CHAPTER 2:

JOB VALUES AND

COMPENSATION
DECISION

Alarcon
Alcomendras
Ambani
Bayao
Boston
Learning Outcomes
At the end of the chapter, the students will be able to:
 discuss the nature of job analysis;
 describe the dimensions of job analysis;
 demonstrate awareness of the job analysis process;
 prepare job description;
 identify the nature of job description;
 identify the nature of job evaluation;
 categorize compensable factors;
 perform job evaluation methods;
 categorize the dimensions of wage survey;
 discuss the data collection analysis; and
 practice job analysis, job evaluation, and market rate analysis in
designing compensation decisions.
 TABLE OF CONTENTS
01 Job Analysis 03 Market Rate Analysis
 Nature of Job Analysis  Dimensions of Wage Surveys
 Dimensions of Job Analysis  Sources of Wage Surveys
 Job Analysis process  Data Collection and Analysis
 Job Description
02 Job Evaluation
 Nature of Job Evaluation
 Job Evaluation Process
 Compensation Factors
 Job Evaluation Methods
 Job Structure
 JOB ANALYSIS

Job analysis plays a crucial role in the many facets of

human resource management. In this chapter, we will see the
importance of job analysis in compensation management Job
analysis is defined as the systematic process of obtaining
relevant information on a specific job To get this information job
analysis consists of a series of activities conducted by job
analysts.
 NATURE OF JOB ANALYSIS

Job analysis plays a crucial role in compensation

management. First organizations need to establish fair
compensation structure Job analysis supports this need by
looking at the similarities and differences in the work contents
of each job.
Information obtained on the job helps in comparing a job
with other jobs in market pricing which is something external
and in job evaluation which is done internally .
 Dimensions of Job Analysis

- Information to be collected
- Level of analysis
- Sources of information
- Methods of collecting information
 Information to be collected

- Knowledge
- Skills and abilities
- Qualifications
- Personality traits
- Scope of the job
- Tools and methods used
- Work conditions
- Contribution of the job to organizational goals
 Levels of Job Analysis
EMPLOYEE -- KNOWLEDGE

ATTRIBUTES -- SKILLS
ABILITIES
PERSONALITY CHARACTERISTICS

ELEMENT - SMALLEST DIVISION OF WORKS

-- POSITION
TASK -- JOB
JOB FAMILY
OCCUPATION
 Sources of Information
Job analysts usually obtain information from the job incumbents themselves. They
are the ones who currently perform the job and are considered to be the best
persons who can describe the details of the job. Another important source of
information can be taken from the supervisors of the job incumbents. They are
knowledgeable about the duties and responsibilities of their people. Those who deal
directly with the job incumbents can also provide some support in giving some
Information about the job. There are also documents that can help job analysts in
getting more details about the job, such as policies and manuals, performance
appraisals, old job descriptions, and other sources like articles, journals, and
electronic publications that can further describe the job.
 Methods of Collecting Information

SURVEY
OBSERVATION QUESTIONNAIRE
Job analysts can observe Lastly, job analysts may
job incumbents and record INTERVIEW use a survey
how they perform the job. questionnaire as a tool to
To overcome the get the details of the job
weakness of observation, One advantage of using a
interviews can be done survey questionnaire is
with the job incumbents that it is a written
Through this method, job document and job analysts
analysts can ask for any can refer to it anytime
type of information about when needed.
the job.
 JOB ANALYSIS PROCESS
STEP 1: Create an initial job information
Job analyst should first review existing documents such as old description of the job to serve as a guide
for conducting the interview with the jobholder. All other documents aside from the job description should
be reviewed as well so that the job analyst can have an overview of the job.

STEP 2: Visit the work area

The second step is to conduct an initial visit to the work area of the jobholder. Here, the job analyst will
be familiarized with the work conditions, the tools and methods being used, and the physical layout
relevant to the performance of the job.
STEP 3: Conduct an interview
The third step is the conduct of the interview. It is the best that the job interview should be done with the
immediate supervisor is in the best position who can provide an overview of the duties of the job holders,
who in turn collaborate as their jobs fit together as a group. Then, it is followed by the jobholder.
 JOB ANALYSIS PROCESS
STEP 4: Visit the work area for the second time
The fourth step is to visit the work area for the second time. This is to refine, correct, or add the
information initially obtained from the first interview.

STEP 5: Collate acuired job information

The fifth step is the collaboration of all the interviews done and other materials considered about the job
and consolidating.

