HRMT3501

THE COUNCIL OF COMMUNITY COLLEGES OF JAMAICA

BACHELOR OF SCIENCE EXAMINATION

SEMESTER I – 2009 DECEMBER

PROGRAMME: BUSINESS STUDIES

COURSE NAME: COMPENSATION MANAGEMENT SYSTEMS

*HRMT3501*
CODE: (HRMT3501)

YEAR GROUP: THREE

DATE: WEDNESDAY, DECEMBER 9, 2009

TIME: 1:00 P.M. – 4:00 P.M.

DURATION: 3 HOURS

EXAMINATION TYPE: FINAL

INSTRUCTIONS:

SECTION A: ANSWER ALL QUESTIONS IN THIS SECTION.

SECTION B: ANSWER ANY TWO (2) QUESTIONS FROM THIS SECTION.

DO NOT TURN THIS PAGE UNTIL YOU ARE TOLD TO DO SO.

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SECTION A

Instructions: On the computerized answer sheet provided, shade the letter that corresponds
with the most appropriate response for each of the following.

1. In addressing his first staff meeting, the new CEO referred to their compensation
package. Which of the following was he NOT referring to?

A. Basic salary
B. Benefits
C. Redundancy payments

D. Bonuses

2. Which of the following is not CORRECT? Indirect pay refers to __________.

A. basic salary
B. training
C. paid time off
D. health and security

3. Which of the following would not be CORRECT? Companies who offer incentive
compensation schemes to the employees, devise a method where ___________.

A. amount and quality of work can be measured and assigned to a category

B. different amounts of pay are allocated to different categories
C. work assessment is objective
D. bonuses are given at each quarter

4. Which of the following is NOT specified under the Employment Act?

A. Men and women doing similar work must be paid the same wages
B. No special considerations must be given to a woman because of pregnancy
C. Cases of inequality in pay must be investigated by a Ministry of Labour “referee”
D. Punishment for an offence against this law involves a fine of $200 or a prison
sentence of up to 12 months

5. Under the Minimum Wage Act, which of the following is NOT the prerogative of the
Minister of Labour?

A. Regulate minimum wages and working conditions for any category of worker
B. Vary or cancel existing minimum wage
C. Summon company witnesses to testify in regard to company policy on wages
D. Permit any category of worker to be exempt from to the act

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6. Under the Minimum Wage Act, the person or persons designated to investigate reported
infringements of the law is/are:

A. the Minister of Labour

B. a Resident Magistrate
C. an advisory committee
D. any member of the Ministry of Labour

7. A woman who qualifies for Maternity Leave is entitled to __________ weeks’ pay.

A. 12
B. 24
C. 8
D. 14

8. Which of the following would exclude a woman from receiving Maternity Leave?

A. Being under 18
B. Having received leave two times already
C. Giving birth to a still born baby
D. Being unmarried

9. Marcia, who had been working at her new job for ten months, was not granted the two
weeks holiday pay that she urgently needed to fly to Florida to see her sick mother. Why?

A. She had not performed well during the 10 months

B. To be eligible for two weeks one has to have worked 220 days
C. She was only eligible for one week
D. She was still on probation

10. Mrs. Jones is livid. Her employer sold out his business to a foreigner, and her department
was eliminated. Her new employer made her an offer, but she was so angry that she just
turned it down without really hearing what he had said. Now, she is being told that there
is no redundancy for her. Why is this?

A. The old employer was mean and heartless

B. Foreigners don’t have to make redundancy payments
C. The new owner of a company never has to make redundancy payments
D. Refusal of a job offer in the same location, that pays the same, and carries all
previous benefits, forfeits redundancy

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11. The Government of Jamaica has announced a $2.7 billion redundancy package for all
workers in the sugar industry even though it is being bought out by Infinity Bio-Energy
Limited. Why are all the workers getting redundancy? Because:

A. the company is being sold free of labour incumbencies

B. the government has given a special exception to the law
C. infinity is not going to employ the same workers
D. all the jobs in Infinity will be quite different from the present ones.

