MCQ
ag98
Week2-finalJobEvaluationandRewardStructures1.pptxLearning outcomes
At the end of this class you will have been introduced to:
Employee financial wellbeing
Reward Strategy
Recap on Maine Bank case study
job evaluation and how it is conducted in a professional and fair manner
pay structures and what pay structure is most suitable for the type of company in question and why
Match pay progression and pay structures
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What do we mean by Reward Strategy?
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An effective Reward Strategy ensures that employees are rewarded for delivering your organisation’s goals in the culture and environment in which it operates.
Clear communication on what your organisation wants to reward and what it doesn’t will need to form an integral part of a successful implementation.
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Why is reward management important?
Why is reward management important?
Studies show that having a good reward system helps keep employees:
Happy
loyal to the company
eager to move up the ladder
Rewards such as:
public recognition
additional pay
motivate employees to work harder.
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Why is reward management important?
Structured reward management is important for examples such as:
Strengthens the company's reputation
Attracts new employees
Avoids the costs of hiring and training new employees
Builds loyalty and honesty
Creates a healthy work environment
Encourages positive attitudes and behaviour
Makes employees seek advancement
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Why is reward management important?
Social determinants of health are the conditions in which people are born, grow, live, work and age.
Follow, S. and Hinton, E. (2018)
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Employee Financial Well-Being
an integrated approach to health and well-being can nurture heightened levels of employee engagement while fostering a workforce where people are committed to achieving organisational success.
understanding of the importance of how financial concerns can affect employee mental and physical health, as well as a recognition that, as income providers, organisations play a vital role in their workers’ financial lives. CIPD (2018)
Employee Financial Well-Being
Stress caused by pay levels, lack of financial awareness or an absence of employee benefits can affect work performance.
In addition, the perception that their contributions are not being acknowledged can have an impact on employee self esteem, health and productivity.
CIPD (2018)
What does the Employer Want?
Despite what we want … employers have their reward goals in order of importance. What do you think the order of importance for businesses are? What do you think the order of importance should be?
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| Private Sector | Public Sector | |
| Support business/organisation strategy | ||
| Reduce costs | ||
| Market competitiveness | ||
| Internal equity (fairness) | ||
| Reward performance |
1 is top goal 5 is 5th highest goal
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What are our Graduate Requirements?
How does money motivate?
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How does money motivate?
Money symbolises different things to different people.
People need money/want money (provides basic survival/security needs if regular income)
Money offers a goal/motivating power for people to strive for
Valued outcomes with money is provided
It symbolises the employees value to the organisation
Self-esteem
Visible appreciation
Grading structures set employees apart from their colleagues
Pay enables people to buy things they wouldn’t normally be able to afford
Employee decides whether to stay or leave the organisation based on their salary/benefits Armstrong, M. (2015)
Reward Aims
From an employee’s point of view?
To be involved and treated as a stakeholder
To be treated fairly and have enough pay to survive
To be communicated to well on how rewards management at work affects them
BE INNOVATIVE
COST CONTAINMENT
RECOGNISE INDIVIDUAL CONTRIBUTION
ATTRACT & REWARD THE BEST
MINIMISE HIERARCHY
MARKET LEADER PAY & BENEFITS
SIGNIFICANT STOCK PROGRAMS
NOTE FAIRNESS NOT MENTIONED
GOOGLE Compensation Reward Strategy
FAIRNESS ‘REWARD SHOULD BE INTERNALLY EQUITABLE (FAIR) AND EXTERNALLY COMPETITIVE’
Do you agree? How easy is it to achieve?
Internal equity (fairness) is difficult to align with market forces
Service, quality, productivity must justify external competitiveness
Motivational Theories
Examples: Taylor’s scientific management, Maslow’s hierarchy of needs, Alderfer’s ERG theory, McClelland learned needs theory, Herzberg’s two-factor theory
What do you know of these theories?
Motivation
Frederick Taylor (Scientific Management, 1909)
Taylorism (early 20th Century)
How employees should be motivated at work
Management of manufacturing organisations
Employees should work well and fast
Observing and training other employees to reach productivity/efficiency
Set targets, reward employees who met targets and reduce employees who did not meet targets
Control and supervise them at work (autocratic leadership style)
Workers are motivated by money
Taylor introduced:
Measured standard times for each unit of production
Gave bonuses for working faster than standard times
Often called ‘payment by results’/piece rate
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Basic HR Department Org Chart
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The Chartered Institute of Personnel Development (CIPD) is the main professional body to accredit and award professional human resources (HR) qualifications. The CIPD's qualifications are the recognised professional standard for HR and training specialists working across the UK's public, private and charity sectors. It is also highly recognised in the UAE.
