Designing Compensation Systems and Employee Benefits

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Designing Compensation Systems and Employee Benefits

Compensation 1

Describe the differences between job analysis and job evaluation and how these practices help establish internally consistent job structures. A job analysis is a step-by-step specification of an employment position's requirements, functions, and procedures. Just as a seed cannot blossom into a flower unless the ground is properly prepared, many human resource management (HRM) practices cannot blossom into competitive advantage unless grounded on an adequate job analysis. A job evaluation is the process of analyzing and accessing the various jobs systematically to ascertain their relative worth in an organization. Job is evaluated on the basis of their content and is placed in the order of their importance. To achieve internal consistency, a firm's employees must believe that all jobs are paid what they are "worth." In other words, they must be confident that company pay rates reflect the overall importance of each person's job to the success of the organization. Because some jobs afford a greater opportunity than others to contribute, those holding such jobs should receive greater pay. For instance, most would agree that nurses should be paid more than orderlies because their work is more important; that is, it contributes more to patient care, which is a primary goal of hospitals.

Compensation 2 For pay rates to be internally consistent, an organization first must determine the overall importance or worth of each job. A job's worth typically is assessed through a systematic process known as job evaluation. In general, the evaluation is based on "informed judgments" regarding such things as the amount of skill and effort required to perform the job, the difficulty of the job, and the amount of…...

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