The performance of the individual employee in the job
In our Company it will also be important to assess the effectiveness of the person doing the job. Whether this happens will depend on the type of payment system used and the organisation view on collectivism or individualism with regard to payments. Organisations that favor collectivism will want to minimise differences in pay between employees as this may avoid costly or time-wasting disputes while other organisations will want to pay everyone individual rates as far as possible in order to reward each person for their efforts, and these two perspectives will result in a variety of different types of payment system.
It is clear that the last two factors are of great importance to payment systems , so we shall now go on to discuss each in detail.
Job evaluation schemes
Very few organisations will pay all the people who work for them exactly the same regardless of the job they do or how well they do that job organisations do have to have regard to equality legislation and créate a fair and transparent system for pay and reward, so most organisations seek to find ways to compare the worth of different Jobs to the organisation, as well as person performance in each job. We have considered ways in which individual performance may be assessed, but here we shall concéntrate on ways of comparing te relative worth of different Jobs. If organisations were to base decisions about the relative worth of different Jobs on managerial whims, they would be accused, quite rightly of being unfair.
Job evaluation does not determine the correct payment level for a job, but rather provides a possible ranking of a job relative to other Jobs. This has the merit of being systematic and of appearing objective, although in reality there is normally some degree of subjectivity in all job evaluation schemes. There are normally three stages involved when an organisation is deciding how much to pay for each job:
- Evaluate the Jobs in the organisation and get a ranking for them
- Decide which Jobs are similar in terms of the job evaluation exercise and group them together
- Decide what pay to attach to these Jobs, partially on the basis of market value
We can be divided into non-analytical and analytical schemes and we shall consider each of these groups in turn.
Non-analytical schemes or analytical schemes
Non-analytical job evaluation schemes compare whole Jobs rather than analyzing the components of each jobs and assessing them factor by factor. These are three main types of non-analytical scheme:
- Whole job ranking
- Paired comparisons
- Job classification
Analytical schemes break the Jobs down and try to compare skills or competencies needed in each job. The main analytical schemes are:
- Points rating
- Proprietary schemes
Proprietary schemes
Faced with the time and costs involved in designing and validating their own job evaluation scheme and checking that it is free of unfair bias, many organisations decide to buy a proprietary scheme or employ a consultant to design a scheme specifically for them .
A scheme designed specifically for one organisation is obviously a good idea and is likely to have a great deal of credibility with the workforce, but buying a proprietary scheme has the additional advantage of giving Access to extensive comparative data on job markets and rates of pay which designers of proprietary schemes also collect. This can provide much more comprehensive data on which to base decisions about payment levels to relate to Jobs than any one organisation could collect.