Join CIPD online as a free member (UK and UAE sites).
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Reward Management
https://www.reed.co.uk/jobs/hr-director/40797309?source=searchResults#/jobs/hr-director-jobs
Reward Management statements
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Professor John Purcell
Reward Management is an ‘illusion in the boardroom’.
JP Morgan Chairman and Chief Executive
“if you don’t retain and release the energy of great people, then you can say goodbye to those people and your success”.
Dave Ulrich
“In a world of high amounts of change, agility becomes important”.
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What would we expect our reward strategy to look like?
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Broad to suit all employees
Organisation tailored
Purpose and goal driven approach to comp and ben
Based on ‘best practice’
Future-orientated
Impact long-term performance
Appeal to skilled workforce (potential and current employees)
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In practice what does our reward strategy look like?
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Stuck in a technical and administration back office
Driven by history
*Spurious ideas as to ‘best practice’
‘Short-run, re-active, messy, political’ Henderson and Risher, 1987
HR rely on benchmarking not business strategy
* Spurious meaning: not being what it purports to be; false or fake.
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What problems that can exist in an organisation implementing rewards?
Ineffective Communication
Lack of support systems (such as market data)
Poor performance management systems
The reward system not matching the company’s needs
Lack of management skills/support
In practice what does our reward strategy look like?
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Changing pay under the glossy jargon in the reward strategy policy is emotional, sensitive, time-consuming.
Well—intentional changes can demotivate and damage the company’s chances of achieving its goals.
HR professionals cannot assume they will design the perfect programme but must constantly learn and adapt…managing change must be the focus. Professor John Purcell
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What prevents organisations from implementing a successful strategy?
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The overriding inhibitor is the skills and abilities of line managers in implementation.
Other key reasons are insufficient communication and the attitudes of employees, line managers and the top team.
The problems can stem from a number of points:
The way it is applied - ‘quick-fix’ mindset
HR not discussing the strategy with line manager or staff
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Effective reward strategy has 3 successful components
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Clearly defined goals and link to business strategy
Well-designed pay and reward programmes, tailored to the needs of the business, its people and consistent and integrated with each other
Effective and supportive HR reward processes in place
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Findings
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Findings from a previous CIPD Reward Management survey in the UK reveal that only 35% of employers have a written reward strategy.
90% of employers have a business strategy and for the same group, 64% have an HR strategy.
Is there a mismatch between the rhetoric of ‘strategic reward’ and the challenges of implementing the practice?
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All over the world, massive layoffs, paycuts, and ‘restructuring’ have become inevitable, as businesses of all sizes try to keep afloat in the post-Covid-19 world.
The contribution of services to the creation of wealth
For a long time - agriculture as the world’s main economic activity for many centuries and still is in many developing countries.
Now – service industry, largest contributors to employment and GDP in most countries.
USA 2020 Hardest-hit industries: Nearly half the leisure and hospitality jobs were lost in April 2020 Franck, T. (2020) CNBC
What is the minimum wage in Dubai? Wage Protection System in the UAE in place that ensures UAE minimum wage employees are paid in full and on time. How to organisations decide how much to pay their employees?
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Definition Job Evaluation (JE)
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Who needs to earn more? How do you know that?
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Sales assistant/Customer service representative
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Who needs to earn more? How do you know that?
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PMD Manager/Stockroom manager
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What is Job Evaluation?
To assess the jobs in an organisation and their relative value and to place them in appropriate grades
A mechanism for establishing agreed differentials within organisations … to minimise subjectivity and make decisions about jobs as rational, consistent and transparent as possible
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(Spyridakos et al., 2001: 376).
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What is the purpose of doing a Job Evaluation?
