Tidbits of LIFE and WORK: Job worth

This is one of the areas that I have been meaning to figure out. How do we know the real worth of the job we have done?

Job Worth - Factors That Determine the Value of Work

Making a studied decision of the value your organization places is jobs preformed for it can greatly affect job retention and company performance.

How can we measure the value of a job? - Here are four possible methods:

Traditional Approach - Considers internal equity, external equity and organizational philosophy towards compensation
Broadbanding - Replaces narrow wage scales with wider ranges of pay. Pay can be flexibly changed to match performance, skills or duties
Pay for Knowledge - Sets a wage based on a specific skill or knowledge set
Team Pay - Group compensation based on the team performance. This encourages employees to strive towards a common performance goal

What is job evaluation? - Job evaluation is used to establish internal equity among jobs that establishes the basis for assessing and rewarding the contribution of the job to the goals of the organization. Job evaluation is not based on the credentials of, or contribution made by the person holding the position, but is seen as the systematic process of assessing the value of each job in relation to other jobs within an organization. The goal is to establish a ranking or hierarchy of worth within the organization. Job evaluation involves four steps: Job analysis, job documentation, job rating and creating a job hierarchy.

Job Analysis - Collecting and evaluating information about the job. Should describe the nature of the work, that is the knowledge, skills, mental or physical effort and conditions of the job
Job Documentation - Process of recording job content, normally through a job description
Job Rating - Uses the organization’s job evaluation plan to compare a job to an evaluation instrument
Creating the Job Hierarchy - Job rating scores are used to produce a ranked list of positions within the organization and wages paid for each position on the list

There are several methods that take these steps to develop a job evaluation:

Point-Factor Method - This is an extremely popular method because of perceived objectivity, stability and reliability for pay setting purposes. It compares jobs by worth factors, which assigns quality to define difficulty. Total score is compared to benchmark pay scales in similar positions elsewhere
Rank-In-Person - This is the system used in military and paramilitary groups like police departments. Rank is earned through education, performance, time in grade and skills. Rank belongs to the individual and not a task. Employees can move throughout the organization without an associated change in wages
Market Based - Managers have authority to hire employees based on experience, desired outcomes and an overall project budget. Normally this is used in specific, short-term projects
Grade Banding - This system reduces the total number of pay classifications and assigns a wide band of compensation. Pay can be flexibly changed to match performance, skills or duties. A concern with this system is that overall wages will drift towards to the high end of the scale
Job Ranking - Positions are ranked by importance or by another fact important to the group and assigned a pay rate
Job Classification - Comparison is made to an established set of job classes with predetermined requirements and pay rate. Best fit of job to classification sets the wage

What the difference between a position classification, a job description, and a job specification?

Position Classification - Comparison is made to an established set of job classes with predetermined requirements and pay rate. Best fit of job to classification sets the wage. Specialization forces additional classes. Classes can make it difficult for employees move from one position to another
Job Description - A written statement of the employee’s responsibilities, duties and qualifications. It will describe desired skills, education and working conditions
Job Specification - A subset of specific skills, abilities or characteristics required for a particular position

What is internal and external equity?

Internal Equity - How does compensation compare to other employees within the same organization
External Equity - How does compensation within the organization compare to similar positions in similar industries

How can we measure how much someone should be paid? - Establish wage benchmarks with comparable industries and use a valid job evaluation system to create a job hierarchy for your organization. Consider the use of a Pay for Performance system like merit pay, profit sharing, bonuses or incentives. The worth of a job to the employee is not always strictly financial, often they are low cost intangibles. Be sure that compensation is legal and does not discriminate based on race, age or sex.