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Human Resource Management

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Human Resource Management (MGT501)
VU
Lesson 27
JOB EVALUATION AND PRICING
After studying this chapter, students should be able to understand the following:
A. The Appraisal Period
B. Job Evaluation
LESSON OVERVIEW
This lecture discusses the career management concepts and their application in detail.
A. THE APPRAISAL PERIOD
Performance evaluations are typically prepared at specific intervals. In most organizations these evaluations
are made either annually or semiannually. The appraisal period may begin with each employee's date of hire,
or all employees may be evaluated at the same time.
I. The Line Manager and Performance Appraisal:
Line managers have the following responsibilities in appraising the performance.
 Complete the ratings: Line managers facilitate the overall rating process, initially by providing
goals to be achieved than comparing those goals with actual performance and finally providing
the feedback to make the corrective actions if required.
 Provide performance feedback: Performance always requires feedback, if it is positive than
feedback will act as a positive reinforcement factor that will lead to more improvement and if
the performance is poor, it again requires feedback so that the poor performance can be
improved by taking corrective steps. This task of providing feedback is carried out and
facilitated by line managers.
 Set performance goals: Performance to b evaluated requires set standards, goals or
benchmarks against which it can be compared for evaluation purpose these goals are provided
by the line mangers.
II. Role of HRM Department in Performance Appraisal:
HRM department performs the following functions during performance appraisal process.
 Develop the appraisal system: HRM department plays important role in formulating the
performance appraisal systems, it facilitated different departments in setting performance
standards and acquiring appropriate appraisal performance method according to the
requirements of particular department it also provides monitoring in appraising the
performance of employees and hence are necessary for developing effective performance
appraisal systems.
 Provide rater training: Evidence indicates that the training of appraisers can make them more
accurate raters. The raters are bothered to be trained because, a poor appraisal is worse than no
appraisal at all. Training can help raters to avoid and eliminate the basic appraisal errors. Raters
are provided with the training opportunity through HRM department.
 Monitor and evaluate the appraisal system: Any system to be run and implemented
effectively requires continuous monitoring. Performance appraisal is very important in any kind
of organization both for employee as well as employer because many decisions are supposed to
be made on data and result provided by the performance appraisal like, promotions, demotions
and some times termination etc . To achieve more authentic and fair results through
performance appraisal systems it requires monitoring and supervision which is performed by
the HRM department.
III. Performance Appraisal Failures:
Some times performance appraisal process do not satisfy the purpose for which it is conducted, that means
it is faced with some failures and there are certain reasons, these reasons are as under:
1. Manager lacks information
2. Lack of appraisal skills
3. Manager not taking appraisal seriously
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Human Resource Management (MGT501)
VU
4.
Manager not prepared
5.
Employee not receiving ongoing feedback
6.
Manager not being honest or sincere
7.
Ineffective discussion of employee development
8.
Unclear language
9.
Insufficient reward for performance
IV. Strategies for Improving Performance:
If performance appraisal process indicates the poor performance of the employees than the following
strategies can be used to improve the performance of the employees and even for good performance these
strategies can be used to keep on the trend. These strategies are as under:
a. Positive Reinforcement:
Applying a valued consequence that increases the likelihood that the person will repeat the behavior that led
to it is termed as positive reinforcement. Examples of positive reinforcement include compliments, letters
of recommendations, favorable performance appraisal, and pay raises. Equally important, Jobs can be
positively reinforcing.
b. Punishment:
Punishment means administering an aversive consequence. Examples include criticizing or shouting at an
employee, assigning an unappealing task, and sending a worker home without pay. Punishment strategy can
be used to improve the performance of employees.
c. Self Management:
Many companies empower their employees to take responsibility for the day to day functions in their areas.
Accordingly, these employees may now work without direct supervision and take on the administrative
responsibilities that were once performed by their supervisor.
d. Employee Assistance Programs (EAPs):
Specific programs designed to help employees with personal problems. No matter what kind of
organization one works in, one thing is certain. Whether that problem is job stress, legal, marital, financial,
or health related, one commonality exists: if an employee experiences a personal problem, sooner or later it
will manifest itself at the work place in terms of lowered productivity, increased absenteeism, or turnover.
To help employees deal with these personal problems, more and more companies are implementing
employee assistance programs.
V. Characteristics Of An Effective Appraisal System (Designing An Appraisal System)
Validation studies of an appraisal system may be the most direct and certain approach to determining
whether the system is satisfactory. It is unlikely that any appraisal system will be totally immune to legal
challenge. However, systems that possess certain characteristics may be more legally defensible.
a.  Job-Related Criteria--The criteria used for appraising employee performance must be
job related. The Uniform Guidelines and court decisions are quite clear on this point.
b. Performance Expectations--Managers must clearly explain their performance
expectations to their subordinates in advance of the appraisal period.
c.  Standardization--Employees in the same job categories under a given supervisor should
be appraised using the same evaluation instrument.
d. Trained Appraisers--Responsibility for evaluating employee performance should be
assigned to the individual(s) who have an opportunity to directly observe a representative
sample of job performance. In order to ensure consistency, appraisers must be well trained.
e.  Open Communication--A good appraisal system provides highly desired feedback on a
continuing basis.
f.  Employee Access To Results--Employees will not trust a system they do not
understand.
g. Due Process--A formal procedure should be developed--if one does not exist--to
permit employees the means for appealing appraisal
Effectiveness of the appraisal can be created by considering following steps.
