Wage and Salaray Administration

Basically, what I knew about the word compensation before is that it is a payment when you render a service or job to a certain employer. However, after enrolling the course the first thing I learned is about the reality of the word compensation. Now, I know that compensations are not simply a payment for labor or services to a worker, but it is the remuneration on an hourly, daily or weekly basis or by the piece of work you are able to produce in a day. It can be a form of direct and an indirect monetary and non-monetary compensation. The word compensation is an umbrella term for salary and wages which also include the benefits, the incentives and rewards to make up the total compensation package for an employee.

There quite a number of theories have been used as a basis for paying employees and these includes the Subsistence Theory which postulates that is paying the workers the minimum wage to sustain the their lives. However critics said that it is no longer appropriate to pay subsistence wage at present, because certain factors influence it like technology and some other factors that caused the demand for labor to increase faster. Another theory is the Wage Fund Theory which pays the employees according to the sum of amount of funds available to employer each year. This theory simply means that if the employer has no enough money at the end of the year, then it pay less to the employees, while if the employee has a lot of money at the end of the year then employees can get more. Of all these theories has been formulated but non from all of them that guaranteed an optimum solution to the problem of how should wages are determined and what should really be the basis for paying employees. However, each of them has lead for the employer to develop an effective way of paying their people. In other words based on these theories companies formulated strategies on how they could pay their people. Some pay their people by qualification, others pay their employees based on performance, while some others pay their employees according to the skills and knowledge he is to used in his job and some others used the combination of these.

Citing those theories above organizations devised some methods of delivering compensations which is called the compensation system. This system to be effective, it should be secure, balance, cost-effective, and acceptable to employees. Its common that most employers pay different rates to employees performing the same job since every employee have different experience, skills and performance, while others still considers seniority as a factor in determining the employees pay. Employees are paid for the time they work as mentioned in this paper, while they can also be paid according to the output they produce, the skills they possessed, their knowledge, competencies or a combinations of these. When paying an employee based on performance, normally performance is variable as for an instance, a high performer of this month may not be the high performer for the next month, therefore; with variable pay system, a percentage of an employee’s paycheck is at risk which means that from the example I cited, the high performer at this month when he perform low next month will not get the same compensation, if she gets P20,000.00 of this month then next month he might get less, lets say P15,000.00. However variable pay is only a component of the total compensation which aside from variable pays it includes the base pay, and the indirect pay. Variable pay helps manage labor costs however it does not guarantee equitable treatment of employees it may lead to productivity decline since financial security on the employees side is not secure. This may serve as a non-motivating factor.

Aside from the base pay, variable pay, there is what we call benefits. Benefits are group membership rewards that provide security for employees and their family members. These benefits are used to safeguard the employee and their families against problems due to sickness, accidents, or retirement. It is believed that it is a powerful tool for recruiting. There are legally required benefits such as health insurance, retirement; insurance and etc. there are also To make benefits to be effective it should be aligned to the organizations compensation strategy by considering what benefit mix to be used, the amount of the benefit and the flexibility of the benefits. Recently more and more organizations offered the cafeteria plans.

 Cafeteria plans are fringe-benefit plans that allow employees to choose the benefits they want from their employer, including cash in lieu of other benefits. Employees may choose among a variety of taxable benefits, such as cash, or nontaxable benefits, such as health coverage. The basic requirements of cafeteria plans are that they be in writing, give employees choices among cash and other benefits, and not discriminate in favor of highly paid employees. A plan must offer at least one taxable benefit and at least one nontaxable benefit. One advantage of this type of plans is that both employer and employee receive certain tax advantages (which may not be as important for nonprofit organizations as for for-profit companies). Another is that employees have the freedom to choose cash instead of unwanted or unneeded benefits. By offering a cafeteria plan, it may be easier to shift more of the cost of employee benefits to the employees.

 On the other hand, there is what we call rewards and incentives which are positive motivational influence that can sometimes be equated or synonymously called as bonus: which is an additional payment (or other remuneration) to employees as a means of increasing output. Incentive pay systems include incentive plans that provide financial or non-financial rewards to employees who make substantial contributions to organizational effectiveness. Some plans tie rewards to the output of individual employees, others reward the productivity of groups but, still others are based on the overall profitability of the organization.  They are designed to encourage employees to achieve specific organizational goals, such as increasing profits, lowering costs, raising productivity, improving product quality. Some organizations have two or more incentive plans operating simultaneously, such as an individual bonus scheme plus an organizational wide profit sharing plan.

Not to mention my report on job analysis provides me insights that it is not the person or the employee being analyzed when doing a job analysis. Instead it is the job which is being analyzed by collecting data about the job using the information from the current position holder, maybe by interview or a structured questionnaire. Job analysis helps to uncover facts about the job, about the training needed by the employees, on how much an employee must be paid performing the job being analyzed, or it can be used in job screening activities. By doing job analysis, the manager can determine what skills are needed to fill the vacant positions. It is also useful in performance review, because by job analysis, job performance can be set. Any performance fall below the standard or the expected performance may lead to knowing that the position holder is not doing well with the job.

