JOB EVALUATION

(CONTINUATION)

MA. CECILIA CONSOLACION CELESTIAL-PALMA

 CAUSES OF WAGE INEQUITIES
• Pressure of aggressive employees or supervisors
• Favoritism among supervisors
• Seniority
• The feeling of being important
• Union pressure
• Faulty classification of jobs
• Absence of job evaluation
• Compensation plan not kept up-to-date
 Pressure of aggressive
employees or supervisors
• Some employees and supervisors use
pressure on their superiors for higher
pay or for more frequent salary raises
regardless of merit.
Favoritism among
supervisors
• A supervisor who is partial to some
of his workers is likely to grant wage
increases to the latter irrespective of
merit to the prejudice of the more
deserving ones.
 Seniority
• Some companies grant extra pay to
their employees for the length of the
service they have rendered to the
firm.
The feeling of being
important
• Some zealous department heads
and supervisors sometimes
erroneously put their respective
departments and functions as the
most important in the company.
Union Pressure
• By applying pressure on
management, union leaders
sometimes obtain
underserved wage raises or
undue upgrading of jobs for
themselves and their
favorites.
Faulty
Classification of
Jobs
• The errors of unexperienced
job classifiers/evaluators
result in wage administration
problems. Such deficiencies
can be avoided by
employing competent job
analysts and evaluators.
Absence of Job
Evaluation
In the absence of a job
evaluation system, the
company find no guide in the
classification and pricing of
jobs.
Compensation
plan not kept
up‐to‐date
Deviations in pay of like jobs
are likely to happen when a
compensation plan is not kept
up‐to‐date. To be realistic, a
compensation plan must be
kept up‐to‐date.
INTER-COMPANY INEQUALITIES IN PAY
• Differences in the nature of the business or
industry, company size and geographical
location
• Collective bargaining
• Company ability to pay
• Management’s generosity
Differences in the nature of
the business or industry,
company size, and
geographical location.
• Some types of industries have greater
earning power than others.
Generally, large well‐established firms
make larger profits than small firms,
the former can afford to give their Collective bargaining
employees higher pay.
• In a collective bargaining
negotiation, the employee’s
pay rates are often determined
by the union’s strength and
bargaining power.
Company ability to pay
• A firm can often pay good wages
because of management’s ability to
Management’s
run the business efficiently. generosity
• Some companies are more
generous in granting wage and
benefits to their employees than
others because of their ability to run
the business profitably.
 OTHER PROBLEMS IN SALARY
ADMINISTRATION
•Equal Pay for Equal Work
•A Fair Day’s Pay for a Fair Day’s Work
•Flexible Time
 “EQUAL PAY FOR EQUAL WORK”
This means that the same rate of
compensation should be paid to all
employees in a company who do similar
work regardless of age, sex, or other
personal circumstances of the individual
employee.
 “A FAIR DAY’S PAY FOR A FAIR DAY’S
WORK”
This principle is an old rule governing the
relations between labor and capital. It
means that if no work is performed by an
employee, he receives no wage or pay. It
also means that from each employee the
company has a right to expect “an hour of
work for each hour of pay.”
 “FLEXIBLE TIME”

This is a working hour arrangement in which

the working hours during the day may vary
among employees but the total number of
hours worked within the period is not less
than the number of hours for which straight
time wages are paid.
 PROGRAM FOR WAGE & SALARY
ADMINISTRATION
A salary program that is well‐conceived,
basically simple, well‐administered and
controlled, and clearly explained to the
employees is important in establishing
good employee‐employer relations.
ELEMENTS OF A FORMAL WAGE & SALARY PROGRAM
TECHNIQUE USED OBJECTIVE OF TECHNIQUE
COMPANY POLICY To provide guidance to operating managers

JOB ANALYSIS: To gather and record job facts, duties,

Job Description & Specification responsibilities and work in conditions and job
requirements. The back bone of job evaluation.

JOB EVALUATION To determine relative job worth.

JOB GRADING To classify evaluated jobs into pay grades or
pay classes. This series of pay grades is called
the job classification plan.

JOB PRICING To translate relative job worth into money

values.
WAGE & SALARY SURVEY To determine the wages and salaries of
comparable jobs in other firms.
 TECHNIQUE USED OBJECTIVE OF TECHNIQUE
SALARY & WAGE STRUCTURE To provide a specific rate schedule of all jobs in the
company.
MERIT PLANS: To reward employees for better performance on the job.
Performance Appraisal
INCENTIVE PLANS To reward employees for output higher than the usual
standard rate of production
FRINGE BENEFITS To provide supplemental compensation as added
incentives, and promote morale.
ADMINISTRATIVE PROCEDURES & To solve individual problems, keep the program current
PRACTICES and operating efficiently, review and provide general
guidance to supervisors and managers.
COMMUNICATIONS To give supervisors and managers the information they
need to know in order to carry out the program and to
gain acceptance of the program
CONTROLS To insure reasonably consistent and current application of
the program
and to maintain control over cost.
FACTORS IN SETTING UP A PROGRAM
• Approval by Top Management
• Objectives of wage and salary administration
• Formulation of company wage policy
• Planning the program
• Job analysis
 APPROVAL BY TOP MANAGEMENT

The first step should be the initiative and

approval by top management on setting
up a systematic program of paying its
employees.
 OBJECTIVES OF WAGE AND SALARY
ADMINISTRATION
1. To establish fair & equitable compensation by setting up
salary standards through wage and salary structure in order to
attract capable employees to the company and retain them
once they are in
2. To maintain realistic and equitable relationship of
compensation between the different jobs in the company.
3. To control costs and to maintain the company in a
competitive position
4. To utilize wages and salaries as incentives for employees to
exert their best efforts to achieve greater productivity.
5. To maintain good employee relations
6. To comply with the requirements of wage laws and
regulations
 FORMULATION OF COMPANY WAGE POLICY
Top management must formulate a sound company wage policy and should be:

1. easily understood
2. easy computation
3. effective
4. provide remuneration as early as possible
5. relatively stable

Wage policies should be carefully developed with the interests of the following in
mind:

1. The owners or stockholders

2. The employees
3. The consumers
4. The community
5. The government
 PLANNING THE PROGRAM
1. Simple to understand
2. Just and Equitable
3. Attractive
4. Reasonable Standard
5. Conducive to Health
6.Willing Co-operation of workers
7. Clarity of Objectives
 JOB ANALYSIS
In relation to employee pay practices, job analysis has two
critical uses:

1. It establishes similarities and differences in job content

2. It helps determine the internal equity and relative worth of
like jobs.

If jobs have equal content, then the pay established for them
will likely be equal.