JOB EVALUATION & BASIC COMPENSATION STRUCTURE

Presented By:Pratik Gandhi Panchali Gadre Rashmi Shah Nikita Jagdale Naval Dhawan Rohit Kale

JOB EVALUATION

Job evaluation is a systematic process of analyzing and evaluation jobs to determine the relative worth of each job in an organization. It forms the basis for designing the compensation management system in an organization. since the compensation management and the perceived fairness of compensation administration have a big influence on employee morale and satisfaction.

JOB EVALUATION

According to the Bureau of Labor Statistics (USA), Job evaluation is the evaluation or rating of jobs to determine their positions in the job hierarchy. the evaluation may be achieved through assignment of points or use of some other systematic method for essential job requirements such as skill, experience and responsibility.

OBJECTIVES

To determine relative worth of different jobs in an organization and providing the basis for the compensation management system. To determine the position and place of a job in the organizational hierarchy. To clarify the responsibility and authority associated with each job. To manage internal and external consistency in the compensation.

OBJECTIVES

To maintain complete and accurate data relating to job description and job specification of various jobs. To ensure employee satisfaction with respect to the compensation. To avoid discrimination of any kind in wage administration. To provide the basis for classification of new or changed jobs.

PRINCIPLES

The job dimensions have to be properly selected and should be rated in accordance with the demands of the job. The dimensions selected for the purpose of rating should be clearly defined to ensure clear understanding by the employees. The evaluation program should be explained and illustrated to the employees at all levels. The employees as well as the supervisors should have confidence in the system of evaluation.

PRINCIPLES

The employees must be actively involved in the evaluation program. This helps develop a sense of trust in the whole exercise. Market factors should be taken into consideration while evaluating jobs. For example, if there is a scarcity of statisticians in the job market, this fact has to be given due importance while evaluating the job of a statisticians.

PROCESS
Gaining acceptance Creating job evaluation committee Finding the jobs to be evaluate Analyzing and preparing job description Selecting the method of evaluation Classifying jobs

TECHNIQUES
NonQuantitative

Ranking Method

Job Classification

Ranking Method

The jobs are ranked in order of their importance from the most important to least important jobs in the organization. Jobs are compared to each other based on the overall worth of the job to the organization. The 'worth' of a job is usually based on skill, effort (physical and mental), responsibility (supervisory), and working conditions.

Merits Very effective when there are relatively few jobs to be evaluated. Simple to understand for employees and supervisors. Demerits Difficult to administer as the number of jobs increases. Since there is no standard used for comparison, new jobs would have to be compared with the existing jobs to determine its appropriate rank. In essence, the ranking process would have to be repeated each time a new job is added to the organization

Job Classification

The jobs are classified and graded based on their significance and their worth to the organization. The jobs at various levels in an organization are placed under different grades or classes, which are clearly defined. Classes are formulated on the basis of some common denominations, such as job responsibility, skill, knowledge, education required, and so on. Standard description is matched with job descriptions in the organization and which nearly matches the job description determines the jobs grading.

TECHNIQUES

Quantitative

Point Rating Method

Factor comparison Method

Point rating method-Pratik

The point method or the point rating method is one of the most widely used methods of job evaluation. In this method, a quantitative point scale is developed to evaluate the jobs. The number of scales to be used and other aspects of implementation are determined by the job evaluation analyst or the human resource function.

Steps in Point method

Determine the job factors or compensable Determine the sub factors Define the degree statements or profile statements Assign points to factors,subfactors and degrees ( For e.g. if experience is critical to a job, degree I might be 20 points, degree II might be 60 points, degree III60 points, degree IV -80 points). Preparation of chart Applying point system

Factor comparison method-Panchali

Example
Job Skill Mental Physical Responsibili Working Requiremen Requiremen ty Conditions t ts Requiremen ts 1 2 1 4

Toolmaker

Mechanist

Electrician

Assembler

Merits

It is logical and objective method of ranking and grading jobs for the purpose of compensation management. It helps in preventing & removing discrepancies in the wage structure of an organization. It helps in maintaining higher worker satisfaction level by logical explanation of issues related to job differentials

Merits

It facilitates the entry of new jobs into the organizational wage structure and help in appropriate evaluation and pay structure fixation accordingly. It helps in comparison of organizations wage structure with that of competitors and market rates. It helps in decisions related to selection, transfer and promotion of employees

Demerits

Changes in jobs and its factors can render job evaluation techniques outdated and irrelevant. It can give rise to employee grievance if not properly formulated or implemented. It introduces rigidity into the pay system and reduces opportunities for mangers top exercise discretion. It takes long time to implement and may involve formalization of rules leading mismatch b/w financial condition of firm and established wage structure.

