Job Structure: Relative Value of Various Jobs

Along with market forces and principles of fairness, organizations consider the relative contribution each job should make to the organization's overall performance. In general, an organization's creation of a pay structure requires that the organization develop an internal structure showing the relative contribution of its various jobs.

The first step to design a pay structure is with a job evaluation to measure the relative worth of the organization's jobs, using compensable factors such as experience, education, and complexity. Pay structures usually include employees making an hourly wage, piecework rates, or a salary. To match what employees earn in comparable jobs in the marketplace, an organization can use survey data or a regression analysis to plot points for a pay policy line. Pay grades are established for sets of jobs having similar worth or content. Within these pay grades, a pay range is included that has minimum, maximum, and midpoint pays for employees holding a particular job. Finally, an organization may pay extra to employees to reflect differences in working conditions or labor markets, such as working the night shift or working in a high-cost area.

Read the case below and answer the questions that follow.

Sally Conroy, HR manager at Valley Ranch Cosmetics, has recently undertaken a comprehensive review of the pay structure at her organization. She and her staff performed job evaluations on all positions and graded each position on its compensable factors. The biggest issue that became clear during the resulting analysis was that the salespeople are currently paid twice as much as the logistics staff, despite similar job evaluation point scores. After investigating, Sally found that salesperson retention had been a large problem in the past, and thus salaries were increased. In addition, the executive team considers sales growth to be a primary objective of the organization; cost control, the responsibility of the logistics staff, while important, is secondary in the minds of the executives. The choices Sally faces are to emphasize the external comparisons, in which case the structure needs little adjustment, or to emphasize the internal comparisons, which would call for an increase in logistics pay or a decrease in sales pay.

1-What is the most likely consequence of emphasizing the internal evaluation?

A-Sales will increase

B-Salespeople will be paid below the market rate

C-The status quo will be maintained

2.What would be a disadvantage of emphasizing the external evaluation?

A-It will be difficult to get salespeople to rotate to logistics

B-Logistics staff will get upset and leave the organization

C-Logistics will increase their productivity

3. What is the most likely reason that people in logistics are paid less for similar work than salespeople?

A-Logistics employees are a cost to the company, not bringing in revenue

B-The founder of the company was biased against logistics

C-The performance of the logistics department is low

4. What would be an advantage of emphasizing the internal evaluation?

A-Customer satisfaction would improve

B-Logistics professionals would feel pressure to perform

C-Logistics professionals would probably feel that they are being treated more fairly

5. All other things being equal, which of these positions should be paid more?

A-Positions that are peripheral to the mission

B-Positions that are central to the organization's goals

C-Positions with fewer job evaluation points