Job Evaluation Market Pricing and Pay Structures

Human Resources

Job Evaluation, Market Pricing & Pay Structures

Job evaluation is a division of the salary management practice. It is a methodical examination of the relative demands that work places on a worker. Job evaluation results in a relative ranking of positions. This position, frequently expressed in terms of salary grades, is the foundation for the classification of salary ranges (Hilling, 2003). Market pricing is an organization of gathering data on the pay rates for comparable jobs in other companies to set up their market rate or price and track movements in those rates. The objective of the process is to help set the organization's own pay rates at the suitable level in order to employ and retain the personnel it desires (Graebner & Seaweard, 2004). While market pricing has forever been the foremost way that companies establish their pay levels, the lack of valuable survey data has been a problem in the past. When there is a reasonable quantity of market information, it is possible to place jobs into grades based on the level of the competitive pay for the assorted jobs. Usually, a simple ranking process is used to slot the positions without market data into a structure.

Market pricing uses external sources in order to assign value to a company's jobs, while job evaluation, is a systemic approach used to evaluate and value jobs within an organization. Job evaluation gives one a common language to talk about the jobs in an organization, and to create job hierarchy. This common language translates all the different jobs to some kind of point factor, number or grade. Even though the jobs are all different, from an internal value standpoint, they are all the same value (Dufetel, 1991).

The main difference between these methodologies is the amount of precision that they offer. The greater the amount of precision, the more multifaceted they are, which is a typical criticism of job evaluation. A lot of people have had experience with a more multifaceted model that became too much to manage over time, and it kind of fell apart because the exceptions became the rule (Job Evaluation: Understanding the Issues, n.d.).

Discussion

Currently Humana, Inc. uses a marketing pricing strategy to set salaries. Each job within the company is compared to data across the industry in order to determine what the salary range for that job will look like. This method does not give any consideration to how important the job is within the company, nor does it take into account any differences between Humana and the rest of the companies in the industry. It appears to be a very cut and dry process that does not leave any room for flexibility to be taken into account.

Conclusion

There is a current push going on to make employees more accountable for the overall performance of the company. If each person is compensated upon their responsibilities and the results that the company achieves instead of effort and tenure, employees are more likely to see that they have a stake in how the company performs as a whole (Graebner & Seaweard, 2004). It is hard to make a care for compensation levels being based upon survey data that is supposed to apply across an industry, when each company is more than likely different from the next. If wages are based upon the responsibility of the position and how much that position contributes to the bottom line of the company, when the company does well that employee should be rewarded. This structure is very likely going to encourage employees tow work hard at what they do because not only will they be rewarded but hey will also be more likely to see what they are doing is truly contributing to the company.

According to Dufetel (1991), job evaluation stresses that the value of a job is the value added that it creates for a company and must be looked at for the contribution that it can make to the organization. This approach makes employees more accountable for their job and how well they do it. An employee can easily seen how it is that their job contributes to the bottom line of the company and thus will be more ready to put forth effort to do the best job possible. Basing compensation on this method is the best way to get the most out of employees and thus create a very successful company with a good bottom line. This approach allows for companies to get the most out of their employees. If the company wins then the employees win and every one is successful.