12. Which of the following is NOT specified in law?

Ms Campbell works on the construction site and pulls her full weight, mixing concrete
and lifting the heavy bucket, yet she gets less pay than her male colleagues. Her union
has now decided to take action, because the law define “equal work” as__________.

A. having duties or responsibilities that are substantially similar in kind, quantity and
amount
B. performing under substantially similar conditions
C. doing exactly the same work as a man
D. requiring substantially similar qualifications, degree of skill and effort

13. Mrs. Isaacs has worked with Company X, in Montego Bay, for over 13 months, and has
just taken her first maternity leave. When she returned to work on Monday, she was
upset because another employee was at her desk and was furious when the HR manager
in Kingston told her that her job had been filled. Which part of the law had Mrs. Isaacs
ignored?

A. She had not submitted a medical certificate confirming pregnancy

B. In her request for Maternity leave she did not indicate that she intended to return to
work after taking leave
C. She already had 3 children
D. Her position was made redundant during her absence.

14. HR manager Nelson meets with the newly formed pay policy committee and reminds
them of some of the issues to be considered in setting policies. Which of the following is
NOT of major significance to the task at hand?

A. Company’s strategic goals

B. Internal equity
C. Individual preferences of committee leader
D. Legal requirements for compensation

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15. Establishing a Pay Policy in a company provides all the following EXCEPT:

A. a common understanding of compensation issues by management and workers

B. protection against law suits from suspicious workers
C. permits managers to manipulate compensation to increase individual productivity
D. keeps company labour costs predictable

16. In developing the pay policies of the company, it is BEST for:

A. HR and other top management to form a decision-making committee

B. Pay policies to be very generally expressed
C. Pay secrecy to be of top priority
D. Top management and HR to seek worker input before creating final policies

17. Which of the following is the MAJOR reason for conducting a salary survey in an
organization? To ensure that compensation policies:

A. take into account external equity

B. have internal equity
C. in “surveying company” keep pay levels at the same amounts as in all participating
companies.
D. to fix salaries

18. The types of jobs selected for inclusion in the salary survey are:

A. most highly paid jobs

B. benchmark jobs
C. least highly paid jobs
D. least common jobs in the company

19. The MOST effective job evaluation is one that:

A. returns a numerical score for each job in the organization

B. is bought off the shelf
C. reflects most of the compensable factors of the organization
D. manually slots jobs into relevant grades

20. A job evaluation:

A. results in a clearly written job description and job specification

B. evaluates how well an employee is performing his or her job
C. encourages job rotation in the organization
D. measures the worth of a job in terms of predetermined criteria

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Figure 1.

21. Figure 1 represents a:

Min. Mid Max. Rate
A. wage scale $15,581 $18,686 $21,792 Annually
B. pay grade
1 $1,298 $1,557 $1,816 Monthly
C. salary survey
$7.50 $9.00 $10.50 Hourly
D. compensation policy
$16,878 $20,433 $23,988 Annually
22. The numbers 1 – 4 represents:
2 $1,407 $1,703 $1,999 Monthly
A. increments $8.13 $9.84 $11.55 Hourly
B. broadbands
C. pay grades $18,319 $22,354 $26,388 Annually
D. pay range steps 3 $1,527 $1,863 $2,199 Monthly
$8.82 $10.77 $12.71 Hourly
23. Predetermined pay rates set out in this
manner are usually used in: $19,872 $24,435 $28,999 Annually
4 $1,656 $2,036 $2,417 Monthly
A. competency based pay schemes $9.57 $11.77 $13.97 Hourly
B. pay for performance systems
C. as incentives for greater productivity
D. in job based organizations focusing on seniority

24. The company’s compensation system is designed to do all of the following EXCEPT:

A. retain good workers

B. encourage highly skilled workers to apply to join the company
C. maintain a high labour cost ratio to productivity
D. motivate workers to higher productivity levels

