It has been seen by businesses as a rational way of working out why some jobs are paid more than others. For example at ‘The Perfume Shop’, wages and salaries for different members of staff are evaluated by the different responsibilities they have. A sales assistant has a lower rate of pay than a senior sales assistant simply because the senior sales assistant has more responsibility with the day to day running of the business i. e. banking, cashing up etc. An issue within Itec Ltd is the disputes regarding equal pay. Job evaluation can help rectify the situation by assessing whether the employees are doing work of equal pay.
The most common method of job evaluation is a point’s scheme. A number of factors (listed below. ) are found which are common to all jobs. Each factor would be given an assessment, and then awarded points according to the importance of the factor needed for the job. The total number of points determines the value of the job, and the wages or salary to be paid. The factors that are most commonly assessed and measured are: Knowledge and skills- These include factors such as, qualifications, work experience, any specialist training, external qualifications and the length of service.
People Management- Would include skills such as human relations, ability to work under stressful conditions and supervisory responsibility. Communication and networking- This would include factors like social skills, enthusiasm, and diplomacy. Decision Making- Initiative, analytical ability and judgement. Working Environment- Extent of management skills required and knowledge. Impact and Influence- Includes responsibility, results of mistakes, competence and impact on customers. Financial Responsibility- This involves budgeting. There are also other methods of job evaluation that Itec Ltd could decide to use:
Factor Comparison, which is quite similar to points rating in the sense that it is based on factors however, no points are appointed. Non-analytical schemes, which are less goal orientated but are most often less complicated and financially efficient than analytical schemes such as points rating. Methods within this sector include job ranking, paired comparisons and job classification. Job ranking is the simplest method of job evaluation. This is where jobs are arranged in order of importance, order of difficulty or job value and are then analysed by qualifications, knowledge, responsibility etc.
They are then formed into a hierarchy of different levels, or ranks within the company. The following table shows an example of job ranking using the job value factor: Job TitleRank Most Valued 1. Forklift Driver1. Inspector 2. Machinist2. Machinist 3. Inspector3. Secretary 4. Secretary4. Forklift Driver 5. File Clerk5. Labourer 6. Labourer6. File Clerk Lest Valued [Human Resource Management, 3rd Edition] There is also a technique called paired comparisons which compare jobs with other jobs in the company. Points are then allocated to the job using a ranking form: Two points for a high valued job
One point if it is regarded as equal worth No points if it is less important Once the points are added up, an overall ranking can be given. Paired comparisons are more time consuming than job ranking but is more accurate as jobs are considered individually. Finally, there is job classification. Grades are given based on the performed tasks, skills, experience, initiative and responsibility. Jobs within the company are then allocated depending on the grades given. Other factors such as skills, qualifications, market references, equity and competition can also contribute to an employees pay.
When Itec Ltd decides to introduce their job evaluation scheme to the staff within the organisation, they should ensure that they communicate effectively. A suggested process is: [www. cipd. co. uk] In my conclusion, Itec Ltd should use the point’s scheme as their method of job evaluation. It breaks down the evaluation scheme into a variety of factors which can ideally be assessed for employees and their jobs. Even though job evaluation can be costly for firms it would be worthwhile for Itec Ltd as it would sort out most disputes and quarrels.
The downside to job evaluation would be that some jobs will still be ‘underpaid’ or ‘overpaid’ as it is a matter of human judgement. 2a. Performance related pay schemes link the annual salary of an employee to their performance in the job. PRP schemes have spread rapidly in the recent years and now perform an important part of white collar pay in both the public and private sector. Nearly all major banks, building societies and insurance companies now use performance systems. Large organisations such as Cadbury’s and Nissan have introduced schemes as well as organisations in the public sector such as NHS and civil services.
There are many different forms of performance related pay, which may be used on their own or side by side. Employers may move from one to another. The most common are: Piecework: a price is paid for each unit of output; this is the oldest form of performance pay. Payment by results: bonus earnings depend on measured quantities or values of output for individuals or groups, usually based on work studied time units; this covers a wide range of bonus schemes. Merit pay: bonus earnings or pay levels are usually based on a general assessment of an employee’s contributions to performance; this is an earlier, less structured form of the next system.
