Having recently returned from the World at Work Conference in Philadelphia, PA, my twin brother and I were able to visit with several Compensation professionals while they explained their compensation programs. Most of them either use market-based only or a classification method and market-based system that buckets jobs into groups based on similar duties and requirements without using a formal job evaluation process. There were also a few that have a true job evaluation system that is integrated in a salary administration program to arrive at a sound and defensible compensation management program.
We believe the right way to evaluate positions is to allow an employee or department manager to complete a consistent and comprehensive position analysis questionnaire (PAQ) and then HR reviews the PAQ to ensure uniformity and objectivity before the PAQ/now job description is evaluated against a proven and defensible job evaluation system that determines the point value for that position as well as all the other positions. To further ensure objectivity and accountability, some of our clients form a job evaluation committee (functional department heads) and the committee members rate each position using our copyrighted 15-factor job evaluation system and the Committee members reach consensus as a group for all positions.
Once all of the jobs have been evaluated, outside market data is obtained from local and regional surveys, published surveys, industry surveys and competitor data gathered by our firm or another third party firm. This allows an organization to use the maximum amount of market data to understand the company’s competitive pay position in relationship to the marketplace.
Through the integration of job rating points, employee current pay levels and outside market data, an organization can establish and implement salary ranges or salary grade ranges. This approach to job evaluation and salary administration is thorough, fair, transparent, objective and defensible. An organization that creates its compensation program based on market data only without a solid defensible job evaluation program is like creating half of a compensation program. We believe that an organization’s goal for compensation should be that it is internally equitable and externally competitive. How would you rate your compensation management program using the method described above?