The productivity of any organization or enterprise to a large extent, depends on the morale and motivation of its employees. One of the principal factors affecting this is the “pay policy” and “pay structure” of the organization. Paying employees less than the work they perform generates dissatisfaction leading to low morale. Additionally, the hidden cost of paying employees more than necessary also is not desirable.

External equity means that the organization’s levels of pay compare favorably and competitively with the salaries offered by comparable organizations for similar jobs. External equity is achieved by making certain that positions are being paid at levels that salary surveys and other data indicate are going rates in the marketplace from which employees are recruited.

A cornerstone of good employee relations is the payment of salaries that each employee believes reflect his or her level of responsibility and value as compared to other employees. When employees believe that management is not recognizing their contributions, external equity drops in importance. More significant is the fact that even if there is sound external equity, an employee who believes his or her salary is not “fair” will find fault with the organization’s overall pay structure. Hence, organizations must maintain internal equity as it helps in maintaining high motivation and morale.

Since the majority of employee dissatisfaction is traced to pay inequities which in effect results in higher labor turnover and inefficiencies (apart from the many other problems in industrial relations), job evaluation concerns itself with the prejudice in pay structure. It provides a sound basis for the establishment of fair and equitable rates, taken from the relative worth of jobs in the organization.

The installation of a company-wide job evaluation program is deemed expedient and necessary to establish an orderly, rational, systematic structure of jobs based on their worth to the business, to justify the existing pay rate structure, or to develop one that provides for internal equity, and to assist in setting pay rates that are comparable with similar jobs in similar industry or other businesses.

ExeQserve offers technical assistance to our clients in the design of a Salary Structure and Job Evaluation Program geared towards creating a compensation system designed to encourage skill acquisition, effort, commitment, adaptation, innovation, or other forms of behavior that are considered most essential for organizational success and at the same time, compatible with PowerVision’s corporate values taking into account the economic, organizational and technological constraints confronting the company.

Basic to the proposed compensation system is that it must be both rational and equitable: rational in the sense that it is adequate to attract and retain a sufficient number of human resources with the varying skills required as well as encourage the employees to perform well; at the same time, they must perceive the remuneration received by the staff as proportionate to their skills and their contributions to the productive process.

The ExeQserve Consultant therefore proposes to assist in the Job Evaluation Program and Design of Salary Structure to be accomplished in three (3) phases:

PHASE 1: JOB ANALYSIS

Job Analysis is the process of determining and defining the contents of jobs. There are three methods of collecting information about jobs: observation, interviews and questionnaires. Below are some of the key activities involved in job analysis.

  • Gather existing Job Documentation and Distribute and Retrieve Job Analysis Questionnaires (JAQs)
  • Conduct Validation Interviews and Work Observations
  • Prepare Job Descriptions and Organizational Structure/Chart

PHASE 2: JOB EVALUATION

Job Evaluation is a systematic means of determining the worth of a specific job in relation to other jobs in an organization, which in turn helps to determine the level of compensation paid. The relative value of a job is measured based on some common denominator or yardstick. The job evaluation program is a process involving a few steps.

  • Gaining acceptance.
  • Creating a job evaluation committee.
  • Inventory of jobs to be evaluated.
  • Analyzing and preparing a job description.
  • Selecting the method of job evaluation.
  • Classifying jobs.

PHASE 3: SALARY STRUCTURE DESIGN

A Salary Structure is a hierarchy of jobs and salary ranges for an organization. A salary structure provides a foundation for pay policy decisions and a framework for fair and consistent pay practices. It typically includes salary ranges with a minimum, midpoint, and maximum salary for jobs with similar levels of pay in the competitive marketplace. Below are some of the basic sets of steps for creating compensation grades and salary ranges.

  • Determine the Organization’s Compensation Philosophy
  • Conduct a Job Analysis
  • Rank Positions Using a Job Evaluation Method
  • Conduct Market Research
  • Create Job Grades
  • Create a Salary Range Based on Research

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