept that all make decision in their work and effect of such decision is felt in organization after certain period.

Unskilled worker few hrs Marketing Manager 2-3 yrs Board directors 10 yrs

Decision Band Band Band

Band Method

E- Top mgt D- Sr, Manager C- Middle Manager

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Non-Conventional Method
Direct

Consensus Method

Workman Guide

and evaluator reach the value by consensus

Chart profile
in managerial pay on three critical factor

Used

Emphasizes

Know-how Practical exp(functional expertise) specialized and technological depth, Width of managerial knowledge, Human relations Problem solving- thinking env , , challenging env. Accountability - Freedom to act, impact on result magnitude of success annually.

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External Parity
Pay

Surveys conduct a survey?


and retaining competent employees pay trends in marketplace

Why

Hiring

Recognizing Defending Data

pay practices in court of law

Collection Techniques
questionnaire

Telephone Mailed Online Face

to face

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External Parity
Type

of Pay surveys Survey method

Informal External Job JD JE Pay

title method

method method

Levels
of Wage trend line structure

Development

Compensation Designing

pay ranges and band.