To generate the information required to develop … an internally equitable grade and pay structure
To provide the data required to ensure that pay levels … are externally competitive
To ensure transparency so that the basis upon which grades are defined … is clear to all concerned
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| Arguments for | Arguments against | |
| 1 | Promotes fairness | Subjectivity of evaluation |
| 2 | A logical system for measuring job values/job role matching and to external benchmark | Job descriptions create rigidity |
| 3 | Provides a foundation for pay structures. | Bureaucratic and costly |
| 4 | Job grades inform career development and to show reasons for CEO v. junior staff pay differences | Less suited ”knowledge worker” (e.g. IT jobs) |
| 5 | Essential for defending equal pay claims (fairness/proof of grade structure) |
Arguments for/against Job Evaluation (JE)
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Bristol.ac.uk 2021
MAINLY FEMALE STORE STAFF CLAIM THEY ARE PAID LESS THAN MAINLY MALE WAREHOUSE STAFF
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JE WILL BE USED TO DECIDE IF STORE AND WAREHOUSE JOBS ARE OF EQUAL VALUE
Asda said in a statement: Our hourly rates of pay in stores are the same for male and female colleagues and this is equally true in our distribution centres. Retail and distribution are two different industry sectors and we pay colleagues the market rates for these sectors.”
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Job Evaluation (JE) trends
JE is being retained by organisations in order to:
Evaluate benchmark jobs/generic roles
Followed by job/role matching
Make market comparisons
Called external benchmarking
Define organisational levels (‘levelling’)
Used for mapping careers
Ensure internal equity and equal value
Having a defence against an equal pay claim
Ensuring fairness
Staff with bigger jobs are paid more
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How?
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Job Analysis
Job descriptions, policy documents and training documentation to identify generic job activities (HR specialist)
Interviews or panel discussions to identify high level duties and tasks (Subject matter experts)
Questionnaires usually computerised to identify detailed sub-tasks and task elements (Wider population)
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Job description
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| Normally includes? | |
| 1 | Purpose of the job |
| 2 | Organisational structure relating to the job |
| 3 | Main duties and tasks |
| 4 | Job dimensions e.g. budget, personnel, equipment |
| 5 | Qualifications and experience required* |
| 6 | Skills required* |
| 7 | Behaviours required* |
If the emphasis is on items 5 to 7 it is often called a role profile
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Job ranking
Rank the following jobs:
Librarian
Teacher
Ambulance person
Nurse
Taxi driver in Dubai
Police sergeant
Shop assistant
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| Ranking |
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Job ranking methods
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Non-analytical “whole job ranking” job evaluation:
Job ranking is one of the simplest to administer. 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 judgements of skill, effort (physical and mental), responsibility (supervisory and fiscal), and working conditions.
Quantitative/Analytical (factor points) job evaluation:
Jobs are broke down based on various identifiable factors such as skill, effort, training, knowledge, hazards, responsibility, etc. Thereafter, points are allocated to each of these factors. Weights are given to factors depending on their importance to perform the job. Points are then summed. Then, the jobs with similar total of points are placed in similar pay grades. The sum of points gives an index of the relative significance of the jobs that are rated.
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Analytical job evaluation methods
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Propriety brands (brand of product that is privately owned and controlled):
Example: Hay Guide Chart
Hay Job Evaluation is a method used by corporates and organizations to map out their job roles in the context of the organisational structure.
Tailor-made job evaluation:
Examples:
JEGS for Civil Service
NJC for Local Government
HERA for Higher Education
Agenda for change in JE methods for NHS
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Hay Guide Chart
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Know-How
Accountability
Problem Solving
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Hay Guide Chart SEPARATE HANDOUT IN MY LEARNING AND MS TEAMS UNDER GENERAL/FILES/CLASS MATERIAL
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KNOW HOW
Breadth of management know-how. Depth and range of technical know-how. HR skills.
PROBLEM SOLVING
Thinking environment and freedom to think. Thinking challenge.
