A major part of the time and effort that goes into the establishment of a salary-administration program is spent in the mere selection of which job-evaluation technique to use. That decision is primarily based on two criteria: whether all jobs within the company are to be evaluated, or just one collection of job categories; and what sorts of jobs those are.
"Ranking-to-market fits best where the jobs are highly market-driven and cover broad responsibilities," says Coate. "I'm thinking mainly of executive-type positions. But this approach has problems on lower levels, where there are unique combinations of duties and responsibilities. You can't find survey data for them, and you end up making very subjective judgments of where they should fit in the structure." The Crystal Tissue Co. was able to use ranking-to-market because only salaried positions were being evaluated.
"A point-factor system " Coate continues, "is more popular in traditional manufacturing industries where many of the jobs are technical in nature. To them, just the aura of the numbers brings some face validity to the results."
A more qualitative job-evaluation system is usually deemed best for the youngest, smallest, and most entrepreneurial organizations -- companies in which most employees wear many hats. Instead of trying to fit those jobs into a market-based hierarchy, or rating them on the point value of the varied skills and duties within each job, most consultants recommend that the company develop its own job values and definitions.
To see how these job-evaluation techniques differ, consider the work of a secretary. The ranking-to-market approach would involve deciding whether secretarial duties in a particular company are worth more or less than what the average secretary does for the average salary elsewhere in the market. In a point-factor evaluation, the duties might be described as "answering telephones and preparing standardized reports and correspondence using a typewriter," and would likely be worth several hundred points. But in some of the more qualitative methods -- which are labeled in various ways by various consulting firms -- the job could be categorized, in descending order of importance, as "secretarial science," "secretarial procedures," or "clerical procedures." It is then up to the company to determine whether, say, "secretarial science" is worth as much as an accounting position.
"You have to be careful not to rely too heavily on market data," warns Meidinger's Finkelstein. "In markets where you're fighting to get and keep the best people, you may tend to bid up the prices if you pay too much attention to what other companies are paying. You may also hold your salaries down by perpetuating any inequity that may exist in the market."
But you can also skew your results from the inside. In identifying and weighting the compensable elements of a job, there is the possibility of giving unfair advantage to some workers. For example, too much emphasis on manual dextenty favors women. Too much emphasis on physical strength favors men. It may not always be right to place academic education above vocational training; and overseeing a function is sometimes a tougher job than supervising people.
Both consultants and their clients say many of these potential pitfalls can be avoided by including employees in the job-evaluation process and making sure that they understand why the development of a salary-administration plan is necessary.
"The best advice I can give is [for you] to spell out ahead of time what you're going to do with the job evaluation when you're done," says James Burns, administrator of Bartlett Memorial Hospital in Juneau, Alaska. The municipally owned facility recently did a total redesign of its compensation system and found that some employees -- particularly nurses -- were underpaid by as much as 20%, while the salaries of some department heads were as much as 36% too high.
"You have to decide whether to raise the low salaries right away or over a period of time," Burns says. "You also have to decide whether to lower or just freeze the ones that are too high. My advice is, get those answers early, and make them public. We didn't warn our employees, and we've lived to regret it." Burns is a hero with underpaid staffers who got their adjustment in one fell swoop, but to those whose salaries have been frozen, well, he isn't winning any popularity contests.
By all accounts, the development of a salary-administration plan is tedious, tiring work -- but worthwhile. Each company that takes on the task rapidly discovers that there is no such thing as an objective job-evaluation, just ones that are a little less subjective. Personnel costs are seldom cut, but are usually controlled.
"The real payoff, however, is that we've determined what the work we do is worth," says Crystal's Seymour, "and we've got a fair structure that's flexible enough to take us into the foreseeable future."
