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Basic Factors in Determining Pay Rates Five Step Process of Establishing Pay Rates Job Evaluation Ranking Method of Job Evaluation Point Method of Job Evaluation Assigning Market Value Positioning Jobs within a Band * ? Prentice Hall, 2000 Chapter 11 11 Gary Dessler Human Resource Management, 8th Edition Chapter Eleven Establishing Pay Plans Behavioral Objectives Discuss four basic factors determining pay rates. Explain in detail each of the five basic steps in establishing pay rates. Present the pros and cons of job evaluation. Define comparable worth and explain its importance today. When you finish studying this chapter, you should be able to: 1 Legal Union Policy Equity 2 Conduct a salary survey of what other employees are paying for comparable jobs (to ensure external equity). Determine the worth of each job in your organization through job valuation (to ensure internal equity). Group similar jobs into pay grades. Price each pay grade by using wage curves. Fine-tune pay rates. 1. 2. 3. 4. 5. 3 Job evaluation is aimed at determining a job’s relative worth. It is a formal and systematic comparison of jobs to determine the worth of one job relative to another and eventually results in a wage or survey hierarchy. 4 1. Obtain job information 2. Select raters and jobs to be rated 3. Select compensable factors 4. Rank jobs 5. Combine ratings 5 The point method is a more quantitative job evaluation technique. It involves identifying (1) several compensable factors, each having several degrees, as well as (2) the degree to which each of these factors is present in the job. 6 Market Value Job A Job B Job C Job D Job E Job F $29.5 $34.5 $45.0 $47.3 $50.1 $59.1 7 Skill Level 1 Skill Level 2 Skill Level 3 4 Skill Level 5 Skill Level 6 Pay in Relation to Skills 8