HR Word of the Day

GOLDEN HANDCUFFS
- a phrase first recorded in 1976,
refers to financial allurements and
benefits that have the objective to
encourage highly compensated
employees to remain within a
company or organization instead
of moving from company to
company (or organization to
organization).

Golden handcuff cab be offered in various ways:

- Different contractual arrangements tailor made for each employee.
- Employee Stock Option which are exercised after certain predetermined period
of employee service.
No immediate lucrative financial gain but if employee retains for long period and
performs well, he can gain from golden handcuff.

There is penalty clause in these contracts which can be leaving stock options offered.
Golden Handcuff on one hand offer big financial benefits such as stock options and on
other side binds employee by non-compete clause, non-disclosure agreement.
Dr. Isa Mishra
 JOB EVALUATION

A job evaluation is a systematic way of determining the value/worth of a job in

relation to other jobs in an organization. It tries to make a systematic
comparison between jobs to assess their relative worth for the purpose of
establishing a rational pay structure.

Job evaluation needs to be differentiated from job analysis.

Job analysis is a systematic way of gathering information about a job.
Every job evaluation method requires at least some basic job analysis in order to
provide factual information about the jobs concerned. Thus, job evaluation
begins with job analysis and ends at that point where the worth of a job is
ascertained for achieving pay equity between jobs and different roles.

Dr. Isa Mishra

 JOB EVALUATION - Features

 Tries to access jobs, not people

 Standards of job evaluation are relative, not absolute
 Basic information on which job evaluations are made is obtained from job
analysis.
 Carried out by groups, not individuals
 Some degree of subjectivity is always present.
 Does not fix pay scales, but merely provides a basis for a notional wage
structure.

Dr. Isa Mishra

 JOB EVALUATION – PROCESS…

 Gaining Acceptance – by all employees. Top management have to be

transparent about the process.

 Job Evaluation Committee – HR experts, experienced employees, union

representatives wherever required.

 Finding the job to be evaluated – Key jobs from every department which
aptly represent the core job of the department.

 Analyzing & preparing Job Description – Job Analysis of the job has to be
available.

 Selecting the method of evaluation – depending on the organizational

demands.

Dr. Isa Mishra

 JOB EVALUATION - PROCESS

 Classifying jobs - The relative worth of jobs is ascertained using criteria like :
• skill requirements,
• experience needed,
• conditions under which job is performed,
• type & extent of responsibilities to be shouldered,
• degree of supervision needed,
• amount of stress caused by the job

 Weights / Points are assigned to each factor which are converted to

monetary values

 Installing the program – Explanation of entire process to all stakeholders.

 Periodic review – as and when the JD & JS undergoes / needs change.

Dr. Isa Mishra

 JOB EVALUATION - BENEFITS

 Tries to link pay with job requirements

 Offers a systematic procedure & rational criteria for determining the relative
worth of jobs.
 Salary inequities are eliminated if job evaluation is done.
 Wage related grievances can be solved quickly as all employees and union
representatives have participated in the process.
 Can help in the evaluation of new jobs.
 Points out faulty selection of current manpower in case of any mismatching
of job competencies vis-à-vis the job role.

Dr. Isa Mishra

 JOB EVALUATION – METHODS…

Qualitative Method
• Ranking or Job Comparison
• Grading or Job Classification

Quantitative Method
• Point Rating
• Factor Comparison

Dr. Isa Mishra

 RANKING or JOB COMPARISON

 Simplest form
 Each job as a whole is compared with another and this comparison of jobs
goes on until all the jobs have been evaluated and ranked.
 All jobs are ranked in the order of their importance from the simplest to the
hardest or from the highest to the lowest

Rank Monthly Salaries

1. Accountant Rs. 30000
2. Accounts Clerk Rs. 18000
3. Purchase Asst. Rs. 17000
4. Machine Operator Rs. 14000
5. Typist Rs. 9000
6. Office Boy Rs. 6000

Dr. Isa Mishra

ADVANTAGES :

1. Simple
2. Fast
3. Most commonly used

DIS-ADVANTAGES :

1. Comparisons can be problematic depending on number and complexity of

jobs
2. May appear arbitrary to employees
3. Can be legally challenged
4. Unreliable

Dr. Isa Mishra

 GRADING or JOB CLASSIFICATION

 A job grade is defined as a group of different jobs of similar difficulty or

requiring similar skills to perform them.
 Job grades are determined on the basis of information derived from job
analysis.
 The grades or classes are created by identifying some common denominator
such as skills, knowledge and responsibilities.

Dr. Isa Mishra

Class Rank Employees

Class 1 Executives Managers, Supervisors,

Superintendents

Class 2 Skilled Workers Purchasing Asst.,

Cashier, Receipts Clerk

Class 3 Semi-skilled Workers Typists, Operators

Class 4 Lesser skilled / Office Boys, Sub-staff

Unskilled Workers

Dr. Isa Mishra

ADVANTAGES :

1. This method is easy to understand and simple to operate.

2. It is economical and, therefore, suitable for small organizations.
3. The grouping of jobs into classifications makes pay determination problems
easy to administer.
4. This method is useful for Government jobs.