25. The type of compensation that is most likely to encourage high productivity is:

A. seniority based pay

B. base pay with individual incentives
C. group incentive
D. merit pay

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26. Considerations to be borne in mind in designing effective pay plans include the:

i. degree of value attributed to the variable pay by the employee

ii. degree of subjectivity involved in pay determination
iii. level of pay differential between the worker and the supervisor
iv. achievability of the performance goals

A. i, ii and iii
B. ii iii and iv
C. i, ii, iii and iv
D. i, iii and iv

27. The incentive that focuses on waste reduction, quality improvement and lower labour
costs is known as a:

A. gainsharing plan
B. ESOP
C. profit sharing plan
D. individual incentive plan

28. The gainsharing plan that pays a bonus to workers who are able to add production value
to the items they manufacture is called:

A. Scanlon plan
B. Improshare
C. Rucker plan
D. Earnings-at-Risk Plan

29. The plan that rewards workers who are able to produce an item in less than estimated
time is called the:

A. Scanlon Plan
B. Improshare
C. Rucker Plan
D. Earnings-at-Risk Plan

30. A promise to pay more to the worker who produces more is called a/an:

A. bonus
B. incentive
C. salary
D. profit sharing plan

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31. The salesman, who DOES NOT earn any salary apart from the percentage of the selling
cost agreed upon with the company, is earning:

A. straight commission
B. commission
C. incentive pay
D. straight piecework

32. The mechanic who charges you X$ per hour on a job estimated to take 2 hrs, but then
completes the job in 1 hr is experiencing an incentive using the ___________ plan.

A. commission
B. piecework
C. standard hour
D. merrick system

33. Mrs. Smith works at the Sunbeam Garment Factory and she is paid for each pair of shorts
that she completes. On a good day Mrs. Smith can complete 75 shorts, but on average she
does only 50. The company contracts to pay $30.00 for the first 40 shorts completed and
$45 for each shorts over and above the 40 completed. This incentive programme is called
the:

A. Bedeaux Plan
B. Taylor Plan
C. Merrick System
D. Straight Piecework plan

34. Mr. Taylor performed exceptionally well in ensuring that the exhibition at the National
Arena came off with a bang. In his pay envelope at the end of the month he was surprised
and delighted to find a second cheque for a sizeable amount in recognition of his hard
work. This incentive is called a:

A. Gantt plan
B. reward
C. straight bonus
D. spot Bonus

35. At Lynmouth’s Funeral Home, the proposed incentive plan for workers has gone
desperately awry, and workers are threatening to strike if a change is not made. Which of
the following is a MAJOR common pitfall in developing incentive programmes?

A. Making too much money available as an incentive

B. Performance Measurement system is biased and subjective
C. Workers are already working very hard and no incentive can produce more
D. Incentive is paid once per quarter only

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36. The motivation theorist who proposed a theory that workers will only extend added effort
if they are convinced of the validity of the award offered, is called:

A. Vroom
B. Adams
C. Hertzbers
D. Maslow

37. Where workers perceive that others, doing the same work as them, are receiving more
pay than themselves, they:

A. don’t believe that the amount offered is worth the effort

B. experience inequity
C. seek to work harder so that they can get more pay
D. believe that the company is doing its best in a difficult situation

38. Mr. Phillips was caught removing telephone wire from the C&W property without
permission. He was thereafter asked to leave the company. This can be described as:

A. redundancy
B. termination
C. dismissal
D. severance

39. Jack’s Café has been losing money for the past 5 months and they have decided to ask 3
members of staff to leave, after which they re-structure and redistribute tasks. The
workers have been:

A. dismissed
B. terminated by way of redundancy
C. terminated for cause
D. laid off

40. For the past 3 months, workers at the Moonstone Hotel have NOT been called out for
work. Business is slow and the CEO has ____________ until business picks up.

A. bumped them off

B. laid them off
C. made them redundant
D. fired them

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41. Workers have gone on strike in support of Ms. Matthews. The Hope Factory has parted
company with her because she is very quarrelsome and frequently is disrespectful to her
supervisor. Yesterday, in front of all the junior staff, Ms. Matthews decided to ‘trace off’
Miss Clarke when she asked her to receive some goods brought in by the provider. Which
of the following are NOT grounds for immediate dismissal?

