| Internal consistency or equity; refers to comparisons among jobs or skills inside a single organization. The focus is on comparing jobs and skills in terms of the relative contributions to the organization's objectives. While wage and salary programs should enable the employer to pay rates, which produce the desired relationship with the external market, it is vital that the proper internal pay relationships be maintained. Periodic reviews and necessary adjustments can be accomplished through job evaluations, position descriptions, and salary structure. A system should be established for continual review and updating of position descriptions. It is vital that this process be reviewed, preferably as a result of individual discussions and agreement with incumbents.
The objectives of a company's total compensation philosophy are influenced by internal consistency. Equity and compliance with governmental legislation are directly affected, while efficiency is influenced more indirectly. Pay relationships within an organization influence employees commitment and desire to continue with the organization. This enhanced dedication motivates employees to have a higher degree of commitment. These factors add to the effectiveness of the individual employee as well as the organization as a whole.
There are three principal approaches to job valuation: ranking, classification, and point factor analysis. These methods are evaluated for their appropriate application to the specific client situation.
Ranking: Jobs are ranked according to job descriptions from highest to lowest, based on the definition of relative value or contribution to the organization's success. This method is simple, expedient, and by far the easiest to implement and explain to employees.
Classification: In this method, job descriptions are inserted into a series of categories that create a range within each classification. Class descriptions are the labels that serve as the standard for comparing job descriptions within the various categories. This method offers the opportunity to slot jobs by comparing job descriptions with benchmark jobs.
Point method: Jobs are assigned compensable factors that are defined on the basis of the strategic direction of the business and how the work contributes to that strategy. Compensation factors are then scaled to reflect the degree to which they are present in each job and weighted to reflect their overall importance to the organization. Points are then assigned to each factor weight. The total points for each job determines its position in the overall job structure.
The objective is to evaluate each job based on factors that have a direct relationship to the organization's objectives and overall corporate philosophy. |