COMPENSATION
BASICS

COMPENSATION

Pay structure in a company depends upon several factors.

settlements. Labour market situation. Companys nature and size. etc.

Pay structure consists of certain grades, scale and range of pay in each scale. Each scale has a minimum and a maximum limit. Jobs places within a particular grade carry the same value though the actual pay in a grade depends upon length of service and or performance of the employee.

COMPENSATION IN INDIA

Pay structure in India generally consists of the following components.

wage/salary Dearness allowance (D.A.) and other allowances. Bonus and other incentives. Fringe benefits or perquisites.

BASIC WAGE-Rohit

The basic wage provides the foundation of pay pocket. It is a price for services rendered. It varies according to mental and physical requirements of the job as measured through job evaluation. Divided in following parts:
MINIMUM

WAGE FAIR WAGE LIVING WAGE

MINIMUM WAGE-Nikita

Covers the bare physical needs of a worker and his family. But the committee felt that the minimum wage should for the preservation of the health, efficiency and well- being of the worker by providing some measure of education, medical facilities and other amenities. Statutory minimum wage is fixed from this point of view. Should be paid to every worker irrespective of the capacity of the industry to pay.

FAIR WAGE
Fair wage depends on several factors like The productivity of labor. The prevailing rates of wages in the same or similar occupations in the same region or neighboring regions Level of national income and its distribution The place of the industry in the economy of the country, and The employers capacity to pay.

LIVING WAGE

It is the wage that provides, in addition to the necessities of life certain amenities considered necessary for the well-being of the worker in a particular society. It should ensure a normal standard of life to the average employee regarded as human beings living in a civilized community.

STATE REGULATION FOR WAGES

The minimum wages act, 1948 The payment of wages act,1936 The equal remuneration act,1976 The industrial dispute act, 1947 Wage boards Pay commissions

DEARNESS AND OTHER ALLOWANCES

The Dearness Allowance is calculated as a percentage of an Indian citizen's basic salary to mitigate the impact of inflation on people. The payment of the Dearness Allowance is not restricted to specific occupations Dearness allowance has now become an integral part of the wage system in India. The following methods are used to calculate dearness allowance:

FLAT RATE

According to this method, D.A. is paid at a flat to all workers irrespective of their wage levels and regardless of change in the consumer price index. This method was used in jute, cotton and engineering industries in West Bengal in the early days of adjudication.

GRADUATED SCALE

Under this method, D.A. increases with each slab of salary. Therefore, D.A. as a percentage of basic pay decreases steadily as shown in table:
Amount (Rs.) 100 150 200 250 of D.A. D.A. as percentage of maximum of the pay scale 20 15 13 12.5

Pay scale (Rs.) 0-500 500-1000 1000-1500 1500-2000

FRINGE BENEFITS

A broad range of benefit and services that are provided by an employer to his employ or associate in addition to his wage and salary.

These benefits are based on critical job factors and performance and it represents indirect compensation.
Fringe Benefits provide output in terms of employee loyalty and co-operation, employee welfare and create Organizational image.

FRINGE BENEFITS
For Example: You could receive a benefit when you

Use a work car for private purposes. Are provided with a cheap loan. Are provided with free private health insurance. Are provided with cleaning services for your private residence.

FRINGE BENEFITS
Categories: For Employment Security : Overtime pay, leave for maternity, jobs to the sons/daughters of the employees and the like.

For Health Protection: Health insurance, medical care, sick benefits, sick leave, etc. For Old Age and Retirement: Pension, provident fund, medical benefits for retired employees, etc. For Personnel Identification, Participation and Stimulation: Anniversary awards, attendance bonus, canteen, stress counseling, safety measures etc.

FRINGE BENEFITS
Need and ImportanceTo retain the employees. To motivate performance. As a social security. Trade Union demand. Skill shortage. Employee Demand.