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Compensationplanpart2.docx

Running head: PAY LEVEL AND STRUCTURE 1

PAY LEVEL AND STRUCTURE 9

Rischonda Forsythe

Baker College

April 11, 2021

Job evaluation process

Job evaluation is the systematic process of assessing and analyzing various job descriptions to ascertain their relative worth. Methods of job evaluation are ranking, classification and point. The ranking is the arrangement of jobs systematically from the highest to the lowest in terms of their value. The advantages of the ranking method are that it is cost-effective and consumes less time during execution, it is easy to conduct, and it is also less biased. Its disadvantages are that it is not appropriate for big organizations due to employees' psychological impact.

Classification in job evaluation involves analyzing job descriptions and then grading them according to the class they best fit. Advantages of using classification are that it is simple, categorizing new jobs is easy due to the independence of the grade structure. Disadvantages of this method include subjectivity of the judgments, biases during comparison, and diversity of some jobs such that they cannot fit in one grade.

The point method of job evaluation involves identifying factors that increase value and worth to a job position. It is done by separating different aspects like roles and effort and then assigning them a numerical point value (SENOL & Dagdeviren, 2019). The points are then added up to ascertain the point value of the entire job. Advantages of the point method include the expression of the job's value in monetary terms. Its application can be used in a vast range of employment, and it can be effectively applied to new positions. Its advantages include subjectivity of judgment affect the pay incurred for each factor, and it creates bias which can eventually affect particular groups like the minorities.

Based on the job-based structure, I would use the ranking method in the compensation project plan because it enables employee classification based on their performance index, which is vital in compensating for their hard work. The steps involved in the ranking method are as follows; analyzing and describing the jobs and acquiring the aspects to be used in job comparison. Secondly, identification of bench-mark jobs including all functions and departments based on their importance. Lastly, ranking the organization's positions surrounding the bench-mark jobs to the point, they are organized in a hierarchy of importance and further dividing the jobs according to their roles. I would involve the HR manager who understands all functions delegated to employees until their ranking reflects what they do.

Skill-based and competency approaches

A person-based evaluation involves analyzing the pay of an employee compared to the skills, knowledge, and abilities he possesses during the hiring and learning process. Its primary purpose is to enact a fair compensation plan for the organization's effort, and his pay is not increased based on the duties delegated (Bagaeva et al., 2018). The competency approach is a method that evaluates an individual's skills, attributes, and talents required to execute a specific assignment to a particular standard.

Advantages of skill-based approaches include; simplicity in that, it is easy to use. Secondly, its longevity enables it to be used for very long in different environments. Additionally, it enhances adaptability in terms of incorporating the skills with technology. Disadvantages of this approach are; high costs of labor are incurred because employees' payment is likely to be higher. Secondly, skill-based systems are complex and require massive investment in training. Further, opportunities to promote employees are reduced. Advantages of using a competency-based approach include improving employees' motivation to enhance their performance and putting more effort into contributing to the organization. Secondly, employees feel entitled and become loyal to the organization because of the rewards they get.

Additionally, the approach aids in pushing employees past their comfort zone. Its disadvantages include; in case of competition, the team becomes disjointed, which adversely affects the overall productivity. In some cases, the competency approach can help some employees at the expense of others. Based on a person-based structure, I would use the competency approach as my method of evaluation. Several steps are to be followed to ensure its execution is successful. The steps are as follows; the first step is understanding the primary purpose of the organization by use of available competencies. Secondly, it will determine the approach and project team by analyzing different aspects of the organization like behavior and values. The third step is to develop a suitable framework that identifies all the dynamics of the competencies and behaviors affecting them. Lastly, implementing the competency model by adding the competencies to the jobs available in the competency initiative and further informing the employees about it.

Best pay structure and the reason why

The best pay structure to be used is the skill-based structure. Day in day out, the organization stays at par with the market and workforce dynamics surrounding it. Using this structure makes it easy to evaluate the performance of employees based on the application of talents, skills, and knowledge of their own. The skills are then used to formulate a payment structure based on the employees' hard work towards increasing productivity in the organization (Lam, 2020). The design is simple to use and can be used in a vast environment in job evaluation and promotions. With the technology advancement, their skills can be incorporated to improve productivity and increase efficiency.

Factors necessary for external competitiveness

External competitiveness refers to how well employees are compensated in comparison with other competitors of the organization. Factors that shape the organization's external competitiveness are discussed below. Supply and demand for labor influence the company's ability to pay employees in that increased demand for labor mean there is high production taking place. Therefore, efficient labor acquisition must be employed. Productivity increases with an increase in labor employment, which generates profits and, thus, incentives to pay employees. Organizations that stabilize the demand and supply of labor indeed achieves a competitive advantage or external competitiveness.

Secondly, the organization should penetrate relevant markets to supply their products. A relevant market exists when more than two products are termed to be substitute goods by the consumer based on the product characteristic, price, or the intended use. The market comprises all firms involved in supplying goods and services, while competition there is homogenous (Oloukoï, & Gero, 2018). Highly competitive organizations pay their employees higher to serve as a motivating factor to produce more and cost-effectively. Elements used in determining relevant markets include occupation, competitors, and geographical position of the firm. Therefore, critically defining the appropriate market aids in knowing payment structures for the employees.