Another thing I learned in this course was the making of my own Performance Appraisal Form which was for me a very stressing activity. This is because even though I know the facts about appraisal systems but applying those facts and theories into making one is a very difficult task. I am so glad I made one.

The course really provides me knowledge on the necessary things I should learn being a student of Masters in Business Management. I believe everything I learned from the class cannot be contained in a five sheets of paper. There are more to tell and to relate. However, I am patience enough to reserve this learning and eager enough to practice it when due time comes.

Job Analysis

What is Job Analysis?

Job analysis is the process used to collect information about the duties, responsibilities, necessary skills, outcomes, and work environment of a particular job. Some experts consider it as a process to identify and determine in detail the particular job duties and requirements and the relative importance of these duties for a given job. While some others define this as a process where judgments are made about data collected on a job.

In job analysis it is important to note that it is the job; not the person is being analyzed. Therefore an important concept of Job Analysis is that the analysis is conducted of the Job, not the person. While Job Analysis data may be collected from incumbents or the present position holder, through interviews or questionnaires, the product of the analysis is a description or specifications of the job, not a description of the person.

The Purpose of Job Analysis

The purpose of job analysis is to establish and document the 'job relatedness' of employment procedures such as training, selection, compensation, and performance appraisal.

1.      Determining Training Needs 

Job Analysis can be used in training/"needs assessment" to identify or develop the training content; this would help determine or identify as what training should be given to the employees that will fit to their current needs. Secondly, assessment tests to measure effectiveness. When trainings are conducted controlling is needed. Job analysis serves as test to assess its effectiveness. Job analysis would also help determine what equipment to be used in delivering the training whether it will used computer, or other equipment deemed to be effective for delivering the training. Finally, job analysis aide’s trainer to determine what methods of training (i.e., small group, computer-based, video, classroom...) are going to be employed.

2. Compensation

On the other hand job analysis can be used in compensation to identify or determine the skill levels of the employees in the firm, whether they are highly skilled or lack of skills. Another is to identify the compensable job factors like education which pertains to the minimum level of formal education, specialized training, and professional licensing and certification required to perform the work, work experience which measures the minimum amount of job-related experience, whether gained inside or outside the University, in order to be hired or promoted into the position. Another factor is leadership and supervisory responsibilities, which is a factor that measures the degree of responsibility for other employees and direct control over the quantity and quality of others work. 

Next is the personal and organizational contact, which is a factor that measures the scope, frequency, and purpose of relationships with others, internal and external. Then, the factor that measures the required skill level and frequency of customer service relationships which is called customer service relationships. Another is the factor that measures the variety, difficulty, and magnitude of tasks and responsibilities necessary to complete the work which is known as work complexity and budget authority. Another important factor is the independent judgment and decision making factor which measures the extent of independent authority for making decisions and recommendations that affect policies, procedures, and practices. Finally is the factor that measures the unavoidable physical demands, environmental elements and safety/hazardous conditions under which the work is performed called working environment conditions.

3. Selection Procedures

Job Analysis can be used in selection procedures to identify or develop the job duties that should be included in advertisements of vacant positions, the appropriate salary level for the position to help determine what salary should be offered to a candidate, the minimum requirements (education and/or experience) for screening applicants, the interview questions to be administered to the applicants, the selection tests/instruments (e.g., written tests; oral tests; job simulations); the applicant appraisal/evaluation forms; and finally the orientation materials for applicants/new hires.

4.       Performance Review 

Job Analysis can be used in performance review to identify or develop the goals and objectives of the employee for the next year’s performance in which will serve as the setting of the performance standards of the employee for the next year. It will also help to determine the evaluation criteria which will be used after the year. The length of probationary periods will also be determined when job analysis are conducted.

By doing job analysis the management could determine if the new hired employee is doing very well or not; therefore the management will decide whether to fire or make the new hire as a regular employee from being on probation status in the company. Lastly, it will help determine the duties to be evaluated. By setting the goals and objectives, it is easy to determine what duties should be evaluated.

METHODS OF JOB ANALYSIS

A typical method of Job Analysis would be to give the incumbent a simple questionnaire to identify job duties, responsibilities, equipment used, work relationships, and work environment. The completed questionnaire would then be used to assist the Job Analyst who would then conduct an interview of the incumbent(s).

A draft of the identified job duties, responsibilities, equipment, relationships, and work environment would be reviewed with the supervisor for accuracy. The Job Analyst would then prepare a job description and/or job specifications. The method that you may use in Job Analysis will depend on practical concerns such as type of job, number of jobs, number of incumbents, and location of jobs.

Several methods exist that may be used individually or in combination. These include, the review of job classification system in which it matches jobs and workers, the public employment service system requires that a uniform occupational language be used in all of its local job service offices. Occupational analysts collect data provided to job interviewers to systematically compare and match the specifications of employer job openings with the qualifications of applicants who are seeking jobs through its facilities. The job analyst may interview the incumbent, in order to know the nature of the job.