A. Gross insubordination
B. Fighting on the job
C. Peddling drugs on the job
D. Disagreeing with one’s supervisor

42. A worker who has experienced sexual harassment from her manager may:

A. claim redundancy because of the behaviour of her boss

B. demand and get the resignation of the perpetrator
C. be terminated for non-compliance with the boss
D. issue threats against the person of the boss

43. A paper trail is established which will:

A. document all disciplinary measures taken against an employee culminating in

dismissal or serious disciplinary activities
B. document all the good things done by the worker at the company
C. leave pieces of paper on the employee’s desk on frequent occasions
D. require immediate dismissal

44. The document in the organization that lays out the actions to be taken against workers
who engage in unacceptable behaviours at work is called the:

A. grievance procedure
B. disciplinary code
C. code of ethics
D. behaviour policy

45. An employee wishing to dismiss a long standing employee immediately:

A. is permitted to fire him without any remuneration

B. is required to pay him all his monetary entitlements before sending him home
C. must offer him a golden handshake to induce him to go
D. is required by law to give payment in lieu of notice

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46. Miss Knowles was hired from her home in Negril. Upon terminating her services at 5.30
p. m, Ms. Knowles’ employer in Kingston is required to give her bus fare to:

A. a guest house in Kingston alone

B. a guest house in Kingston, plus dinner money
C. Negril, plus expense money to cover food and lodging
D. Negril only

47. Which of the following is NOT true? Whether having been terminated for cause or for
redundancy, a worker may:

A. claim any part of unpaid time off to which he is entitled

B. claim his contribution to the pension scheme
C. get vacation leave for the rest of the year
D. get his or her portion of retroactive salary for time already worked.

48. Which of the following is NOT an acceptable reason for downsizing?

A. To increase efficiency
B. To encourage effectiveness
C. To get rid of unproductive workers
D. To free up cash for the purchase of equipment

49. Workers involved in a merger and who have been offered similar reasonable jobs in the
new company will ___________Which is NOT correct?

A. certainly obtain redundancy

B. be called upon to undergo extensive training in new procedures
C. retain their seniority with the new company
D. continue to contribute to the pension scheme in place

50. Having contributed to a government pension scheme for the required number of years, a
woman is entitled to receive her pension at the age of ___________ years.

A. 50
B. 60
C. 65
D. 55
(Total 50 marks)

END OF SECTION A

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THE COUNCIL OF COMMUNITY COLLEGES OF JAMAICA

BACHELOR OF SCIENCE EXAMINATION

SEMESTER I – 2009 DECEMBER

PROGRAMME: BUSINESS STUDIES

COURSE NAME: COMPENSATION MANAGEMENT SYSTEMS

*HRMT3501*
CODE: (HRMT3501)

YEAR GROUP: THREE

DATE: WEDNESDAY, DECEMBER 9, 2009

TIME: 1:00 P.M. – 4:00 P.M.

DURATION: 3 HOURS

EXAMINATION TYPE: FINAL

INSTRUCTIONS:

SECTION B: ANSWER ANY TWO (2) QUESTIONS FROM THIS SECTION.

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SECTION B

Instructions: Answer any two (2) questions from this section.

Question 1

Curiott & Company manufactures a new brand of fertilizer using organic products available in
Jamaica. It aims to replace the demand for foreign chemical fertilizer, but at the present
productivity is low.

Make a presentation to the CEO in which you:

(a) define “gainsharing”, and distinguish it from a “profit sharing” (4 marks)

(b) explain how to establish an ESOP and a Scanlon Plan in a company (10 marks)

(c) discus the advantages and disadvantages of both plans (8 marks)

(d) recommend, with reasons, one (1) of these plans to the CEO (3 marks)

(Total 25 marks)

Question 2

The employees at Hopeton Trading Company have been restive for the past 2 years. They
complain about pay, but they also complain that there is no pay policy in the company which
results in all manner of inequities in the compensation package and administration.

