CompensationEmployee’s PerspectiveEmployer’s PerspectiveSlide 4Influence of EquityDevelop a Job HierarchyFactor 8: Decision Making / Supervision RequiredExample of One Factor in a Point Factor System (Complexity/Problem Solving)Slide 9Slide 10Pricing JobsSlide 12Slide 13Develop a Pay StructureInequitiesPricing Managerial and Professional JobsEvaluate People Not JobsSkill-Based Compared to Job-Based StructuresFinancial IncentivesIncentives for Production EmployeesOther Incentives for Mangers, Executives and Other EmployeesOrganization Incentive PlansPotential Incentive Plan ProblemsRecommendationsPerformance EvaluationPerformance Measurement PurposesSlide 27Slide 28Performance Measurement IssuesPerformance MeasuresSlide 31Measures of Physical OutputAdministrative ChallengesSlide 34Slide 35Trends in PA ResearchCompensationEmployee’s PerspectiveWhat compensation do you seek?DirectMoneyIndirectBenefitsEmployer’s PerspectiveWhat do you compensate?Job:• Responsibility• Critical function• Job contentIndividual Characteristics:• Ability• Training• EducationEmployer’s PerspectiveWhat factors influence your compensation policy?• Supply and demand skills• Unions• Ability to pay• Cost of living increases• Strategy• Government (FLSA, min. wage)Influence of EquityInternalExternalMarket wagesPerceived equityDevelop a Job HierarchyA. Job Evaluation1. Preliminary planning2. Select a plan3. Develop the plan4. Evaluate jobs, NOT PEOPLEFactor 8: Decision Making / Supervision Required1st Degree (36 points)Limited decision making by the incumbent. Progress of work is checked by others most of the time, and/or 60-90 percent of activities are defined by other than incumbent.2nd Degree (89 points)Routine decision making bases on specific criteria. Progress of work is often checked by others, and/or 40-60 percent of activities are defined by other than incumbent.3rd Degree (112 points)Significant decision making based on established guidelines and experience. Progress of work is check by others some of the time, and/or 25-40 percent of activities are defined by others than the incumbent.4th Degree (180 points)Extensive decision making based on broad policies, procedures, and guidelines. Progress of work is seldom checked by others, and/or less than 25 percent of activities are defined by other than the incumbent.Example of One Factor in a Point Factor System (Complexity/Problem Solving)Level Point Value Description of Characteristics and Measures 0 0 Seldom confronts problems not covered by job routine or organizational policy; analysis of data is negligible. Benchmark: General secretary, switchboard / receptionist. 1 40 Follows clearly prescribed standard practice and demonstrates straightforward application of readily understood rules and procedures. Analyzes noncomplicated data by established routine. Benchmark: Statistical clerk, billing clerk.The mental capacity required to perform the given job as expressed in resourcefulness in dealing with unfamiliar problems, interpretation of data, initiation of new ideas, complex data analysis, creative or developmental work.Example of One Factor in a Point Factor System (Complexity/Problem Solving) (cont’d)Level Point Value Description of Characteristics and Measures 2 80 Frequently confronts problems not covered by job routine. Independent judgment exercised in making minor decision where alternatives are limited and standard policies established. Analysis of standardized data for information of or use by others. Benchmark: Social worker, executive secretary 3 120 Exercises independent judgment in making decision involving nonroutine problems with general guidance only from higher supervision. Analyzes and evaluates data pertaining to nonroutine problems for solution in conjunction with others. Benchmark: Nurse, accountant, team leaderExample of One Factor in a Point Factor System (Complexity/Problem Solving) (cont’d)Level Point Value Description of Characteristics and Measures 4 160 Uses independent judgment in making decisions that are subject to review in the final stages only. Analyzes and solves nonroutine problems involving evaluation of a wide variety of data as a regular part of job duties. Benchmark: Associate director, business manager, park services director. 5 200 Uses independent judgment in making decisions that are not subject to review. Regularly exercises developmental or creative abilities in policy development. Benchmark: Executive director.Pricing Jobs"The acceptability of job evaluationhinges in large part on whether theresults are consistent with the rankingof the same jobs in the external labormarket."Pricing JobsJobs that are relatively stable in content and found in many organizationsA. Use key or benchmark jobsCompare your internal analysis to external wagesB. Conduct wage survey to examine external wagesPricing JobsC. Use points from job evaluation as a predictorUse predictor to determine wages for non-key positionsNon-key positions: jobs that have no similar “comparison job” outside of the organizationDevelop a Pay StructureA. Pay on the basis of individual jobs or grades?B. Utilize single rates or a rate range?InequitiesComparable worthSalary compressionPricing Managerial and Professional JobsNot easy because there are fewer quantifiable factorsManagers are often compensated for long term performanceAre executives overpaid?Evaluate People Not JobsSkill Based PaySkill-Based Compared to Job-Based StructuresJob-Based Knowledge-BasedPay Structure Based on job performed Based on skills possessed by the employeeManager’s focus Job carries wage Employee carries wageEmployee linked to job Employee linked to skillEmployee focus Job promotion to earn Skill acquisition to earn greater pay greater payProcedures required Assess job content Assess skillsValue jobs Value skillsAdvantages Pay based on the value Flexibility performed Reduced work forceLimitations Potential personnel Potential personnel bureaucracy bureaucracyInflexibilities Cost controlsFinancial Incentives"The basic aim of an incentive should beto encourage good performance bylinking performance and rewards, andthis in turn requires valid, accurateperformance appraisals.”Incentives for Production EmployeesPieceworkGroup incentive plansAttendanceAnnual bonusOther Incentives for Mangers, Executives and Other