STRATEGIC COMPENSATION
A Human Resource
Management Approach
Chapter 7
Building Internally Consistent
Compensation Systems
7-1
Prentice Hall, Inc. © 2006
Prepared by David Oakes
Internal Consistency
 Compares value of a job against others
 Represents job structure or hierarchy
 Job descriptions are its cornerstone
 Recognizes differences in job
characteristics
7-2
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Job Structure Processes
 Job analysis
 A descriptive procedure
 Identifies & defines job content
 Job evaluation
 Reflects value judgments
 Compensation systems set pay levels
7-3
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Worker Requirements
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Skills
Education
Experience
Licenses
Permits
Special abilities
7-4
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Job Analysis Process
 Determine job analysis program
 Select & train analysts
 Direct job analyst orientation
 Conduct the study
 Summarize results: write job
descriptions
7-5
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Job Analysis Data Gathering
Methods
 Questionnaires
 Interviews
 Observation
 Participation
7-6
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JOB ANALYSIS UNITS
 Elements
 Tasks
 Position
 Job
 Job family
 Occupation
7-7
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SOC
 Standard Occupational Classification
System
 Office of Management and Budget
 Replaces DOT
 Lists
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23 Occupational Groups,
98 Minor Groups
452 Broad occupations
822 Detailed occupations
7-8
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Sources
 Job incumbents
 Supervisors
 Job analysts
7-9
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Writing Job Descriptions
Should Include
 Job title
 Job summary
 Job duties
 Worker specifications
7-10
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Legal Considerations
 Equal Pay Act
 Must justify pay differences
 FLSA
 Determine exemption status
 ADA
 Determine essential job functions
7-11
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ADA Guidelines
Essential Job Functions
 Position has an essential function
 Requires high skills or expertise
 Decided case - by - case
 Non - essential jobs are marginal
7-12
Prentice Hall, Inc. © 2006
O*NET Categories
 Experience requirements
 Occupational requirements
 Occupation specific requirements
 Worker requirements
 Worker characteristics
 Labor market characteristics
7-13
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Experience
Requirements
 Experience & training
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Related work experience
On - site training
On - the - job training
Apprenticeships
 Licensing
 Licenses & certificates
 Formal education
7-14
Prentice Hall, Inc. © 2006
Occupation Requirements
 Occupational skills
 Occupational knowledge
 Tasks
 Machines
 Tools
 Equipment
 Duties
7-15
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Worker
Requirements
 Basic skills
 Cross - functional skills
 Knowledge
 Education
7-16
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O*NET Sources
 Libraries, public & academic
 U.S. Government Printing Office
 http://www.doleta.gov
 American Psychological Assoc
“An Occupational Information
System for the 21st Century:
The Development of O*NET”
7-17
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Universal Compensable Factors
 Skill
 Effort
 Responsibility
 Working conditions
7-18
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Job Evaluation Process Steps
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Select technique
Choose committee
Train members to evaluate
Document plan
Communicate with employees
Set-up appeals process
7-19
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Point Method Steps
 Select benchmark jobs
 Choose compensable factors
 Define factor degrees
 Determine weight of factors
 Determine point value
 Verify factor degrees & point values
 Evaluate all jobs
7-20
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Job Evaluation Qualitative
Approaches
 Simple ranking plan
 Paired comparisons
 Alternation ranking
 Classification plans
7-21
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Alternatives To Job Evaluations
 Market pay rates
 Pay incentives
 Individual rates
 Collective bargaining
7-22
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