As HR manager, make a presentation to the CEO of the company in which you seek his approval
for the pay policy that you have developed.

(a) Explain what is a “pay policy” and the methodology used in its development. (5 marks)

(b) Discuss issues to be considered in the development of a pay policy. (10 marks)

(c) Discuss the benefits and disadvantages to a company in having a Pay policy. (10 marks)

(Total 25 marks)

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Question 3

“Compensation is the most important motivating factor for employees, and high levels of
compensation are sure to result in high levels of productivity”

Discuss this statement making reference to existing research on the matter, and giving examples
to support your views.
(Total 25 marks)

Question 4

McIntyre’s Auto Supplies and Maintenance employs over 200 workers and is facing the
likelihood of legal action for unfair, and gender prejudiced compensation practices. The HR has
finally persuaded the owner to permit her to conduct a Job Evaluation which should appease the
workers.

(a) Explain to the owner what a Job Evaluation is, and discuss the benefits and any
drawbacks that the company might experience from its implementation
(7 marks)

(b) Describe the steps to be taken in setting up a Job Evaluation (8 marks)

(c) Describe clearly, one (1) job evaluation method that would be suitable to an
organization of this size (10 marks)

(Total 25 marks)

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END OF EXAMINATION
THE COUNCIL OF COMMUNITY COLLEGES OF JAMAICA

BACHELORS DEGREE EXAMINATIONS

SEMESTER 1 – 2009 DECEMBER

PROGRAMME: BUSINESS STUDIES

COURSE NAME: COMPENSATION MANAGEMENT

CODE:

YEAR GROUP: 2008-2009

DATE:

TIME:

DURATION: 3 HOURS

EXAMINATION TYPE: FINAL

SOLUTIONS SECTION A
1 C 11 A 21 A 31 A 41 D
2 A 12 C 22 C 32 C 42 A
3 D 13 B 23 D 33 B 43 A
4 B 14 C 24 C 34 D 44 B
5 C 15 C 25 B 35 B 45 D
6 C 16 D 26 C 36 A 46 C
7 C 17 A 27 A 37 B 47 C
8 A 18 B 28 C 38 C 48 C
9 B 19 A 29 B 39 B 49 A
10 D 20 D 30 B 40 B 50 B
SECTION B

Question 1

Make a presentation to the CEO in which you

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(a) . define “gainsharing”, and distinguish it from a “profit sharing” (4 marks)

Gainsharing: company benefits from savings made by way of increased quality, decreased waste
and lowered labour costs
Profit sharing – a system whereby workers may be permitted to share in the profits make by the
company, in the form of and ESOP or earning’s at risk plan. Both are expected to encourage
greated productivity and commitment to the company.

(b) explain how to establish and ESOP and a Scanlon Plan in a company
( 10 marks)

ESOP: company to set aside number of shares to be make available to workers who have been
with the company X # of years and are at Y level. Shares are sold to employees at a particular
time for a lower than market rate. Shares must remain in the ESOP for a given number of years
through a process known as “vesting”…. After this the shares may be sold by the employee at
market rates to market buyers. Sale of an ESOP does not attract tax.

SCANLON: With the blessing of the CEO, the HR Mgr gens up enthusiasm for the introduction
of a Scanlon plan… explaining the benefit or bonus that it will bring to the worker.

Two committees are to be set up:

(i) the Scanlon management or oversight Committee – consisting of CEO, any senior
managers and the HR head. To approve the schemes to be undertaken and to work out the
bonuses to be make available and the methods of measuring the savings.

(ii) and EIT or Employee committee consisting of workers and union members. They
will collect suggestions from workers on ways to save, investigate the schemes and refer
the most suitable ones to the oversight committee. When the project is passed they will
meet with staff on regular period to iron out problems faced in seeking to save

At the end of the year, or six months, the calculations are done to determine the level of savings
attracted by the problem-solving activates agreed on. 75% of the savings is to be shared equally
among those workers participating in the department, and 25% goes to the company as a hedge
against future problems.

