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36 Cards in this Set
- Front
- Back
Advantages of Point Method |
High degree of precision in measuring jobs Can have a high degree of consistency Orders jobs Provides a relative value of each job Jobs can be clustered into pay grades easier than other approaches Large body of knowledge about point method |
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5 main steps of developing a job evaluation system using the point method |
1. Identify key job characteristics (compensable factors) that differentiate the value of various jobs 2. Develop a measuring scale for each factor (scaling factors) so that the extent to which each factor is present in a job can be quantified 3. Weight each factor according to importance to the firm. This produces a system that can be used to provide a point total for each factor for each job 4. Apply the job evaluation system to every job included under the JE system. 5. Test the resulting job hierarchy for reliability, validity, and market fit, and make any necessary revisions to the JE system |
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Define compensable factors |
Characteristics of jobs that are valued by the organization and differentiate jobs from one another |
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Four main categories of compensable factors |
Skill Effort Responsibility Working Conditions |
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How many factors should be used? |
Depends on the broadness of groups of jobs More complexity = more compensable factors Generally between 8-12 |
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What does it mean to scale factors? |
set degrees (or levels) to each factor The degrees represent gradations in the extent to which a certain factor is present in a particular job being rated |
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How do you weight the compensable factors? |
Weight each compensable factor dividing total points between factors, then divide points between the degrees (either identical or varied) |
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How are factor weights derived? |
statistical analysis expert judgement |
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How does one apply the job evaluation system? |
Make a chart outlining the hierarchy of jobs |
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How do you test the job evaluation system? |
Test for reliability to determine validity Once reliability is achieved, test for market fit through benchmarking |
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How do you test reliability? |
Use different evaluators |
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Define validity |
The extent to which a measuring instrument actually measures what we intend it to |
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Define reliability |
The extent to which a measure instrument consistently produces the same measurement result when measuring the same thing |
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4 Main Pitfalls of the Point Method of Job Evaluation |
1. Inconsistent Construct Formation 2. Factor Overlaps 3. Hierarchical Grounding 4. Gender Bias |
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When may factors fail to be well-defined and separate? |
1. The factor is ambiguous 2. The degree may not be consistent with the factor definition 3. The definitions of the degree or level may not all be degrees of the same construct |
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What does hierarchal grounding mean? |
The factors confuse the outcome with the process. Example: Responsibility for action explaining reporting hierarchy does not explain the degrees |
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What are the six ways that gender bias occurs when creating job evaluations with the point system? |
1. Separate job evaluation systems for different job families 2. A factor is valued when it is found in "male jobs" but not in "female jobs" 3. Job content is confused with stereotypes 4. Factors found in female jobs are ignored 5. There is an insufficient range of degree statements 6. The job descriptions are biased |
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Other issues with job evaluation |
Evaluators bias Adversarial process between mgmt and employees |
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Define base pay structure |
The structure of pay grades and pay ranges, along with the criteria for movement within pay ranges, that applies to base pay |
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Define pay grade |
A grouping of jobs of similar value to the organization, typically grouped by point totals |
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Define pay range |
The minimum and maximum pay rates (in dollars) for jobs in a particular pay grade |
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5 reasons for clustering jobs into pay grades |
1. Use of grades recognizes that job evaluation is subjective process 2. Pay grades make it easier to justify and explain pay rates to employees 3. Pay grades simplify the administration of the pay system by eliminating need for separate rates for every job 4. Having jobs clustered within pay grades makes it easier for employees to move across jobs in the same pay grade 5. Pay grades create more stability for the pay system |
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Describe the ways to establish pay grade size? |
Equal interval approach Equal increase approach Equal percentage approach Broadbanding |
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Define equal interval approach |
Method to establish pay grade widths, in which the point spreads are equal for all pay grades |
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Define equal increase approach |
Method to establish pay grade sizes, in which each pay grade increases in width by a constant number of points from the preceding pay grade |
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Define equal percentage approach |
Method to establish pay grade sizes, in which each pay grade increase in width by an equal percentage from the preceding pay grade |
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Define broadbanding |
The practice of reducing the number of pay grades by creating large or "fat" grades, sometimes known as "bands" |
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Four areas required to determine pay ranges |
Establishing range midpoints Establishing range spreads Overlaps between pay ranges Gaps Between pay ranges |
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Define intergrade differentials |
The difference between the range midpoints of adjacent pay grades in a pay structure, expressed in dollars |
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Define intergrade differential percentage |
Calculated by dividing the intergrade differential (expressed in dollars) of each pay grade by the midpoint (in dollars) of the previous pay grade |
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Define range spread |
The difference between the maximum and the minimum pay level, in dollars, for a given pay range |
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Define range spread percentage |
A percentage calculated by dividing the range spread for a given pay range by the minimum for that pay range |
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Define JND |
The amount of pay increase necessary to be considered significant by employees receiving the increase |
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Define market line |
A regression line that relates job evaluation points to market pay (in dollars) for the benchmark jobs |
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Define pay policy line |
The intended pay policy for the organization, generated by adjusting the market line for the intended pay level strategy of the organization |
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Define correlation coefficient |
A statistic that measures the extent to which plots of two variables on a graph fall in a straight line |