Magazine article HRMagazine

Matching Jobs with Pay

Magazine article HRMagazine

Matching Jobs with Pay

Article excerpt

Traditional job evaluations are giving way to market pricing in setting compensation levels.

How much is a job worth?

To find out, employers might benchmark the job using salary surveys; rank its value within the organization; or assign a set number of points to job factors such as education, experience, skills sets or responsibilities.

Sounds easy, right? Unfortunately, the process of job evaluation isn't always so straightforward. The most unique job Rich Sperling ever had to evaluate was for a sporting goods store. "It was for the guy who got the athletes' endorsements for the company's products. Not a tough job," Sperling says, "but when he called Reggie Jackson's phone number, Reggie took his call."

When Sperling first started in the consulting business in the early 1980s, and throughout that decade, employers commonly created in-house, crossfunctional jobs analysis teams made up of their brightest up-and-comers. Then, compensation companies such as Hay Group, where he spent 27 years, started to take over this work in many companies, says Sperling, the principal of Sperling HR LLC in Evanston, Ill. Four primary methods of job evaluations were used to set compensation levels: job ranking, job classification, point factor and factor comparison.

Job ranking places jobs in a hierarchy that depends on how much each is valued by the company. It is considered the simplest method.

The job classification method is based on job classes. Each job is placed into the job class where the evaluator finds the best fit.

For years, the point factor method was the most widely used technique. It breaks down jobs into compensable factors identified as part of a jobs analysis. Points are assigned to the factors, and a pay structure is established for the position.

The factor comparison method combines the point and ranking techniques.

Market Matches

Times have changed. These days, fewer employers are performing job evaluations. Most set employee compensation based on market pay alone or, if they are larger, in conjunction with one of these four methods. "It's definitely more market-pay-driven," says Anne Thomas, SPHR, GPHR, senior compensation and global HR specialist at Hughes Network Systems in Germantown, Md.

"People are more fluid in their careers and aren't staying for 20 years with the same employer, so they don't really care how the job is evaluated. They are more concerned with what they are worth in the marketplace," Thomas says.

That attitude represents one reason many employers are taking another look at how they evaluate jobs and set compensation.

Crosstex Energy Services, a Dallasbased natural gas company with just under 500 employees, matches its jobs to similar ones outside the company in the salary survey it uses. HR staff members find matches for 85 percent of the jobs, according to Stacy Cardwell, PHR, compensation manager for Crosstex.

"I came from a very large organization where you benchmarked a couple core jobs and then applied the standard across the board. Here, we go to great lengths to market-price, to be fair to employees about what their true market rate is," Cardwell says.

James Arnett, SPHR, director of HR at Meriter Health Services in Madison, Wis., finds the majority of the hospital and clinic jobs easy to match. The system has 3,300 employees.

Not all jobs are perfect matches, however, so employers must know the jobs' real qualifications. The job description might say the person has to have five years of experience, but in reality they need more, says Nancy Kasmar, SPHR, practice lead for compensation and benefits consulting for Kent, Wash.-based Washington Employers. The organization provides HR support to member companies. Instead of an engineer II, the right choice may be engineer III, she says. "Match your qualifications to the qualifications in the [salary] survey data, not just the job titles," Kasmar advises. …

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