(c) discus the advantages and disadvantages of both plans (8 marks)

Benefit of ESOP: gives security to older workers who may use it as a pension insurance.
Encourages loyalty to a company in which one has shares; encourages worker to think like an
owner and change his or thinking about he company

Disadvantages: expensive to administer, only makes sense in a Large company where shares are
valuable. Vesting period makes them long term incentives that cannot immediately by turned
into liquidity in the case of an emergency.

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Scanlon: beneficial to worker and company… both benefit… Encourages worker

involvement… without their help it cant work. Encourages camaraderie among staff and
managers

(d) recommend, with reasons, ONE of these plans to the CEO. (3 marks)

Reason for one Suggest Scanlon to CEO… Any good reasons accepted

Question 2

As HR manager, make a presentation to the CEO of the company in which you seek his
approval for the pay policy that you have developed.

(a) Explain what is a “pay policy” and the methodology used in its development

(5 marks)

Pay Policy: Document created and posted on intranet, copy given to all staff, explaining the
company’s position on compensation and how existing policies can be changed.

Methodology: Use the committee method with representatives from all levels of company so
that (a) they may understand what is a pay policy, and that their major concerns may be
reflected there in.

(b) Discuss issues to be considered in the development of a pay policy (10

marks)

Pay related Issues: policy governing type of compensation used;; how the amounts are to
be arrived at, whether to lead, lag or match, secret or open pay, seniority based or
performance driven, types of benefits to be offered and how they are to be achieved, ratio of
base to variable pay, criteria for measuring work done.’ External vs internal equity, Impact
of environment
on compensation., legality of policies, payment days, use of credit card, lodgement of
salaries, Statutory deductions Ect

(c) Discuss the benefits and disadvantages to a company in having a Pay

policy.
Benefits: common knowledge, unions can enforce implementation and discourage breaking
of it. Relevant, providing a participatory methodology was used in compiling it. Reduce
industrial action and suits taken out against company (10) marks)

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Question 3

“Compensation is the most important motivating factor for employees, and high levels of
compensation are sure to result in high levels of productivity”

Discuss this statement making reference to existing research on the matter, and giving
examples to support your views. (25 marks)

Introduction: 5 marks
Motivation: Not the most important: Hertzberg views it as a dissatisfier, while he sees
achievement, promotion, the job itself as more effective motivators. Adams speaks to equity and
the fact that money does not motivate… if one does not perceive that your compensation is fair.
It is even said that if we perceive that we are being over paid, one will make an effort to
overcompensate.
Maslow speaks of making supreme efforts, not just for money but also for respect, and to fit in to
a group of society which one believes to be beneficial. Even Maslow’s views on self-
actualization speck to the need to feel good about one’s self, rather than just earn lots of money.
Carl Stone’s research in Ja, while it does not refute the importance of compensation, found that
workers were more interested in avenues for promotion and advancement than just straight
money

Value of money as a motivator: speak of the social capital achieved from earning good wages
and give examples to show its importance.

Productivity is not always achieved with the increase of compensation. One’s expenses increase
with higher wages and persons find more to do with their time than just attend work…Initial
euphoria wears off and worker becomes accustomed to live at the higher wage. Compares
himself against persons in a higher wage bracket and the package does not look so good.

Question 4

(a) Explain to the owner what a Job Evaluation is, and discuss the benefits and
any drawbacks that the company might experience from its implementation (7
marks)

Job Evaluation: Job evaluation is a systematic process that you can use to determine the
relative level, importance, complexity, and value of each job in your organization. With a

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successful job evaluation system, you can compare each job to other jobs within the
organization. The end product of a Job Evaluation will be a scientifically derived ranking of the
jobs in the section of the organization that has been evaluated.
Job evaluators often assess jobs based on these factors:
← Qualifications or Training level requirements
← Knowledge and skills requirements
← Complexity of tasks
← Interaction with various levels of the organization
← Problem-solving and independent judgment
← Accountability and responsibility
← Decision-making authority
← Degree of supervision required
← Cross-training requirements
← Working conditions
← Degree of difficulty in filling job

.
Benefits to be gained: internal equity… fair and just ranking of jobs, defensible in court,
use of universal evaluation methods and instruments makes it globally acceptable. In a
globalized economy where there is a diverse workforce, it reduces suspicion about the
fairness of the job situation. Process involves workers and so creates buy in to the notion
that compensation is fair. Compensable factors should reflect the focus o the company and
help to improve its running.