 Gain support for the system
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Choose the appropriate rating instrument
Choose the raters
Determine the appropriate timing of appraisals
Ensure appraisal fairness
B. Job Evaluation
Job evaluation means systematically determining relative worth of jobs to create job structure. An attempt
to identify inputs that are most valuable to the organization & to develop job hierarchy based on which jobs
have more or less of those dimensions
Job Evaluation Methods:
The essence of compensation administration is job evaluation and the establishment of the pay structure.
Let's now turn our attention to the topic of job evaluation. By job evaluation we mean using the
information in job analysis to systematically determine the value of each job in relation to all jobs with in the
organization. In short, job evaluation seeks to rank all the jobs in the organization and place them in a
hierarchy that will reflect the relative worth of each. There are four general job evaluation methods.
a. Ranking method:
Raters examine the description of each job being evaluated and arrange the jobs in order according to their
value to the company. This method requires a committee ­ typically composed of both management and
employee representative ­ to arrange job in a simple rank order from highest to lowest. No attempts are
made to break down the jobs by specific weighted criteria. The committee members merely compare two
jobs and judge which one is more important, or more difficult to perform. Then they compare the other job
with the first two, and so on until all the jobs have been evaluated and ranked.
The most obvious limitation to the ranking method is its sheer inability to be managed when there
are a large number of jobs. Other drawbacks to be considered are the subjectivity of the method- there
are no definite or consistent standards by which to justify the rankings- and the fact that because jobs are
only ranked in terms of order, we have no knowledge of the distance between the ranks.
b. Classification method:
A job evaluation method by which a number of classes or grades are defined to describe a group of jobs is
known as Classification method. The classifications are created by identifying some common denominator-
skills, knowledge, responsibilities ­with the desired goal being the criterion of a number of distinct classes
or grades of jobs.
Once the classifications are established, they are ranked in an overall order of importance according to the
criteria chosen, and each job is placed in its appropriate classification. This later action is generally done by
comparing each position's job description against the classification description and benchmarked jobs.
The classification method shares most of the disadvantages of the ranking approach, plus the difficulty of
writing classification descriptions, judging which jobs go where, and dealing with jobs that appear to fall
into more than one classification.
c. Factor comparison method:
Raters need not keep the entire job in mind as they evaluate; instead, they make decisions on separate
aspects, or factors, of the job. A basic underlying assumption is that there are five universal job factors: (1)
Mental Requirements, (2) Skills, (3) Physical Requirements, (4) Responsibilities, and (5) Working
Conditions. The committee first rank each of the selected benchmark jobs on the relative degree of
difficulty for each of the five factors. Then, the committee allocates the total pay rates for each job to each
factor based on the importance of the respective factor to the job. A job comparison scale, reflecting
rankings and money allocations, is developed next. The raters compare each job, factor by factor, with those
appearing on the job comparison scale. Then, they place the jobs on the chart in an appropriate position.
d. Point method:
Raters assign numerical values to specific job components, and the sum of these values provides a
quantitative assessment of a job's relative worth. The point method requires selection of job factors
according to the nature of the specific group of jobs being evaluated. After determining the group of jobs to
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be studied, analysts conduct job analysis and write job descriptions. Next, the analysts select and define the
factors to be used in measuring job value and which become the standards used for the evaluation of jobs.
Education, experience, job knowledge, mental effort, physical effort, responsibility, and working conditions
are examples of factors typically used. The committee establishes factor weights according to their relative
importance in the jobs being evaluated, and then determines the total number of points to be used in the
plan. A distribution of the point values to job factor degrees is made, with the next step being the
preparation of a job evaluation manual.
Hay guide chart-profile method: A highly refined version of the point method that uses the
factors of know-how, problem solving, accountability, and, where appropriate, working
conditions.
Key Terms
Job Evaluation: Job evaluation means systematically determining relative worth of jobs to create job
structure.
Point Method: Raters assign numerical values to specific job components, and the sum of these values
provides a quantitative assessment of a job's relative worth.
Classification Method: A job evaluation method by which a number of classes or grades are defined to
describe a group of jobs is known as Classification method.
Ranking Method: Raters examine the description of each job being evaluated and arrange the jobs in order
according to their value to the company.
EAPs: Specific programs designed to help employees with personal problems.
Positive Reinforcement: Applying a valued consequence that increases the likelihood that the person will
repeat the behavior that led to it is termed as positive reinforcement.
Punishment: Punishment means administering an aversive consequence.