ACCOUNTABILITY
Freedom to act (close supervision to subject only to Board of Directors)
Magnitude (under £50,000 to £500 million) measures the size of area of impact or size of the full function most clearly affected by the job
Job impact on end results either Remote, Contributory, shared or Prime
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Hay Guide Chart level definitions
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| Level | Points | Definition |
| 1 | 20 | Restricted local contacts, only to pass on information |
| 2 | 40 | Frequent contacts laterally within the organisation, mainly to exchange information on matters of fact |
| 3 | 60 | Active lateral contacts, with discussion of procedures or provision of service or products, inside or outside the organisation |
| 4 | 80 | Active communication, inside or outside the organisation, about a service or product, involving reconciling different interests |
| 5 | 100 | Regular contacts inside and outside the organisation, reconciling interests, resolving differences and problems, or negotiating within set limits |
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Tailor-made job evaluation method
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| Local Government NJC factors and sub-factors (Supported by the UNISON Trade Union) | |
| Knowledge and skills | Knowledge, mental, personal, physical skills |
| Effort and demands | Initiative/independence, physical, mental, emotional demands |
| Responsibilities | For people, supervision, financial, physical resources |
| Environmental demands | Working conditions |
Some characteristics of tailor-made job evaluation method/schemes:
Enable choice of factors that reflect jobs within organisations
Allocate points that reflect the importance of different factors to an organisation
Total points are allocated to grades or bands
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| Job A | Job B | Job C | |
| Qualifications required | 40 | 40 | 80 |
| Skills training required | 40 | 40 | 100 |
| Acquired skills necessary | 80 | 80 | 40 |
| Complexity and accuracy | 40 | 20 | 100 |
| Responsibilities | 80 | 80 | 60 |
| Decision making/judgement | 80 | 80 | 60 |
| Management of staff | 0 | 100 | 0 |
| Personal contacts | 100 | 20 | 20 |
| TOTAL POINTS | 460 | 460 | 460 |
| Job A | Job B | Job C |
Factor point scoresheet for three different jobs
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EXAMPLE : OIL COMPANY JOBS i.e. PAY IS AROUND £35,000 p.a. Qualifications 40 = GCSE 80 = Degree
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A) Sale representative
B) Line Manager: Staff who drive refusing vehicles at Heathrow
C) IT Programmer
Pay structures
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JE points, grades and pay structures
Red-Circling is when an employee's pay rate is approved to be above the established salary maximum for that position. Hence, the employee is usually not eligible for further base pay increases until the range maximum surpasses the employee's pay rate.
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JE POINTS, GRADES & PAY SCALES
GROSS 250-299 300-349 350-399 400-449 450-499 500-549 13.5 17.5 22.5 27.5 33 40 NET adjusted for COLA 250-299 300-349 350-399 400-449 450-499 500-549 9 10 10.5 12 15 18
£ 000 p.a.
Types of pay structures
Spot rates or rate for the job
Narrow graded/banded pay structures
Broad-banded/Broad-graded pay structure
Pay spines and increments
Job family structures
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PAY STRUCTURES
SPOT
JOB FAMILIES
BROAD BAND
SPINE
GRADED
STRUCTURE & CONTROL
MANAGEMENT FREEDOM
MANAGEMENT FREEDOM
A TREND
SIMILAR ‘LOOSE’ STRUCTURES
MANAGEMENT FREEDOM
(1) Spot rates
Spot rates (person-based-pay)
Manager uses his/her judgement to decide pay
Often in small or start up companies
Common for directors, footballers, investment banks
Rate for the job
Common for manual jobs i.e. carpenter paid ph
Where pay is negotiated with a union
Where staff become fully competent very quickly e.g. refuse collector
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A spot rate is based on the value of an asset at the moment of the quote. As a result, spot rates change frequently and sometimes dramatically.
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(2) Narrow banded/graded pay structure
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Narrow banded pay scales in NHS
(Pay Scales In GB Pounds [£])
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Narrow banded/graded pay structure
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| Narrow banded pay structure | |
| Arguments for | Arguments against |
| Easy to explain and administer | Inflexible |
| Grading maintains *relativities | Good performers quickly hit their pay ceiling |
| Control over new starter pay | |
| Frequent grade increases popular with staff |
Narrow graded pay scales: A manager has limited freedom to decide a person’s pay
*’relativities’ how things only have importance in relation to other things
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Narrow Graded Pay Structures
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IN NARROW GRADED PAY STRUCTURES, A MANAGER HAS LIMITED FREEDOM TO DECIDE A PERSON’S PAY
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(3) Broad banded/graded pay structure
Grade maximum
Grade minimum
Grade midpoint
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Broad banded/graded pay structure
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| Broad banded pay structure | |
| Arguments for | Arguments against |
| More flexibility in individual pay | Raises expectations |
| Managers have more freedom | Can lead to cost escalation |
| Makes job moves without promotion easier | Perceived equity |
| Good for mergers | Market comparisons more difficult |
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Broad-Banded/Graded pay scales
Job evaluation no longer drive grading
Pay Policy is Market Driven
Greater Flexibility in pay determined by management
Focus on rewarding employees for lateral development (i.e. creativeness, innovative ideas)
Delayed organisation
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Broad-Banded/Graded pay scales
broad-banding involves the use of an even smaller number of pay bands (four or five).