Disadvantages: Expensive, time consuming, but benefits out weigh the disadvantages

(b) Describe the steps to be taken in setting up a Job Evaluation (8 marks)

Set up JE committee. Determine the type of method to be used, select the bench mark jobs,
create the questionnaire if necessary. (1st step in JE = Job Analysis). The standard steps in job
evaluation include:
1. Introduce the concept of job evaluation.
2. Obtain management approval for the evaluation.
3. Train the job evaluation selection team.
4. Review and select the job evaluation method.
5. Gather information on all internal jobs.
6. Use information to fully expand job descriptions. (if the company has recently carried
out a Job Analysis, this may be omitted)
7. Use the selected job evaluation method to rank jobs hierarchically or in groups.
8. Link the ranked jobs with your compensation system or develop a new system.
9. Implement the job evaluation and compensation systems.

Periodically review your job evaluation system and the resulting compensation decisions
Job evaluation to be updated every 5 years or so.

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Lecturers may accept any variation or combination of points once the information given is
correct and complete.

(c) Describe clearly ONE job evaluation method that would be suitable to an
organization of this size (10) marks)

NOT RANKING – unsuitable for a company so large

Point: Point evaluation is the most widely used job evaluation method. In a point evaluation
system, you express the value of a particular job in monetary terms. You first identify
compensable factors that a group of jobs possess. Based on these factors, you assign points that
numerically represent the description and range of the job.
Examples of compensable factors are skills required, level of decision-making authority, number
of reporting staff members, and working conditions.
← Advantage This method is often viewed as less biased than other methods because the
job evaluator assigns each job's total points before the compensable factors become part of
the equation.

Disadvantages Subjective decisions about compensable factors and the associated

points assigned might be dominate. The job evaluator must be aware of biases and ensure
that they are not represented in points assigned to jobs that are traditionally held by
minority and female employees.

Classification The general purpose of job classification is to create and maintain pay grades
for comparable work across your organization. To conduct a job classification: First, write
descriptions for a category of jobs; next, develop standards for each job category by describing
the key characteristics of those jobs in the category; finally, match all jobs to the categories
based on the similarity of tasks, the decision-making exercised, and the job's contribution to
the organization's overall goals.
Universities, government employers and agencies, and other large organizations with limited
resources typically use job classification systems. These types of organizations have many
types of jobs at diverse locations and must maintain equitable and fair standards across all
work settings.
← Advantage Job classification is simple once you establish your categories. You can
assign new jobs and jobs with changing responsibilities within the existing system.
←
← Disadvantages Job classification is subjective, so jobs mightfall into several categories.
Decisions rely on the judgment of the job evaluator. Job evaluators must evaluate jobs
carefully because similar titles might describe different jobs from different work sites.

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 HRMT3501

Factor Comparison The factor-comparison method is a quantitative and quite complex

combination of the ranking and point methods. It involves fist determining the benchmark jobs
in an organization, selecting compensable factors, and ranking all benchmark jobs factor by
factor. Next, a comparison of jobs to market rates for benchmark jobs results in the assignment
of monetary values for each factor. The final step is to evaluate all other jobs in the
organization by comparing them with the benchmark jobs. A major advantage of the factor
comparison method is that it is tailored specifically to one organization. Each organization
must develop its own key jobs and its own factors. .For this reason, buying a packaged system
may not be appropriate. .It also returns a numerical ranking of all jobs in the company But
major disadvantages of the factor comparison method are its difficulty and complexity, and it
is time consuming to establish and develop.

THE END

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