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LEARNING OBJECTIVES
At the end of this session students should be able
to:

Define the term pay management

Explain the importance of pay management

Understand the equity issue in pay management

Explain factors affecting pay management

Explain the concept of job evaluation

Identify the methods of job evaluation

Identify the pay survey method

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Pay Management is the HRM function
that deals with development,
implementation and maintenance of a
base pay system that is fair.

It is the aggregate of all the activities

involved in developing, implementing
and maintaining a fair base pay system.

Base pay is the basic wage or salary

paid to the employee and it does not 3
include allowances and other payments.
 Base Wage Salary
As per payment Wage is paid Salary is paid
base according to the according to the
number of units time spent for
produced or sold working
As per types of production and Clerical,
jobs sales employees supervisory and
managerial
employees
As per time of Daily or hourly Weekly or monthly
payment
As per nature of Work is Work is subjective
work measurable clearly and difficult to
and quantitatively measure
quantitatively
As per accounting Considered as Considered as 4
base expenses to expenses to
calculate calculate net profit
 To attract suitably qualified
persons to the organisation
 To retain most appropriate
employees within the organisation
 To motivate employees
 To comply with legal requirements
 To ensure equity
 To control employee cost
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 Primary Equity

 Internal Equity

 External Equity

 Inputs Equity 6
 Government legal requirements
 Trade unions
 Cost of living
 Demand and supply
 Productivity
 Financial ability
 Competitive pays
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 Job evaluation is the systematic
process of determining the
relative worth of jobs which are
available within an organisation

 It is a systematic comparison of
jobs to determine the worth of
one job relative to another and
eventually result in a wage or
salary hierarchy 9
 Appoint a committee for job evaluation

 Examine job analysis information

 Decide the method of job evaluation

 Evaluate jobs

 Rank jobs according to the relative

importance
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 Job Ranking Method

 Job Grading/Classification Method

 Factor Comparison Method

 Point System

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 Jobs are ranked from the most
important to least important
according to the degree of relative

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contribution given by each job to
achieve the organizational success

 Two techniques of job ranking

a) General Ranking
b) Paired Comparison
 Job evaluator is provided with job
descriptions relevant to all jobs which are
to be evaluated. Placing jobs from most
valued to leased valued is by considering
responsibility, needed efforts, needed
competencies and working conditions.

 Later, ranking done by all evaluators are

compared and averages of rankings are
calculated.

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Format for calculation of averages under job
general ranking

Job Evaluators Average

A B C D E

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 Format for Ranking Jobs
Job Ranking by Ranking by Ranking by
Evaluator A Evaluator B Evaluator C

Manager 1 1 1
Supervisor 3 3 3
Cashier 4 5 5
Peon 9 9 9
Van Salesmen 6 6 7
Counter Salesmen 8 8 8

Clerk 5 4 4
Bicycle Salesmen 7 7 6 15

Assistant Manager 2 2 2
Order Job Average

1 Manager 1

2 Assistant Manager 2

3 Supervisor 3

4 Clerk 4.3

5 Cashier 4.6

6 Van Salesmen 6.3

7 Bicycle Salesmen 6.6

8 Counter Salesmen 8
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9 Peon 9
 Evaluate the job but not the job holder
 Use sufficient number of factors to
evaluate the job
 Use factors which can be defined and
described
 Communicate the method of evaluation
and its purpose
 Use several experts and managers for
evaluation
 Have job analysis information before
job evaluation
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 Pay survey is a type of research that
details with collection and analysis of
information on salaries and wages
being paid by similar or competitive
organisations.

 It attempts to ensure external

equity .

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 Determine Jobs (Key Jobs) to be considered

 Decide which information is needed

 Determine organizations for the survey

 Determine survey techniques

 Conduct the survey

 Analyze data, information and present

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 Prevailing wage or salary rates

 Union power

 Wage and salary policies and adjustments

 Pay secrecy and pay openness

 Competency-based pay Vs skilled- based

pay
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QUESTIONS/SUG
GESTIONS

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