DIS-ADVANTAGES :

1. The method suffers from personal bias of the committee members.

2. It cannot deal with complex jobs which will not fit neatly into one grade.

Dr. Isa Mishra

 POINT RATING

 Jobs are broke down based on various identifiable factors such as skill, effort,
training, knowledge, hazards, responsibility, etc. Thereafter, points are
allocated to each of these factors.
 Weights are given to factors depending on their importance to perform the
job.
 The sum of points gives an index of the relative significance of the jobs that
are rated.

Dr. Isa Mishra

FIRST STEP : Assign point values to degrees after fixing a relative value for each key factor.

Degree Define
1 Able to carry out simple calculations
2 Basic MS Office
3 Adept in MS Office
4 Adept in MS Office, Handles mails
5 Adept in MS Office, Handles mails, Does
work independently

Dr. Isa Mishra

SECOND STEP : Assign point values to factors along a scale.

Factor Point Values for Degrees Total

1 2 3 4 5
Skill 10 20 30 40 50 150
Physical effort 8 16 24 32 40 120
Mental effort 5 10 15 20 25 75
Responsibility 7 14 21 28 35 105
Working conditions 6 12 18 24 30 90
Maximum total points of all factors depending on their importance to job = 540
(Bank Officer)

Dr. Isa Mishra

THIRD STEP : Conversion of Job Grade Points into Money Value

Point Range Daily Wage rate (Rs.) Job Grades of key bank officials
500-599 30000-39999 Officer
600-699 40000-49999 Junior Manager
700-799 50000-59999 Asst. Manager
800-899 60000-69999 Dy. Manager
900-1000 70000-89999 Manager

Dr. Isa Mishra

ADVANTAGES :

1. This method is widely used.

2. Forces raters to look into all job factors.
3. It is the most comprehensive and accurate method of job evaluation.
4. Prejudice and human judgment are minimised, i.e. the system cannot be
easily manipulated.
5. Being a systematic method, workers of the organisation favour this
method.
6. The scales developed in this method can be used for long time.

DIS-ADVANTAGES :

1. Rater has to understand the method fully

2. Time consuming as all job factors are captured, as far as feasible.
3. Taxing & difficult for senior level jobs where the job cannot be quantified
fully.

Dr. Isa Mishra

 FACTOR COMPARISON

 Combination of both ranking and point methods

 Instead of ranking complete jobs, each job is ranked according to a series of
factors. These factors include mental effort, skill needed, responsibility,
working conditions, etc.
 Pay will be assigned in this method by comparing the weights of factors
required for each job.
 Wages are assigned to the job in comparison to its ranking on each job factor.

Dr. Isa Mishra

 FACTOR COMPARISON - STEPS

 Select the key jobs (15 to 20) across the organization, representing all
departments.
 Find factors for evaluating the job like skill, physical effort, mental effort,
responsibility, etc.
 Rank selected job under each factor (done by job evaluation committee
members).
 Assign money value and determine the wage rates

Dr. Isa Mishra

 Factor Daily Physical Mental Skill Respons Working
s Wage Effort Effort ibility Conditio
Rate ns
Key Job
Electrician 60 11(3) 14(1) 15(1) 12(1) 8(2)
Fitter 50 14(1) 10(2) 9(2) 8(2) 9(1)
Welder 40 12(2) 7(3) 8(3) 7(3) 6(3)
Cleaner 30 9(4) 6(4) 4(5) 6(4) 5(4)
Labor 25 8(5) 4(5) 6(4) 3(5) 4(5)

For painter who is similar to electrician in effort (11), to fitter in mental effort
(10), to welder in skill (8), cleaner in responsibility (6) and labor in working
conditions (5); the wage rate is (11+10+8+6+5) = Rs. 40.

Dr. Isa Mishra

ADVANTAGES :

1. Analytical & objective.

2. Valid as each job is compared with all other jobs.
3. Minimum errors

DIS-ADVANTAGES :

1. Rater has to understand the method fully

2. Time consuming as all job factors are captured, as far as feasible.
3. Taxing & difficult for senior level jobs where the job cannot be quantified
fully.

Dr. Isa Mishra

Method What facet of How is job evaluated? Type of Major Major
job is to be method advantage(s) disadvantage
evaluated? (s)
Ranking Whole job Jobs are subjectively Non- Simple, Good Subjective,
ordered according to quantita when no. of Not suitable
relative worth tive jobs are less for more no.
of jobs &
complex jobs
Grading Whole job Jobs are compared to Non- Simple; Cumbersome,
descriptions of job quantita Classifies jobs Cannot grade
grades tive complex jobs

Point Compensable Jobs are compared with Quantita Accurate & Complex;
method job factors standardized tive stable over Cannot accord
descriptions of degrees time; points to jobs
of compensable factors Analytical; which cannot
Systematic be quantified
fully
Factor Compensable Jobs graded by ref to Quantita Easy to use; Market rate
Comparis job factors market rate data & tive Analytical, info may be
on direct comparison with Realistic, difficult to
jobs at or near same Practical obtain
level within org Dr. Isa Mishra
 JOB EVALUATION - LIMITATIONS

 Point allocation is subject to the interpretation of the job evaluation

committee
 Conflicts arise amongst employees, management, union representatives,
experts while according weightage / points to compensable job factors
 Compensable factors are not exhaustive
 Compensable factors change with changes in technology, values, aspirations
of employees, need of organization, etc.

Dr. Isa Mishra