Assignment 2 BUS 409

Assignment 2 Arlene Miller Professor Fitzpatrick Compensation Management BUS 409 November 27, 2011

Assignment 2 BUS 409

Describe the differences between job analysis and job evaluation and how these practices help establish internally consistent job structures. The differences between job analysis and job evaluation is, job analysis is a systematic process for gathering, documenting, and analyzing information in order to describe jobs. Job analyses describe content or job duties, worker requirements, and, sometimes, the job context or working conditions. Job evaluation is a systematic recognition of differences in the relative worth among a set of jobs and establishes pay differentials accordingly. Job analysis provides information about what duties the job entails and what human characteristics are required to perform these activities. This information, in the form of job descriptions and specifications, helps managers decide what sort of people to recruit and hire. Compensation ( such as salary or bonus) usually depends on the jobs required skill and education level, safety hazards, degree of responsibility, and so on all factors you assess through job analysis. Furthermore, many employers group jobs into classes for pay purposes. Job analysis provides the information to determine the relative worth of each job (Dessler, pg 117). Job evaluation aims to determine a jobs relative worth. The job evaluation is a formal and systematic comparison of jobs to determine the worth of one job relative to another. Job evaluation eventually results in a wage , salary structure, or hierarchy. The basic principle of job evaluation is this: jobs that require greater qualifications, more responsibilities, and more complex job duties should receive more pay than jobs with lesser requirements (Dessler, pg 397).

Assignment 2 BUS 409

How these practices help establish internally consistent job structures are the descriptive job analysis results directly aid compensation professionals in their pay-setting decisions by differences between job content and worker requirements. Job content refers to the actual job duties and task that employees must perform on the job. Worker requirements are the minimum qualifications and skills that people must have to perform a particular job. Job evaluation partly reflects the values and priorities that management places on various positions. Some compensable factors how companies distinguish themselves is through skill, effort, responsibility, and working conditions are some of the compensable factors that companies take into consideration. Describe the challenges in developing compensations that are both internally consistent and market competitive. Internally consistent compensation systems are what allow a company to develop relative pay scales. A relative pay scale means that jobs within the company pay different rates in comparison to other jobs within the same company. The means by which these internally consistent compensation systems are developed are rooted in simple principles and requisites. Jobs that require a person to possess a higher level of education, experience, or skill will be assigned a higher wage than jobs requiring less of these requirements. Other factors affecting the relative pay of a job within the company include job complexity and the level of responsibility. These different job characteristics are formally recognized within the internally consistent compensation structure, and allow compensation managers to establish a pay scale that fairly reflects these characteristics. Despite their usefulness within an organization, internally consistent compensation systems can create a challenge in corporate competition. This is due to the fact that these

Assignment 2 BUS 409

systems, which are based on a formal job analysis, lead to formally structured job descriptions on which the pay scale is developed. However, it may become necessary for employees in a particular job to take on duties of other positions or duties of newly created positions in order for the company to remain competitive in the market. This may occur as a result of downsizing staff or adding responsibilities to the company without additional staff. Either way the employees responsibilities, or perhaps education needs, will increase without an appropriate change in the internally consistent compensation system definitions. This type of locked system can lead to employees being asked to work outside their comfort zone, which is to say performing tasks beyond their pay. One solution to this is to develop a set of dynamic consistent compensation systems. This means that aside of the jobs core relative pay, the company has the ability to give additional pay for additional responsibilities as defined by a set of clearly defined policies. This will allow a company to grow in response to market changes while still being able to compensate employees fairly for additional job duties. In order to remain competitive with others, companies need to have market competitive compensation policies. Market competitive means that the pay scale for jobs is set in such a way as to attract and retain the most skilled and knowledgeable workers. This market competitive policy does have drawbacks. Primary among these is that offering more money for jobs can go against the idea of a low-cost strategy. This can occur by paying too much for a certain position relative to the companys revenue in response to a competitors compensation policy. By paying more for particular jobs, the company must take money, which is a limited resource, away from areas such as research and development, thereby limiting the companys ability for creativity, productivity, and growth.