Organizational factors also shape external competitiveness by adopting industry and technology to increase efficiency. Because organizations have huge tasks to execute, technology is employed to reduce labor intensity and reduce overall wages substituted by technology. Employer size is another organizational factor that steers companies to external competitiveness because if the size is more significant, then the salaries incurred will be higher too. Talented employees are in a position to earn higher due to their influence and decisions to attain higher profits. The organization's strategy relating to pay differentials and employees' care influences external competitiveness as employees want to work in organizations they get treated well.

Competitive pay policies are vital in external competitiveness for the organization. Lead policies in an organization ensure that employees' turnover and absenteeism are reduced significantly. Therefore, companies keep running without hitches of employees' shortage. By incorporating the variable pay, employees receive incentives and bonuses that motivate them to give their all. Lag policy increases the commitment of employees if there is a promise of higher returns like faster promotions—employers of choice influence a company's competition based on reputation. Best employers are based on extensive training programs, health insurance, and traditions beyond pay level.

Externally competitive pay levels and structure

The primary purpose of conducting a pay level survey is to determine what other companies are paying their employees for individual job descriptions. Big organizations conduct routine compensation surveys to understand the pay level and remuneration dynamics. They may choose to complete the survey by themselves or purchase surveys that are already done by others. Understanding what the organization's competitors are also ascertained from these surveys and then adjusting them as per they are. It also aids in legal compliance by avoiding price-fixing, which may have evolved with time. Investment protection is also enabled during these surveys by comparing the revenue generated alongside its percentage that goes to salaries. Further, it helps make sound decisions relating to compensation and projecting incentives plans for the available employees and those yet to be hired.

The selection of relevant competitors is vital in remaining competitive and standing out for the general public. First, the organization should conduct detailed market research by determining how people perceive your products compared to products of different organizations. Secondly, the organization should solicit feedback from customers who are essential in unlocking direct competition. Customers often reveal competitors that even the company never knew. They then go forward to counter their moves before they take root in the market (Gebauer et al., 2017). Analyzing online communities using social media helps understand the recommendations and advice on specific products they wish to purchase. By doing this, competitors are identified with ease.

Designing a pay level survey is vital for any organization. First, the organization needs to survey to understand what their competitors are paying their employees for their job descriptions—secondly, the determination of each job's worth by conducting job evaluations. Thirdly, evaluating factors based on what employees expect to be paid. Thirdly, the creation of payment grades by segmenting specific jobs to a particular pay grade, further assigning pay rates for each graded pay according to the job description. Finally, creating a pay structure by the generation of payment ranges and further, overlooking its performance.

When interpreting survey results, it is essential to ask the right questions, analyze open-ended questions, filter key phrases, visually display results, and use previously conducted research to understand results. Further, during verification of the results, accuracy should be looked into when checking for any anomalies. The pay policy line is ascertained by practical job analysis and critical job evaluation to help the organization's executive’s project for the future.

Broad banding compensation is vital in adding trust in the management team, facilitating the organization's internal movement, and streamlining its hierarchy. Its disadvantages include; there is insufficient knowledge about the rates of the external markets. Sometimes, it may lead to inequities in job descriptions; controlling cost is usually cumbersome. Further, promotions are often undermined. Advantages of ranges and grades compensation include; it aids in effective budgeting, increment of competitiveness, enables flexibility, and provides consistency of operations. Their disadvantages include; the administration is a burden since it advocates for streamlining jobs alongside their grades. Further, it causes rigidity in the recruitment process.

Addressing conflicts between internal and external standards

The conflicts should be addressed immediately after arising to avoid them slowing down operations. Secondly, the stakeholders' motivation should enhance increased participation in the production sector by employees. Understanding relationships between emerging issues is critical in weighing decisions to be affected by the senior management involved in addressing the problems. Additionally, agreements from stakeholders about particular objectives and approaches should be used to revolutionize any conflicts. Communication is critical in conflict resolutions to ascertain the issue at hand and resolve them in time.

References

Bagaeva, I., Iliashenko, O., & Borremans, A. (2018). Theoretical and methodological aspects of the competence approach to the evaluation of the organization’s personnel. In MATEC Web of Conferences (Vol. 193, p. 05060). EDP Sciences.

Gebauer, H., Saul, C. J., Haldimann, M., & Gustafsson, A. (2017). Organizational capabilities for pay-per-use services in product-oriented companies. International Journal of Production Economics192, 157-168.

Lam, W. Y. L. (2020). Pay transparency, pay structure, and idiosyncratic deals.

Oloukoï, L., & Gero, F. A. (2018). External Competitiveness of Benin Agriculture: A Synthetic Dynamic Approach Analysis. Journal of Economics6(1), 1-10.

SENOL, M. B., & Dagdeviren, M. (2019). An Analytical Approach for Job Evaluation. Gazi University Journal of Science32(4).