Compensation Management Explain the Job Characteristics Theory  Essay

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Compensation Management

Explain the job characteristics theory. How does it tie in with intrinsic compensation?

Job characteristics theory was first introduced by Hackman and Oldham. Later on the basis of this theory, a job characteristic model was proposed which is also known as JCM. The theory focuses on five job attributes which helps in motivating the employees and make them feel satisfied at their job. The five job characteristics are as follows:

Task Identity refers to the task assigned at job that has a defined beginning and an end. This enables a worker to have a complete idea about the job procedure and the set criteria for job evaluation.

Autonomy is the level of freedom permitted to the employee at his or her job. It counts whether an employee is allowed to make changes in the schedule of work and its method or he/she is required to take permission from the higher staff for it.

Skills Variety refers to the variety of talents and skills required at the job. It tells whether an employee just has to perform the repetitive tasks or different things.

4- Task Significance means if the job of an employee has any worth in an organization or not. Does the job make substantial impact over the organization or society or it is just an ordinary one.

5- Job Feedback refers to the organizational procedure of letting employees informed about their performance at job regularly. (Hackman & Oldham, 1976, p. 250-279)

The above job characteristics enable an employee to experience meaningfulness of work, responsibility and knowledge of outcomes. The other name of these motivational factors is the intrinsic compensation. Since, only money cannot make an employee happy but they need a motivation at work as well so it is important for any organization to compensate their employees intrinsically too. (Faturochman, 1997, p. 1-13)

2A. Why did Amy classify the shift leaders as Exempt? Are there any advantages to Jones Department Store to having the Shift leaders classified as Exempt?

As according to the U.S. Department of Labor, the shift leaders who can also be classified as the assistant managers are considered as exempt of overtime rights. Since, they supervise their subordinates and also involved in managerial decisions so overtime pay is not applicable on the administrative staff. Moreover, the kind of tasks that Jane performs is not at all repetitive so she cannot claim for the overtime payment as she is exempt for this.

Though there is benefit for the Jones Department Store for classifying shift leaders as exempt since number of employees have already left the job due to extra load so it means Store is going in loss. But here rule is applied as well.

2B. Do you think that the shift leaders are properly classified as exempt? Why or why not?

No, in this case shift leaders are not properly classified as exempt. Since, Jane is neither being paid as equal to the assistant managers nor for the over time. Even she is doing the work of an assistant manager but not paid accordingly. She is involved in all managerial decisions and also part of the management team but actually she is being overburdened more than her job requires.

2C. What are some factors that Amy should consider when determining if shift leaders are Exempt or Nonexempt?

The first thing that Amy should consider is that if the shift leaders are actually being paid equal to the standard rate of assistant managers or not. Secondly, she needs to see if the shift leaders are performing the same set of tasks repeatedly at their job or different. Thirdly, if the shift leaders, who are actually considered as the associates are performing the same tasks that the job requires or being overburdened.

3.What are profit sharing plans? List and describe at least two advantages and disadvantages of profit sharing plans.

Profit Sharing Plans are also known as deferred profit sharing plan according to which employees receive the share in profits earned by the company. These profits are either provided to the employees in form of stocks, bonds or cash. Employees can also opt to receive the profits at the time of retirement or invest in other small businesses. Generally there are three forms of profit sharing plans that are cash plans, deferred plans and third one is the mix of both cash and deferred plans. (Coates, 1991, p.19-25)

These profit sharing plans are formed by the companies to make their employees feel as part of the organization and thus improving the loyalty factor. There are number of advantages of these plans but on the other side there are certain disadvantages as well.


The motivational level among the employees for their work becomes higher.

Employees become more committed to the organization.

Employees work hard at their job so as to improve the company's profitability.

The gap between the employee and employer gets minimized.

The well-being of employee is improved.


Administrative costs get increased.

Administration requires keeping a check on equal distribution of the profits.

Employees may only be focusing upon the profits and ignore the quality of work.

It becomes difficult for the company to manage the individual profits regularly.

(Watson, 2000)

4A.What are some problems with Precision's performance appraisal process that might cause challenges for Jackson to implement a merit pay program?

Precision current performance appraisal process is quite simple. The supervisors only meet their employees once in a year so that to rate their performance. It is for this reason that almost all the employees at Precision are rated on average. It is very rare that any employee get ratings very high or very low. So it means that the supervisors just fill out performance appraisal forms as a formality. Performance appraisals are not done fairly and general increments are made in the base pay of employees yearly. Since, employees are now used to these easy going performance appraisals so if Jackson will suggest merit pay program then it may disturb the employees and they would consider it as tough. This could also increase the turnover rate.

Secondly Jackson will also require making job analysis of every job and letting the employees know about their job responsibilities and performance criteria.

4B. What changes do you recommend Precision make to performance appraisal process to align it with a merit pay program?

Since, the merit pay program is based on the performance appraisal. The better the performance, the better will be bonuses and benefits. So Jackson will first have to improve the method of job appraisal. The supervisors must keep a check on the performance of their subordinates and rate them regularly so that the fair methods could be applied.

Secondly, employees must be informed about the criteria that will be followed for appraising their performances. For this purpose, detailed job descriptions should be handed over to the employees. Moreover, administration must discuss the compensation reward percentage with the employees.

5. What are the two chief considerations in analyzing survey data? How are statistics used to summarize survey data? Support your answer with examples.

There are two kinds of approaches to analyze the survey data. One is the simple one that is also known as basic analysis and the other one is advanced analysis. There are built-in options for graphs and analysis in basic analysis software like Zoomerang and Survey Monkey. However, one can conduct advanced survey analysis using Microsoft Excel and SPSS. Using these softwares, one can create customizable charts and graphs like bar, pie and histogram charts. Different survey analysis techniques can be used like cohort analysis and cross classification analysis to rightly assess the collected data. (Chromy & Abeyasekara, 2005, pp. 1-27)

The statistics can be summarized by two major ways. One is measure of central tendency and the other is measure of dispersion. The prior measures the mid-point of the distribution and the second indicates the amount of variation in distributed data.

Central tendency

There are three kinds of central tendency measures that are arithmetic mean, median and the mode. Arithmetic mean is applied over the interval and ratio scaled data. The sum of observations is added to the number of observation to get the arithmetic mean. Median is applied over the ordinal data and the mode is used for the nominal data.


There are three measures to check the compactness of data that are standard deviation, variance and range. The smaller the value of these measures, the data will be more compact. The formula for standard deviation is:

Where f is the frequency, m is the mid-range of cell value, n is the sample size and is the sample mean. (Horgan, 2009, pp. 13-22)

6A. What are some strategic considerations in establishing a pay structure at Nutriment?

For establishing the pay structure of any particular job, Jack must have to do the job analysis and measure the job worth. This will decide the fair pay that should be offered to the candidate. Moreover, jack must do the market analysis…

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