Milkovich/Newman: Compensation, Ninth Edition

Chapter 4
Job Analysis

McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
 Chapter Topics
 Structures Based on Jobs, People, or Both
 Job-based Approach: Most Common
 Job Analysis Procedures
 What Information Should Be Collected?
 How Can the Information Be Collected?
 Job Descriptions Summarize the Data
 Job Analysis: Bedrock or Bureaucracy?
 Judging Job Analysis
 Your Turn: The Customer-Service Agent

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 Structures Based On Jobs, People, Or
Both
 Job-based structures look at what people are
doing and the expected outcomes
 Skill- and competency based structures look at
the person

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Exhibit 4.1: Many Ways to Create Internal Structure

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Exhibit 4.2: Contemporary Job Description
for Registered Nurse

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 Job Analysis

The systematic process of collecting

information that identifies
similarities and differences in the
work.

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Exhibit 4.3: Determining the
Internal Job Structure

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 Job-Based Approach: Most Common
 Why Perform Job Analysis?
– Potential uses for job analysis have been suggested
for every major personnel function
 Type of job analysis data needed differs by function
– Internal structure based on job-related information
provides a work-related rationale for pay differences
to both managers and employees

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 Job-Based Approach: Most Common
(cont.)
 Why Perform Job Analysis? (cont.)
– In compensation, job analysis has two critical uses:
 Establishes similarities and differences in the work
contents of the jobs
 Helps establish an internally fair and aligned job structure
 Key issue for compensation decision makers:
– Ensuring that data collected are useful and
acceptable to employees and managers involved

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 Job Analysis Procedures
 Job analysis usually collects information about
specific tasks or behaviors
– Position – a group of tasks performed by one person
– Job – made up from identical positions
– Job family – broadly similar jobs
 Traditional, stable structures are shrinking, but
persist in many large organizations

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Exhibit 4.4: Job Analysis Terminology

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Exhibit 4.5: Conventional Job Analysis Procedures

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Exhibit 4.6: Typical Data Collected for Job
Analysis

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What Information Should Be Collected?
 Job data: Identification
– Job titles, departments, the number of people who
hold the job etc.
 Job data: Content
– Elemental tasks or units of work, with emphasis on
the purpose of each task
 Employee data
– Position Analysis Questionnaire (PAQ)
– McFry Nine Step Program

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Exhibit 4.7: Communication: Task-Based Data

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Exhibit 4.8: Communication: Behavioral-Based Data

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Exhibit 4.9: The McFry Nine Step
Program

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What Information Should Be Collected?
(cont.)
 “Essential elements” and the Americans with
Disabilities Act
– Requires that essential elements of a job – those that
cannot be reassigned to other workers – must be
specified for jobs covered by the legislation
– Essential functions – the fundamental job duties of
the employment position the individual with a
disability holds or desires

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What Information Should Be Collected?
(cont.)
 Level of analysis
– Level at which an analysis begins influences
whether work is similar or dissimilar
 Microscopic approach
 Broad, generic descriptions
– Countervailing view
 Promotion to a new job title is part of the organization's
network of returns
 Reducing title may reduce opportunities to reinforce
positive employee behavior

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How Can the Information Be Collected?
 Conventional methods
– Questionnaires and interviews
 Advantages: involvement increases understanding of
process
 Disadvantage: open to bias and favoritism

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How Can the Information Be Collected?
(cont.)
 Quantitative methods
– Quantitative job analysis
 Advantages: practical and cost-effective
 Disadvantages:
– Important aspects of a job may be omitted
– Resulting job descriptions can be faulty

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Exhibit 4.10: 3M’s Structured Interview Questionnaire

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Exhibit 4.11: Online Job Analysis Questionnaire

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Exhibit 4.12: Online Job Profile

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How Can the Information Be Collected?
(cont.)
 Who collects the
information?
 Who provides the
information?
 What about
discrepancies?
 Top management (and
union) support is critical
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 Job Descriptions Summarize The Data
 Job description – information collected is
summarized and documented in a way that will
be useful for HR decisions, including job
evaluations
– Job specifications – knowledge, skills, and abilities
required to adequately perform the tasks
 Describing managerial/professional jobs –
more-detailed information on the nature of the
job, its scope, and accountability
 Verify the description

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Exhibit 4.13: Job Description for a
Manager

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Exhibit 4.14: Job Description for Nurse
100 Years Ago

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Job Analysis: Bedrock or Bureaucracy
 Reducing number of different jobs and cross-
training employees makes work content more
fluid and employees more flexible
 Generic job descriptions provide flexibility in
moving people among tasks without adjusting
pay
 Traditional job analysis making fine distinctions
among levels of jobs could reinforce rigidity
 Analyzing work content is now conducted as
part of work flow and supply chain analysis