STEP 6: Validate job description done

The last step is the review of the job description by all the interviewees such as the immediate supervisor
and the job holders in a group setting. Each is given a copy and the group reviews the job description per
item, line by line. The job analyst takes note of all the corrections.
 JOB DESCRIPTION
The end product of job analysis is the job description. The main objective of the
job description is to summarize the duties and responsibilities of the Jonas well as
the qualifications needed to perform the job. Essentially, a job description
provides the what, how, and why of the job. The “WHAT” of the job describes the
physical and mental activities of the job. It also explains the interaction of the job
to other jobs in the organization. The “HOW” of the job identifies the procedures,
tools, and methods needed to carry out the job successfully. The “WHY” of the
job describes the objective of the activities that pertain to particular job. Job
Description also provides some details of the job as the immediate superior and
the job grade or classification based on the hierarchy of jobs in the organization.
Job specifications summarize the basic requirements of the job in terms of
educational background, skills, experience, and personality traits and behaviors
to successfully perform the job.
 JOB DESCRIPTION
TITLE Department Secretary
DIVISION/TEAM Administration
REPORTS TO Administrative Manager
MAIN FUNCTION
The Department Secretary provides administrative support to the Department Manager by providing administrative
and clerical duties as well as handling relevant information for the department.
SPECIFIC DUTIES AND RESPONSIBILITIES
- Prepares correspondence, documents, and reports
- Takes and prepares minutes of the meeting
- Maintains schedules and calendars
- Monitors department and corporate events, meetings, and other activities
- Organizes and arranges department activities
- Handles emails, reports, and other department documents
- Liaises with internal and external contacts
JOB SPECIFICATIONS
Level of Education
- Graduate of any 4-year course; Graduate in BSBA degree is an advantage but not required
Knowledge/Job Specific Competencies
- At least 3 years professional experience in administrative work; Excellent oral and written communication skills
- Computer literate; Proficient in MS Office and other office communication software
- Has keen attention to details; Has strong commitment to confidentiality of information
 JOB EVALUATION
MILKOVICH (2013) it is defined job evaluation as the process of determining the
relative worth of various jobs for the purpose of creating hierarchy of jobs which in turn
becomes the basis for the development of a pay structure in the organization.

Two Principles of job evaluation:

 Equal pay for equal work
 More pay for more important work
 NATURE OF JOB EVALUATION
 It started with the United States civil service commission in 1871 or with Frederick
Taylor in 1881.Employer association and the spread of unionism brought great
strides in the installation of job evaluation in organization. During the world war II,
the National War Labor Board supported the use of job evaluation to propagate
wage equality. Job evaluation methods had been developed and improved until the
late 1950s. Through the Civil Rights Movement, job evaluation was put into law, the
equal pay Act of 1963. Which requires jobs to be compared into three (3) aspect:
skill, effort and responsibility.
 There is always a question on what job evaluation does. It is based on job content
or job value?
 Job content - is the actual work performed and how it is done. It helps align job
based on skills needed to perform each job as well as the duties and
responsibilities of each job. Job value - the skills duties and responsibilities
required for each job are evaluated on how they contribute to organizational goals.
JOB EVALUATION PROCESS
DETERMINING
JOB ANAYSIS COMPENSABLE
FACTORS

ESTABLISHING
THE JOB DEVELOPING THE
STRUCTURE METHOD
 Job Analysis
This process is discussed in the first part of this chapter. It is imperative to have first a
job description for each job. Job analysis is crucial in obtaining pertinent information
about the job. The worth of each job cannot be determined without the information
required for each job. Job analysis provides information on the skills, duties and
responsibilities, educational background, tools and equipment used, work conditions,
and so on so that the relative worth and value of the job can be obtained.

Compensable Factors
The next step is to determine what aspects of the job will make it higher or lower than
the others in the job hierarchy. They determine which of these aspects have
contributed greatly to the organization, which eventually should be rewarded.
 Job Evaluation Methods
The third step is to select the appropriate method for evaluating the jobs according to
the factors chosen. The method should rightfully choose the jobs that should be
placed higher in the job hierarchy. There are two main schemes for internal job
evaluation: analytical and non-analytical schemes. Analytical job evaluation scheme
assesses jobs based on value or size. The types of non-analytical schemes are the
following: job classification and job ranking (Armstrong, 2010).