Designed to:
allow for greater pay flexibility
typical broad-banding would place no limits on pay progression within each band
although some employers have introduced a greater degree of structure
each job can have its pay range within a band
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Broad Band Pay Structure
POINTS
1A
1B
1C
2A
2B
2C
3A
3B
3C
Progress from points 1 to 4 with increased length of service
Promotion from band 1 to 2
Move from
A to B to C with increased
competency
£
1 = 14,517
2 = 14,922
3 = 15,269
4 = 15,617
23 = 24,103
26 = 27,191
25 = 26,123
24 = 25,054
(4) Pay spine
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Pay spines and increments
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| Pay spine pay structure | |
| Arguments for | Arguments against |
| Fixed points published and transparent | Costly if all staff progress to the top of their band |
| Progression less dependent on management judgement | Discourage local decision making |
| Often linked to steady progression based on competence and length of service |
Mainly in public sector or organisations who recruit from the public sector
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The Scottish Negotiating Committee for Teachers (SNCT) determines the pay of teachers and associated professionals.
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(5) Job Family Structure
£10,000
£20,000
£30,000
£40,000
£50,000
LEGAL
MARKETING
IT
FINANCE
£60,000
PAY
ADMIN
SUPERVISORY
PROFESSIONAL
MANAGERS
ADMIN
SUPERVISORY
PROFESSIONAL
MANAGERS
ADMIN
SUPERVISORY
PROFESSIONAL
MANAGERS
SUPERVISORY
ADMIN
PROFESSIONAL
MANAGERS
£70,000
A job family is defined as a series of related job titles with progressively higher levels of impact, knowledge, skills, abilities (competencies), and other factors, providing for promotional opportunities over time.
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Job family structures
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Job family
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| Job family pay structure: Separate structures for each function or family | |
| Arguments for | Arguments against |
| Can match external market salaries or that job family, e.g. lawyers not constrained by company-wide graded salary scales | Difficult to maintain equity between families which can result in: Possible equal pay challenges Difficulty in moving staff across families |
| Often linked to staff development within that family |
Mainly used in large Private Sector organisations with separate structures for each function or family, particularly useful for specialist staff who are in short supply
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PAY STRUCTURES
SPOT
JOB FAMILIES
BROAD BAND
SPINE
GRADED
STRUCTURE & CONTROL
MANAGEMENT FREEDOM
MANAGEMENT FREEDOM
A TREND
SIMILAR ‘LOOSE’ STRUCTURES
MANAGEMENT FREEDOM
PAY PROGRESSION
MOST LIKELY STRUCTURE?
BY
CHOOSE ONE OR MORE FROM
LENGTH OF SERVICE SR SPOT RATES
OUTPUT/PERFORMANCE PS PAY SPINES
COMPETENCE GP GRADED PAY
MANAGEMENT JUDGEMENT BB BROAD BANDED
MARKET MOVEMENT JF JOB FAMILIES
PROMOTION
PAY PROGRESSION
MOST LIKELY STRUCTURE?
BY
CHOOSE ONE OR MORE FROM
ANSWERS
LENGTH OF SERVICE PS SR SPOT RATES
OUTPUT/PERFORMANCE GP, BB, JF PS PAY SPINES
COMPETENCE BB, PS, JF GP GRADED PAY
MANAGEMENT JUDGEMENT SR, JF, BB BB BROAD BANDED
MARKET MOVEMENT JF, SR, BB JF JOB FAMILIES
PROMOTION GP, PS
Read : Maine Bank Case Study
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Look at the grade and pay structure – do you need to develop a new one?
HOMEWORK Independent learning
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Questions to ask using SWOT Analysis
HRM 1110: Organisational Behaviour and Analysis
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Copyright © Sebastian Fuchs
Questions to ask using PESTEL