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 Judging Job Analysis
 Reliability
– Measure of consistency of results among various
analysts, various methods, various sources of data, or
over time
 Validity
– Examines the convergence of results among sources
of data and methods
 Acceptability
 Usefulness
– Practicality of information collected
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Milkovich/Newman: Compensation, Ninth Edition

N
Evaluating Work:
Job Evaluation

McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved.
 Job-Based Structures: Job Evaluation
 Job evaluation – process of systematically
determining the relative worth of jobs to create a
job structure for the organization
 The evaluation is based on a combination of:
– Job content
– Skills required
– Value to the organization
– Organizational culture
– External market

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Exhibit 5.1: Many Ways to Create Internal Structure

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 Defining Job Evaluation: Content,
Value, and External Market Links
 Content and value
– Exchange value
 Linking content with the external market
– Value of job content is based on what it can
command in the external market
 “Measure for measure” vs. “Much ado
about nothing”

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Exhibit 5.2: Assumptions Underlying
Different Views of Job Evaluation

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Defining Job Evaluation: Content, Value,
and External Market Links (cont.)
 “How-To”: Major decisions
– Establish the purpose
 Supports organization strategy
 Supports work flow
 Is fair to employees
 Motivates behavior toward organization objectives

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Exhibit 5.3: Determining an Internally
Aligned Job Structure

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Defining Job Evaluation: Content, Value,
and External Market Links (cont.)
 “How-To”: Major decisions (cont.)
– Single versus multiple plans
 Characteristics of a benchmark job:
– Contents are well-known and relatively stable over time
– Job not unique to one employee
– A reasonable number of employees are involved in the job
 Depth and breadth of job
 Refer Exhibit 5.4
– Choose among methods

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Exhibit 5.4: Benchmark Jobs

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Exhibit 5.5: Comparison of Job
Evaluation Methods

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 Ranking
 Orders job descriptions from highest to lowest
based on a global definition of relative value or
contribution to the organization’s success
– Simple, fast, and easy to understand and explain
– Initially, the least expensive method
– Can be misleading
– Two approaches
 Alternation ranking
 Paired comparison method

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Exhibit 5.6: Paired Comparison Ranking

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 Classification
 Uses class descriptions that serve as the
standard for comparing job descriptions
 Classes include benchmark jobs

 Outcome: Series of classes with a number of

jobs in each

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Exhibit 5.7: Classifications for Engineering
Work Used by Clark Consulting

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 Point Method
 Three common characteristics of point
methods:
– Compensable factors
– Factor degrees numerically scaled
– Weights reflect relative
importance of each factor
 Most commonly used approach to establish pay
structures in U.S.
 Differ from other methods by making explicit
the criteria for evaluating jobs – compensable
factors

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 Designing a Point Plan: Six Steps
 Conduct job analysis
 Determine compensable factors
 Scale the factors
 Weight the factors according to importance
 Communicate the plan, train users; prepare
manual
 Apply to nonbenchmark jobs

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 Step 1: Conduct Job Analysis
 Point plans begin with job analysis
 A representative sample of jobs (benchmark
jobs) is drawn for analysis
 Content of these jobs is basis for:
– Defining compensable factors
– Scaling compensable factors
– Weighting compensable factors

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Step 2: Determine Compensable Factors
 Compensable factors – characteristics in the
work that the organization values, that help it
pursue its strategy and achieve its objectives
 Compensable factors play a pivotal role
– Reflect how work adds value to organization
– Decision making is three-dimensional:
 Risk and complexity
 Impact of decision
 Time that must pass before evidence of impact

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Exhibit 5.9: Compensable Factor Definition: Decision Making

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Step 2: Determine Compensable Factors
(cont.)
 To be effective, compensable factors should be:
– Based on strategy and values of organization
– Based on work performed
 Documentation is important
– Acceptable to the stakeholders
– Adapting factors from existing plans
 Skills, and effort required; responsibility, and working
conditions
 NEMA, NMTA, Equal Pay Act (1963), and Steel plan

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 Compensable Factors - How Many
Factors?
– “Illusion of validity” - Belief that factors are
capturing divergent aspects of a job and are both
important
– “Small numbers” - If even one job has a certain
characteristic, it must be a compensable factor
– “Accepted and doing the job” – 21 factor, 7
factors, 3 factors
– Research results
 Skills explain 90% or more of variance
 Three factors account for 98 - 99% of variance
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 Exhibit 5.10: Compensable Factor
Definition: Multinational Responsibilities

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Exhibit 5.11: Factors in Hay Plan

