Wage and Salary Administration

Wage and Salary Administration

Several methods can be used in job evaluation, which is a process of determining the relative value of various jobs in any given organization. The purpose of job evaluation is to compare jobs to create a pay structure that is fair, equitable, and consistent for every employee. The two job evaluation methods I feel are appropriate for developing a sound wage structure at Jean Incorporation are job classification and the point-factor methods.

The job classification method entails ranking jobs based on a predetermined grade comparison. For example, classifying the CEO, the directors, the vice president, and the managers in one class. One important point to note with the job classification method is that the job is classified based on the predetermined ranking, and this ranking is also based on the grades. The grades are created among job families (Vulpen, 2019). In this job evaluation method, the job characteristics are grouped to reflect the levels of responsibilities at the number of the predetermined grade classification. Individual job areas are compared to groups of job characteristics and then matched to a particular grade classification. One of the job classification methods is; First, it can be a challenge since one size cannot fit it all; hence, jobs may be force-fit in the grade (Armstrong, 2018). Secondly, this method is subject to grade inflation as jobs get pushed to the next higher levels. Do you need help with your assignment ? Contact us at eminencepapers.com.

The second job evaluation method that Jeans can adopt is a point-factor method. In this method, jobs are assessed on the required knowledge, problem-solving skills, experience, and accountability. Each factor is assigned points, and thus, the sum of the points reveals the job ranking. The goodness with this method is that bit identifies factors that add value and worth to the position. The limitation of the point-factor method is; first, the method may not reflect the market values of the jobs. Secondly, this method may lead to the hierarchy (Armstrong, 2018). Comparing job classification and point-factor evaluation methods, I recommend Jean Inc. to adopt the point factor method. The point factor is more of a scientific method of job evaluation since individuals with jobs are ranked according to individuals’ knowledge, skills, experience, and accountability (Armstrong, 2005). This is contrary to the job classification method that makes so many assumptions.

The policy of paying 10% more than the prevailing rates is not sound because it seems to be casework. Pay rates cannot be determined through casework but should be based on various factors such as knowledge, the firm’s profitability, and individual productivity. Instead of Jeans Inc. paying 10% more, it should pay the same amount other firms are paying for the positions. Paying the same with other firms will help the company cut labor costs (Shrm, 2021). However, paying 10% will increase the labor costs, and any attempt at reducing the future would lead to employee turnover.

A sound wage structure musts have certain characteristics. First, the structure musts are display fairness in the wage pay. Firms should pay reasonable wages to their workers; the wages paid should be commensurate with the work input. Firms should ensure that at one point in time, workers should not feel that they are underpaid for the work they are doing. Secondly, a sound wage structure should adhere to the minimum wage guarantee (Bhavika, 2020). Every country has a minimum wage which all firms need to observe while creating a wage structure. A good wage structure should conform to trade agreements between employers and employees, and the employer should not go against what is agreed. Moreover, a wage structure should be flexible but not rigid. A flexible structure changes when the changes are incorporated in the system; when taxes increases and the living standards increase, the pay should be adjusted.

References

Armstrong, A. (2018). Armstrong’s Job Evaluation Handbook: A Guide to Achieving Fairness and Transparency in Pay and Reward. Kogan Page,

Armstrong, M. (2005). Job evaluation: A guide to achieving equal pay. London: Kogan Page.

Bhavika, H. (2020). Wage and Salary Administration. Retrieved from https://www.economicsdiscussion.net/wages/wage-system/wage-and-salary-administration/32097

Nyberg, A., Pieper, J & Trevor, C. (2016). Pay-for-Performance’s Effect on Future Employee Performance: Integrating Psychological and Economic Principles toward a Contingency Perspective. Management Department Faculty Publications. 111

Shrm. (2021).  Building a Market-Based Pay Structure from Scratch. Retrieved from https://www.shrm.org/resourcesandtools/tools-and-samples/toolkits/pages/buildingamarket-basedpaystructurefromscratch.aspx

Vulpen, E. (2019). A Full Guide to Job Evaluation for HR. Retrieved from https://www.aihr.com/blog/job-evaluation

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Wage and Salary Administration

View the following video concerning internal equity:

GreggU. (2019, September 30). Internal Consistency [Video]. YouTube. https://youtu.be/U9asrLiEpxQ

Time for Change in Pay Plans?

You are a newly hired HR professional now working for Jeans Inc. Jeans does not have a formal wage structure or rate ranges and does not use compensable factors. Wages are basically set on prevailing wages in surrounding communities coupled with some attempt for internal equity among workers.

Jeans does not participate in formal pay surveys. Instead, the administrative assistant routinely looks over online job openings and conducts informal surveys among her friends in local organizations. Jeans has always followed a policy of paying employees about 10% above what the assistant determines are the prevailing rates. She thinks this reduces turnover and fosters employee loyalty. The practice is to pay men about 20% more than women for the same job. The assistant explains, “When we hire males, they have families, and they are stronger and can work harder for longer hours.”

Address the following questions in a 2-page essay. Support your responses with information from at least 2 reputable sources (library and/or Web-based), and provide the full citation at the end. Use APA format for your references. Share your own personal experiences, readings, and research, where applicable.

Select two job evaluation methods that might work well for Jeans. Compare and contrast them. Select one of the methods and justify why you recommend that it be implemented for Jeans Inc.
Is the policy of paying 10% more than the prevailing rates a sound one? If so, how should it be determined? If not, what do you recommend?
What characteristics of a sound salary structure are needed for Jeans? Why? Justify your answer.