Job Structure
The last step is to select people who should be part of setting up the job hierarchy.
This is prior to the actual determination of actual pay for each job in the hierarchy.
 Compensable Factors
Compensable factors are the characteristics of the job which the
organization considers as contributors to the achievement of organizational
objectives (Milkovich, Newman, & Gerhart, 2013).
Job content is usually and primarily found in job descriptions. Initially, job
evaluators would like to see job descriptions first, borne out of conducting job
analysis. The following are the compensable factors found in evaluating job content:
experience, education, responsibility, complexity of duties, supervision received.
supervision exercised, consequences of error, working conditions, mental, visual,
and physical demands, and confidential data (BLR's Job Descriptions Encyclopedia
as cited in Bruce, 2010).
 Compensable Factors
Experience refers to the length of time that the job requires, while education
pertains to the formal study, training, certifications, and specialization required.
Responsibility is the scope of the job in terms of, for example, safety of employees,
or safekeeping of money, or maintenance of inventory, and the like. The complexity
of duties means that the jobholder needs to be decisive, to show initiative, and to
innovate among others in accomplishing the tasks. Supervision received is the extent
of monitoring or checking of the job and the extent of providing an outline of methods
and procedures to the jobholder. Supervision exercised is the extent of supervising a
number of employees directly or indirectly. Consequences of error are the magnitude
of an error made in
 JOB EVALUATION METHOD

1. Point Factor
- Compensable Factors
- Points Assignment
- Weights Assignment
- Job Categories
2. Factor Comparison
3. Job Ranking
4. Job Classification
 JOB EVALUATION METHOD

1. Point Factor
Compensable Factors - The common compensable factors are
identified which are common to all jobs Examples are skills, duties and
responsibilities, and working conditions. Under skills are subcategories such as:
education, experience, and ability
Points Assignment - Experience may be subdivided into five levels such
as: 20 points for no experience, 40 points for 1-3 years experience: 60 points for 4-
6 years experience; 80 points for 7-9 years experience; and 100 points for 10
years and above.
 JOB EVALUATION METHOD

1. Point Factor
Weights Assignment - After assigning points for all compensable
factors, each of the subcategories for each compensable factors will be assigned
corresponding weights depending on the importance of the category for the job.
For example, a sales manager job is being evaluated. If experience required is 4-6
years, it is 60 points. If the highest weight that can be given for experience is 1.5, it
will be 60 points x 1.5. So, the value of experience as a factor for sales manager is
90. Weighting continues until all the factors for sales manager position are
finished. The same procedure is done for other jobs.
Job Categories - In the last step, the point totals for the sales manager
job are determined to group the sales manager job with other jobs with similar
totals. This will later on be used for developing job grades (Grant, 2019).
 JOB EVALUATION METHOD

2. Factor Comparison
Factor comparison is used to value jobs based on monetary equivalents
using the factors. For purposes of illustration, below is an example of the original
comparison method used in job evaluation (HR Guide, 2015).
There are compensable factors ranging from 4 to 5. For this example,
there are four factors. They are the following: skills, responsibilities, effort, and
working conditions. Then, benchmark jobs will be identified. A benchmark job
should have job content that is stable for a certain period of time and must be
common across a certain industry or a certain number of organizations. Definitely,
it is not unique to a particular employer (Milkovich, Newman, & Gerhart, 2013).
 JOB EVALUATION METHOD
2. Factor Comparison
In the illustration below, the identified benchmark jobs have certain
characteristics. First, they have equitable pay, meaning neither underpaid nor
overpaid Second, the range of the factors may be at a high end or at low end. The
jobs are priced per hour. The total hourly rates are subdivided per compensable
factor.
Pay for (in Philippine Peso)

Job Hourly Skill Effort Responsibilit Working

Rate y Conditions
Secretary 95.00 47.50 19.00 19.00 9.50

Administrative 120.00 60.00 18.00 24.00 18.50

Assistant
Production 160.00 48.00 48.00 32.00 32.00
Supervisor
Sales Manager 200.00 80.00 50.00 50.00 20.00
 JOB EVALUATION METHOD
3. Job Ranking
It is the least complicated job evaluation method because it ranks jobs
from highest to lowest based on the importance of the job to the organization.
Because of its simplicity, it can be explained well and employees can easily
understand how it is done. It is also the least expensive among the job evaluation
methods. There are two ways of ranking: alternation ranking and paired
comparison. Alternation ranking simply orders jobs on extremes: most valuable
and least valuable. After identifying the most and the least valuable jobs, the job
evaluators agree which will be ranked as the next most valuable until all jobs are
ranked. The paired comparison method compares jobs in pairs (Milkovich,
Newman, & Gerhart, 2013).
 JOB EVALUATION METHOD

4. Job Classification
This job evaluation method uses grades or levels for each job. A
particular position has sub-levels depending on educational attainment,
experience, and skills. For example, a bank may use job classification to put levels
on each position. This is very useful during recruitment when job advertisements
will indicate that the salary will depend on specific requirements like educational
attainment and years of experience (Leonard, 2019).
 JOB EVALUATION METHOD
4. Job Classification
TELLER 1