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Exhibit 5.12: Hay Guide Chart – Profile Method of Job
Evaluation

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 Step 3: Scale the Factors
 Construct scales reflecting different degrees
within each factor
– Most factor scales consist of four to eight degrees

 Issue
– Whether to make each degree equidistant from
adjacent degrees (interval scaling)

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 Step 3: Scale the Factors (cont.)
 Criteria for scaling factors
 Ensure number of degrees is necessary to distinguish
among jobs
 Use understandable terminology

 Anchor degree definitions with benchmark-job titles

and/or work behaviors
 Make it apparent how degree applies to job

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Exhibit 5.13: Factor Scaling – National Metal Trades
Association

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Step 4: Weight the Factors According to
Importance
– Different weights reflect differences in
importance attached to each factor by the
employer
– Determination of factor weights
 Advisory committee allocates 100 percent of the
value among factors

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Step 4: Weight the Factors According to
Importance (cont.)
 Select criterion pay structure
– Committee members recommend the criterion pay
structure
– Statistical approach is termed policy capturing to
differentiate it from the committee a priori judgment
approach
– Weights also influence pay structure

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Exhibit 5.14: Job Evaluation Form

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 Overview of the Point System
Degree of Factor

Job Factor Weight 1 2 3 4 5

1. Education 50% 100 200 300 400 500

2. Respons- 30% 75 150 225 300

ibility
3. Physical 12% 24 48 72 96 120
effort
4. Working 8% 25 51 80
conditions
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 AAIM National Position Evaluation Plan
Points Assigned to Factor Degrees
1st 2nd 3rd 4th 5th
Factor Degree Degree Degree Degree Degree
Skill
1. Knowledge 14 28 42 56 70
2. Experience 22 44 66 88 110
3. Initiative and Ingenuity 14 28 42 56 70
Effort
4. Physical Demand 10 20 30 40 50
5. Mental or Visual Demand 5 10 15 20 25
Responsibility
6. Equipment or Process 5 10 15 20 25
7. Material or Product 5 10 15 20 25
8. Safety of Others 5 10 15 20 25
9. Work of Others 5 10 15 20 25
Job Conditions
10. Working Conditions 10 20 30 40 50
11. Hazards 5 10 15 20 25
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 Job Evaluation Example
Job Points Reference Wage
A Clerk 45 $12/hour
B Acct Clerk 55 $16
C Accountant 75 $22
D HR Mgr 85 $25
E Ass’t Adm 80 $26
F Office Mgr 85 $28

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Step 5: Communicate the Plan and Train
Users
 Involves development of manual containing
information to allow users to apply plan
– Describes job evaluation method
– Defines compensable factors
– Provides information to permit users to distinguish
varying degrees of each factor
 Involves training users on total pay system
 Includes appeals process for employees
– Employee acceptance is imperative
 Communication

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 Step 6: Apply to Nonbenchmark Jobs
 Final step involves applying plan to remaining
jobs
– Could involve both designers and/or employees
trained in applying the plan
 Tool for managers and HR specialists once plan
is developed and accepted
 Trained evaluators will evaluate new jobs or
reevaluate jobs whose work content has
changed
– May also be part of appeals process

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 Step 7: Develop Online Software
Support
 Online job evaluation is widely used in larger
organizations
 Becomes part of a Total Compensation Service
Center for managers and HR generalists to use

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 Who Should be Involved?
 Managers and employees with a stake in the
results should be involved
– Can include representatives from key operating
functions, including nonmanagerial employees
 Organizations with unions find including union
representatives helps gain acceptance
– Extent of union participation varies

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 Who Should be Involved? (cont.)
 Design process matters
– Attending to fairness of design process and approach
chosen likely to achieve employee and management
commitment, trust, and acceptance of results
 Appeals/review procedures
– Inevitable that some jobs are incorrectly evaluated
– Requires review procedures for handling such cases
and helping to ensure procedural fairness

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 Who Should be Involved? (cont.)
 “I know I speak for all of us when I say I speak
for all of us”
– Procedures should be judged for their susceptibility
to political influences

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 The Final Result: Structure
 The final result of the job analysis – job
description – job evaluation process is a
structure, a hierarchy of work
 Managerial, technical, manufacturing, and
administrative

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Exhibit 5.15: Resulting Internal Structures – Job, Skill, and
Competency Based

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 Balancing Chaos and Control
 Job evaluation changed the legacy of
decentralization and uncoordinated wage-setting
practices left from the 1930s and ’40s
 It must afford flexibility to adapt to changing
conditions
– Avoids bureaucracy and increases freedom to
manage
– Reduces control and guidelines, making
enforcement of fairness difficult

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