Management 623: Compensation

1
Management 623Compensation Performance
Management

• Session 10
• February 14th 2006
• Dr. J. Bruce Prince

2
Agenda

• Discuss Creating Job Descriptions
• Do job descriptions matter?
• Overview of Team Report 1 requirements
• Handout Guide for Assignment
• Aligning a pay structure guides for design
  choices

3
Coming Up

• Thursday, February 16th
• Job Evaluation Reading
• Job Evaluation Exercise Handout
• Tuesday, February 21st
• No class sessions Work on FastCat 1
  Assignment- Im not in town this day
• Thursday, February 23rd
• No class sessions Work on FastCat 1 Assignment
• I will come to the classroom at 230 in case
  there are questions
• Tuesday, February 28th
• FastCat Assignment 1 Due Presentations on
  proposed pay structure
• Jury duty possibility Assignment is due even if
  class is canceled

4
Special Office Hours

• Office Hours for Next week (March 20-24)
• Monday to Wednesday No office hours
• Thursday
• 230 to ? in the classroom
• 300 to 400 in my office (C204A)
• Friday
• 1000 to 1100, or by appointment

5
Fast Cat 1 Assignment

• Due February 28th
• Key Parts
• Executive summary
• What are your Pay Objectives?
• Supporting commentary how will it help the firm
  compete?
• Present a Proposed Structure Job families jobs
• Levels, differences, criteria used (Do not create
  a person-based system)
• Present your system for analyzing and comparing
  jobs
• Compensable factors used pay manual
• Jobs must be grouped into families and points
  MUST be assigned EACH job show how you
  calculated points

6
Mini Exam Results

• Scores on Essay Qs Ave 20.5 (85.4)
• Scores on MC Qs Ave 22.5 (62.5)
• Your Adjusted Final Score
• Essay Q Points MC Q Points 7 points
• Average Adjusted Final Score 48.9 (81.5)
• Range 42/60 (70) to 59/60 (98.3)
• See me about improving your test scores
• Higher performance on your Mid-Term Exam can
  improve your Mini-Exam 1 for 2pts ? up to 85

7
Analyzing the Customer-Service Agents Job
Exercise

• Students present Job Description ideas for Bill
  Ryans job
• Review info from ONet
• Contrast with example from author

8
What should a job description look like?

• Typical Format
• Job Title
• Job Summary (general statement)
• Key Relationships
• Report to internal external relationships
• Worker Qualifications
• Education, certifications, related work
  experience, physical demands
• Essential Responsibilities

9
Job Analysis ? Job Description Building Process

• Gather preliminary information
• Review prior job descriptions ONet ideas
• List key tasks, etc., note unclear areas
• Tour work site See the context flow
• Conduct interviews
• Supervisor go over the job job incumbents
• Get average employees vs. best employees
• Develop draft job description revisit work site
  supervisor with questions on areas of
  uncertainty
• Consolidate into a near final job description
  verify with all interviewees in group setting
• Create the final job description

10
Job Analysis Challenges

• JA is still at the heart of HR Management
• but there are serious challenges
• High rates of changes cost-efficiency pressures
  invest less job analysis
• Some see it as a bureaucratic waste
• Do people really use job descriptions
• If JA is not a priority must adapt
• Rely more on generic ONet descriptions
• Add emphasis on customers (in out)
• Broad-bands more discretion with wider ranges
• Competency models alternative but this fits
  person-based pay not job-based pay

11
Defining a Pay Structure

• Levels How many?
• Many distinct jobs vs. fewer but broader jobs
  within a family
• Differentials Pay differences in a job family
• Egalitarian vs. hierarchical structures
• Criteria (use value vs. exchange value??)
• Job evaluation process identifies criteria for
  assigning (relative) internal use value - then
  external labor markets pay policy determine the
  exchange value.
• Job-Based versus person-based Structures

12
Pay Structure Determinants 1

• External factors
• Economics
• Spend up to the point that
• Marginal Cost Marginal Productivity (gains)
• Should a new job with unique skills be added?
• Only MClt or MP
• Living wage, should minimum wage be raised
• Government policies legal compliance
• Other stakeholders unions, stockholders,
  interest groups

13
Pay Structure Determinants 2

• Customs Cultures what is fair is culturally
  based
• British vs. American Executive Pay
• Organizational Factors
• Strategy Align pay system with strategy
• Work design
• Skill levels required higher - costs more
• Enriched jobs, multiple skills ? costs more (but
  MCltMP gains
• Work flow design who works with who, etc.
• Employees versus contingent workforce
• Multi-tiered workforce example

14
Design Choices

• Fit the pay structure to multiple external
  internal forces (prior two slides)
• Loose versus tight structures
• Does flexibility hurt or harm?
• Cost leader vs. differentiator business strategy
• Egalitarian versus hierarchical structures
• Note benefits on next 2 slide
• Tournament theory the big low- prize has big
  impact on behavior Lotteries!
• Equity theory is also important

15
Strategic ChoiceHierarchical versus Egalitarian
16
Hierarchical vs. Egalitarian Structures

• Layered Structure
• Chief Engineer
• Engineering Manager
• Consulting Engineer
• Senior Lead Engineer
• Lead Engineer
• Senior Engineer
• Engineer
• Engineer Trainee

• De-layered Structure
• Chief Engineer
• Consulting Engineer
• Associate Engineer