TELLER 2

TELLER 3
 Senior high school  Graduate of  Graduate of
graduate Bachelor of Bachelor of
specifically in the Science in Science in
Accountancy, Business Business
Business and Administration Administration
Management (BSBA) or (BSBA) or
(ABM) strand equivalent equivalent
 No work  With 1 or 2 years  With at least 3
experience related experience years related
necessary in a bank or any experience in a
service-oriented bank or any
firm service-oriented
firm
MARKET RATE ANALYSIS
Market rate analysis refers to/the process of obtaining the current pays of
employers for different jobs which are eventually used to establish pay
rates for an organization. It depends on the organization up to what extent
the information would be used in its job categories. Many organizations
use a combination of job evaluation and market fate analysts in
developing pay structures.
MARKET RATE ANALYSIS
Job Matching. It is crucial to match a job in the organization with a job
outside the organization. However. matching jobs should not be based on job titles
alone or mere summary of job duties. The most important considerations are
sector, industry, size, and location. An example is that the salary rates of jobs in
provincial areas are different from pay rates of the same types of jobs in the
National Capital Region.
Sample Frame. The data collected should contain a sample of
organizations that represent the pay rates needed by the organization. The
organization should keep in mind the considerations in obtaining rate data. As
mentioned, it should be within the same sector such as the market public and
private sectors. If the data collected came from jobs taken from government offices
and were compared with a private organization, there will be a problem. One
particular example is that the salary of teachers in public schools is different from
the salaries provided by private schools.
MARKET RATE ANALYSIS
Timing. The information obtained should be updated. Salary surveys
may easily become unreliable if they are out-of-date. Organizations should be
careful in subscribing to salary survey reports, specifically on being very particular
with the period covered. Survey reports immediately become outdated once they
are published. For one, it takes time for these reports to be released. So,
organizations should foresee the changes that have happened before such reports
are released
Sources of Wage Salary. Salary or wage surveys are the main sources
of market rate data. The general classification is whether found online or published
in hard copies. There are several sources of market rate data which include the
following: online data, national or locally published surveys, management or
consultant’s databases, and recruitment agencies.
MARKET RATE ANALYSIS
Online Data. Online data has become more popular than paper
publications in recent years. Organizations find it easier to obtain data online rather
than wait for paper publications to be released. Paid online data are easily
accessible.
National and Local Surveys. Average salaries on various positions
across sectors and industries are available through the Department of Labor and
Employment (DOLE) and the Philippine Statistics Authority (PSA). Usually, reports
released during the current year highlight data from the previous year.
Management or Consultant Databases. Organizations subscribe to
consultants that specialize in salary surveys. They have a data bank of salaries in
different industries. Also, most of these consultants are multinational companies
that have branches in different parts of the world.
Recruitment Firms. These firms conduct their own salary surveys and
are made available for free in a comprehensive format with their clients. Some of
them usually conduct salary surveys and provide them for free.
Data Collection and Analysis

DETERMINE THE PURPOSE DECIDE THE JOBS THAT

OF CONDUCTING MARKET WILL USE MARKET DATA
RATE ANALYSIS

ANALYZE THE DATA

SELECT THE SOURCES OF
GATHERED
MARKET DATA

PRESENT THE ANALYSIS

AND RECOMMEND A PLAN
OF ACTION
Data Collection and Analysis
The first step is to decide whether or not there is a need to do market rate analysis. One of the
motives for doing market rate analysis is to make the salaries more competitive and attractive.
There is also the need to retain good and high- performing employees. It is but natural for the
organization to be at par with competitors in the industry.
The next step is to determine which among the jobs must use market rate analysis. The
organization must also ensure that market data for such jobs are available There are some jobs
that are unique to the organization. Therefore, there is a possibility that these are not available
in the market.
The third step is to select the sources of market data. The organization should consider not
only one but a combination of sources to ensure reliability and credibility of market data.
After obtaining job data, the organization conducts market analysis using appropriate
statistical tools, depending on the scope and size of the data obtained. The important thing is to
always ensure the reliability and relevance of the data obtained.
The last step is to present the interpretation of the data gathered and the recommendations
that will be needed during the development of the pay structure
ACTIVITY!!
Instructions: Re-arrange the following scrambled letters. Write only your
answers in a ¼ sheet of paper. Don’t forget to write your name, date
today, course and year.
Hint: Underlined letter is the first letter of the word.

1. ONMECSPAOTIN 6. BJO
2. EDSIONCI 7. CLAATIONSSIFIC
3. SISYLANA 8. TADA
4. AFIIMNNOORT 9. RKETMA
5. RENATU 10. ATER
ANSWERS!!

1. COMPENSATION 6. JOB
2. DECISION 7. CLASSIFICATION
3. ANALYSIS 8. DATA
4. INFORMATION 9. MARKET
5. NATURE 10. RATE
 CHAPTER 2:
JOB VALUES AND
COMPENSATION
DECISION

Thank You!!