Then if possible the supervisor shall be interviewed also so that the information gathered from interviewing the incumbent will be validated by the supervisor. The analysis can be carried out also through structured questionnaires in which the incumbent and the supervisor maybe given a questionnaire which is purposely structured by the analyst in order to get the information needed for the analysis.

A most effective method includes interview method that is viewed to allow the incumbent to describe tasks and duties that are not observable. However, the disadvantage is that the incumbent may exaggerate or omit tasks and duties.

Two types of interview method are structured and unstructured. Unstructured interview is a conversation with no prepared questions or predetermined line of investigation. However, the interviewer should explain the purpose of the study and the particular focus of the interview. Then the roles and the purposes of the interview will give structure, since the interviewer generally uses a questioning strategy to explore the work the job holder performs.

Listening and taking notes are very important; these enable follow up questions to be posed. The questions and responses - with summaries enable the interview to be controlled. The conversation takes on a structure with areas being considered, explored, related to each other and revisited to secure the depth of information required in job analysis. It involves questions and responses and may be free flowing but it becomes structured in the sense that the interviewer has a purpose and needs skill to establish a relationship. The important thing is that the interviewer should ask well-structured questions to generate a conversational flow in which the interviewee offers information - factual, opinion, subjective and objective about aspects of the job. To ensure information received is heard and understood - listening, clarifying and reflective summarizing

Structured Interviews on the other hand may assume a definite format involving charting a job-holder's sequence of activities in performance and an inventory or questionnaire may be used. Care is needed to set up such interactions.  A specialist analyst is not involved and participants need to know what they are doing, why and what is expected as a result. Notes and records may be needed for subsequent analysis.

The interview outcomes generate descriptive data and enable job-holders to interpret their activities. It is said that a good interviewer can probe sensitive areas in more depth. But structured questionnaires cannot easily do this. Jobholders can give overviews of their work and offer their perceptions and feelings about their job and the environment. Rigid questionnaires tend to be less effective where the more affective aspects of work are concerned.

However information from different interviews can be hard to bring together. Also there is a potential for interviewer bias, and certain areas of the work may fail to be picked up. An interview may stress one area and neglect others. There might be some problems in interpretation and analysis with the possibility of distorted impressions and most especially the subjectivity of the data captured needs to be considered.

Another method is observation in which it involves a direct observation of incumbents performing their jobs that enables the trained job analyst to obtain first-hand knowledge and information about the job being analyzed. The observation method is suited for jobs in which the work behaviors are observable involving some degree of movement on the part of the incumbent, or job tasks are short in duration allowing for many observations to be made in a short period of time or a significant part of the job can be observed in a short period of time, or jobs in which the job analyst can learn information about the job through observation.

Some advantages of observation are that the trained job analyst can obtain first-hand knowledge and information about the job being analyzed. Further it allows the job analyst to see (and in some cases experience) the work environment, tools and equipment used, interrelationships with other workers, and complexity of the job. Since, the job analysis may be of limited value if the job analyst has not seen the incumbent perform the job. In other words, relying solely on the incumbent's description of their job may not withstand scrutiny in a court of law.

However there are also some disadvantages, one of it is that the presence of an observer may affect the incumbent causing the incumbent to alter their normal work behavior. It is important for the analyst to be unobtrusive in their observations. Incumbents may alter their work behavior if they know they are being observed. It is known that this method is not appropriate for jobs that involve significant amounts of time spent in concentration or mental effort.

Another way of doing job analysis is through task inventories, which are structured job analysis questionnaires used to gather information about job components. The typical task inventory consists of task statements which are rated by job incumbents and/or their supervisors using one or more rating scales, and a background information section requesting such information as worker/supervisor identification, work experience, education, sex, race, wage/salary, job satisfaction, physical demands, equipment usage, management information, and any other dimension which may add depth to the analytical process. Typically, a task is defined as a collection of more elemental activities directed toward the achievement of a specific objective. An example of a task statement for an accountant job might be: communicates with clients by letter or telephone in order to gather information for tax returns. A thorough job analysis will typically identify from 30 to 100 tasks of this type for a job.

Next is using check list, a method based on an inventory of job elements. Two types of checklist are checklist for incumbent in which a worker or supervisor check items on a standardized task inventory that applies to the job. It can be a custom-made or purchased from an outside vendor. Another type of checklist is the checklist for an analyst which is used to review all the data before issuing a job description. Its components should include appropriate questions base on post. Its advantage is that it is easy to administer and inexpensive. However, the disadvantage of it is that it may not include important parts of work.

Outcome of Job Analysis

The outcome of job analysis is job description. Job Description are based on objective information obtained through job analysis, an understanding of the competencies and skills required to accomplish needed tasks, and the needs of the organization to produce work. It clearly identifies and spells out the responsibilities of a specific job. This also  include information about working conditions, tools, equipment used, knowledge and skills needed, and relationships with other positions. The best job descriptions are living, breathing documents that are updated as responsibilities change. The best job descriptions do not limit employees, but rather, cause them to stretch their experience, grow their skills, and develop their ability to contribute within their organization.

This article is my learning while studying my Staffing, Training and Development Class.