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Table of Contents:
  1. INTRODUCTION TO HRM:Growing Importance of HRM, Road Map of the Course
  2. ESSENTIALS OF MANAGEMENT:Concepts and Essential of Management, Managerís Roles
  3. ORGANIZATION AND COMPONENTS OF ORGANIZATION:Open versus Closed Systems, The Hawthorne Studies
  4. PEOPLE AND THEIR BEHAVIOR:Why to work in organizations?, The Goals of Organizational Behavior
  5. INDIVIDUAL VS. GROUP BEHAVIOR:What Are Roles?, Problem solving Team
  6. PERSONNEL MANAGEMENT TO HUMAN RESOURCE MANAGEMENT:Records and Administration, Competitive Advantage
  7. HRM IN A CHANGING ENVIRONMENT:Productivity, New Trends at Work Place
  8. How organization Cultivate a Diverse Workforce, STEPS TOWARD MANAGEMENT OF DIVERSITY
  9. FUNCTIONS AND ENVIRONMENT OF HRM:Compensation and Benefits, Safety And Health, Interrelationships of HRM Functions
  10. LINE AND STAFF ASPECTS OF HRM:Authority, Line versus Staff Authority, Staff Manager
  11. LEGAL CONTEXT OF HR DECISIONS:Doing the Right Thing, Affirmative Action, Unintended Consequences
  12. HUMAN RESOURCE PLANNING (HRP):Benefits of HR Planning, Forecasting Human Resource Availability
  13. STRATEGIC PLANNING AND HRIS:HRís Strategic Role, Human Resource Information System, Common HRIS Functions
  14. JOB ANALYSIS:Purposes of the job Analysis, Questions Job Analysis Should Answer
  15. JOB ANALYSIS:Methods of Collecting Job Analysis Information, Observation, Source of Data
  16. JOB ANALYSIS (CONTD.):SURPLUS OF EMPLOYEES FORECASTED, Diversity through Recruiting Efforts
  17. SOURCES OF RECRUITMENT:ALTERNATIVES TO RECRUITMENT, Quantity of the Applicants, Quality of the Applicants
  18. SELECTION:Initial Screening, Advantages of Successful Screening
  19. SELECTION TESTS:Characteristics of Properly Designed Selection Tests, Guidelines for Conducting an Interview
  20. SELECTION PROCESSÖ CONTD:Background Investigations, Physical Exam, Selecting Managers
  21. SOCIALIZATION:Compensation and Benefits, Team Membership, Stages in socialization Process, Training and Development Trends
  22. TRAINING AND DEVELOPMENT:Learning, Phases of Training, Why Transfer of Training Fails
  23. MAXIMIZING LEARNING:Following up on Training, Repetition, Feedback, Purposes of T & D
  24. CAREER MANAGEMENT:Individual career planning, Career Planning and Development Methods
  25. PERFORMANCE:Determinants of Job Performance, Why is performance measured?, Performance Management
  26. PERFORMANCE APPRAISAL:What to Evaluate, The Appraisal Interview, PROBLEMS IN PERFORMANCE APPRAISAL
  27. JOB EVALUATION AND PRICING:THE APPRAISAL PERIOD, Ranking method,
  28. COMPENSATION SYSTEM:Pay, Job Pricing, Compensation: An Overview, Compensation Surveys
  29. BENEFITS:Total Compensation, Discretionary Benefits (Voluntary), Workplace Flexibility
  30. ROLE OF MONEY IN PERFORMANCE OF EMPLOYEES:Types of Pay-for-Performance Plans, Empower Employees
  31. MOTIVATION:The Motivation Process, Motivational Theories, Challenges of motivating employees
  32. OCCUPATION, HEALTH & SAFETY:Physical Conditions, Accident Investigation, Smoking in The work place
  33. STRESS MANAGEMENT:Symptoms of Stress, Managing Stress,
  34. COMMUNICATION IN ORGANIZATION:Burnout, Social Support at Work & Home, Communication in organization, Meetings
  35. TRADE UNIONS:Collective Bargaining, The HRM Department in a Nonunion Setting, Phases of Labor Relations
  36. CONFLICT AND NEGOTIATION:Transitions in Conflict Thought, Individual Conflict Management Styles
  37. POWER AND POLITICS:Sources of Power, Advantages and Disadvantages of PowerPower and Politics in Context
  38. EMPLOYEE RIGHTS AND DISCIPLINE:Contractual Rights, Management Rights, Disciplining Employees,
  39. DISCIPLINE (CONT...):Factors to Consider when Disciplining, Disciplinary Guidelines, Employee Separations
  40. LEADERSHIP:The Leaderís Behavior, Situational Theories of Leadership, Becoming a Leader
  41. REVISION (LESSON 12-21):Plans, Job Specification, Human resource planning, Selection Process, Corporate Culture
  42. REVISION (LESSON 22-26):Training, Case Study Method, Training, Performance
  43. REVISION (LESSON 27-35):Classification Method, Compensation, Empowerment, Mediation
  44. INTERNATIONAL DIMENSIONS OF HRM:Global Corporation, Type of staff members, Approaches to Global Staffing
  45. CONCLUSION & REVIEW:Strategies for Gaining Competitive Advantage, High-performance Work System