Assignment 2 BUS 409

Two employees perform the same job and each received exemplary performance ratings. Discuss whether it is fair to give one employee a smaller percentage merit increase because his pay falls within the 3rd quartile but give a larger percentage merit increase to the other because his pay falls within the 1st quartile and explain why. No, I do not think it is fair to give one employee a smaller percentage merit increase because his pay falls within the third quartile but give a larger percentage merit increase to the other because his pay falls within the first quartile. I think both should be given the same amount; it does not matter if it is two different quartiles if both did the same work then both should be given the same pay amount unless one possessed different skills, education, or requirements for the job. As stated in our text in chapter three Managers rely on objective as well as subjective performance indicators to determine whether an employee will receive a merit increase and the amount of increase warranted. As a rule, supervisors give merit increases to employees based on subjective appraisal of employees performance. Supervisors periodically review individual employee performance to evaluate how well each worker is accomplishing assigned duties relative to established standards and goals (Martocchio, pg 62-63). I think employees merit increases should be based on performance, skill, contribution, and experience that the employees bring to the job to determine what increase should be given by the supervisor Discuss the basic concept of insurance and how this concept applies to health care. The basic concept of health insurance covers the costs of a variety of services that promote sound physical and mental health, including physical examinations, diagnostic testing, surgery, hospitalization, psychotherapy, dental treatments, and corrective prescription lenses for vision deficiencies (Martocchio, pg 242). Health insurance provides coverage for medicine, visits to the doctor or emergency room, hospital stays and other medical expenses. Policies differ in what

Assignment 2 BUS 409

they cover, the size of the deductible and/or co-payment, limits of coverage and the options for treatment available to the policyholder. Health insurance can be directly purchased by an individual, or it may be provided through an employer (What is health insurance, n.d.). How this concept applies to health care is the insurance policy specifies the amount of money the insurance company will pay for such particular services as physical examinations. Employers pay insurance companies a negotiated amount, or premium to establish and maintain insurance policies (Martocchio, pg 242). In a fee-for-service plan there are deductibles, and this means that over a period of time an employee will have to pay for services needed before insurance benefits become active. The deductible amount is modest, usually a fixed amount ranging anywhere between $100 and $500 depending on the plan. Deductible amounts may also depend on annual earnings, expressed as either a fixed amount for a range of earnings or as a percentage of income ((Martocchio, pg 246). Health insurance plans pay doctors, hospitals, and other providers of health care in various ways. There are Fee-For-Service plans, managed care plans, and point-of-service plans. Except for the Family and Medical Leave Act, the remaining legally required benefits were conceived decades ago. Describe the changes in the business environment and society that might affect the relevance or perhaps the viability of any of these benefits. The changes in the business environment and society might affect the relevance or perhaps the viability of any of these benefits companies faced with higher health care costs reduces investments and lower employment. Companies faced with rising cost of benefits and health care may cut employment, reduce benefits that may enhance future productivity. Some examples of benefits are medical insurance, disability, unemployment, workers compensation, vacations pay, holiday pay, and maternity leave, contribution to retirement (pension pay), profit

Assignment 2 BUS 409

sharing, stock options, and bonuses. Unemployment insurance payments are intended to provide temporary financial assistance to unemployed workers who meet the requirements of state law. Eligibility for unemployment insurance, benefit amounts, and length of time benefits are determined by the state law under which employments insurance claims are established and filed each week. The problem with unemployment benefits is due to a decline in revenue in turn has created budget deficits. Other contributing factors affecting the business environment and society that might affect the relevance or viability of any benefits are layoffs, involuntary loss of job due to company closing, and companies off-shoring. These factors affect benefits and health care because employees lose benefits and health care. Without the assistance of employer-sponsored health insurance, employees could not afford to pay for medical services on their own. Our economy faces a severe recession, and growing number of unemployed workers and their families are coping with the loss of benefits and health insurance.

Assignment 2 BUS 409

References Dessler, G. (2011). Human Resource Management: 2010 custom edition (12th ed.). Upper Saddle River, NJ: Prentice Hall. Martocchio, J. J. (2011). Strategic compensation: A human resource management approach: 2011 custom edition (6th ed.). Upper Saddle River, NJ: Prentice Hall. What is health insurance. (n.d.). Retrieved November 15, 2011, from Investorwords.com website: http://www.investorwords.com/2289/health_insurance.html