Performance related pay: bonus earnings or pay levels are based on an assessment or appraisal of an employee’s (or team’s) performance against previously set objectives, usually part of a performance management system; this is a fairly recent development, particularly in the public sector, which has grown sharply in use since the 1980s. Competence based pay: reward and training are linked to competency frameworks, based on the worker demonstrating certain skills (e. g. problem solving, decision making, leadership, customer service, dealing with differing views) or achieving certain qualifications.
Profit related pay: Profit related pay involves employees being paid a cash bonus as a proportion of the annual profits of the company. In previous years a certain amount of profit related pay has been exempt from taxation. Profit related pay has a number of problems for employees as it is not linked to individual performance and rewards. There are a number of reasons why employers’ introduce performance related pay: ?To clarify objectives and engage employees with the organisation’s goals ? To motivate employees by linking pay to achievement of targets not length of service ? To reward achievement and identify any under performances ?
To contribute to overall improvements in productivity; ?To introduce more flexible pay systems or deal with recruitment and retention problems ? In the case of some employers the reason PRP is introduced is to give greater power to managers and weaken trade union influence in bargaining and representation of staff. There can be problems related with performance related pay. As I have mentioned before it is only based on individual achievement, so the better a person does the more that person is paid. However, there are many disputes on how performance should be measured and whether a person has achieved enough to be rewarded.
Also, the system is not likely to work if people do not react to the possibility of rewards by working harder. Research also shows that many organisations may be out of tune with their employees, placing too much emphasis on incentives. Research by ACAS also suggests that PRP schemes tend to de-motivate rather than motivate them. 3a. Motivation It is argued that if an individual’s needs are not satisfied, then that worker will not be motivated to work. Some organisations have found that even if employees are satisfied with pay and conditions at work, they also complain that their employer does not do a good job in motivating them.
It is important that Nick Moore motivates his employees. In the short run a lack of motivation may lead to reduced effort and lack of commitment. If employees are watched closely, fear of wage cuts or redundancy may force them to maintain their efforts even though they are not motivated, this is known as negative motivation. In the long term, a lack of motivation may result in high levels of non-attendance, industrial disputes and falling productivity and profit for a business. So it is argued that employees that are well motivated will be more productive which should lead for more profits for the business.
The diagram below shows one example of how Itec Ltd could make decisions, having first identified an employee’s needs: [Business Studies, 3rd Edition] 1. The employee may need to be involved in decisions to feel wanted and recognised as important to the company. 2. Set up discussions with management about goals and working practises. 3. The employee feels as if their opinion and contribution is valuable. 4. The employee may be willing to work longer hours or take more responsibility. In 1966 Fredrick Herzberg attempted to find out what motivated people at work.
He asked a group of professional engineers and accountants to describe incidents in their jobs that gave them strong feelings of satisfaction or dissatisfaction. He then asked them to describe the causes in each case. Herzberg then divided the causes into two categories, these were: Motivators: These are the factors that give workers job satisfaction, such as recognition for their efforts. Increasing these motivators is needed to give job satisfaction. This, it could be argued, will make workers more productive.
Hygiene Factors: These are the factors that can lead workers to be dissatisfied, such as pay or conditions. Improving hygiene factors should remove dissatisfaction. For example, improving canteen conditions may make workers less dissatisfied about their work environment. It is argued that by improving pay and conditions could lead to workers taking these factors for granted. It is argued that such rewards, whether they are financial or non-financial are needed to motivate a reluctant workforce. Employees see work as a means to an end. As a result they are far more likely to be interested in monetary rewards.
However, there are a number of methods that can be used to reward employees for the work that they do. These rewards are also a type of motivation for staff, which can be represented in a non-financial and financial way. Employees can receive incentives such as bonuses as a reward for their work. This should increase workers productivity as they have a worthwhile reward to aim towards. Holidays and promotions can also have the same effect. In the following table, I have put together a list of employee rewards and the type of behaviour they will have conducted in order to receive these rewards.
These rewards will indefinitely be linked to motivation, because it would give an employee a goal to work towards and something other than the regular work wage or salary to look forward to. It can also motivate an employee to become more efficient, organised, responsible and more interested in their work. Type of RewardExamplesType of Behaviour Individual RewardsBasic WageMaintaining work attendance, performing tasks, completing tasks without errors and using initiative. Overtime Piece Rate Commission Bonuses Merit Paid Leave Benefits Team RewardsTeam BonusesCooperation with co-workers Gain Sharing