Compensation

Management, 2e
Dipak Kumar
Bhattacharyya
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Chapter 7
Compensation Management
and Job Design

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Introduction
For compensation design and management, the important prerequisites are
effective job design, information and documentation of job analysis, job
descriptions, and job evaluations.
All these processes help in identifying job requirements. They also help in
describing the job, job-families, skill-sets, and skill mapping apart from helping
develop skill inventories in the organization.
Job design helps in organizing job tasks. It has a direct impact on the mental and
physical health of employees and thus on their performance levels.
The physical aspects of jobs require organizations to consider ergonomic issues
such as reducing physical strain, fatigue, and even boredom, which occurs when
doing repetitive tasks.
Mental aspects require organizations to address behavioural issues such as
developing work systems and a culture, which enables employees to get relief from
the dehumanizing effects of long work hours.
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Introduction
Factors which are likely to affect job design are:

job specialization and repetitive operations

changing technology
labour-union policies
abilities of existing personnel
adequate availability of potential personnel
interaction between jobs and the system
psychological and social needs that can be met by the job

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Characteristics of Job Design

Jobs where employees experience a high level of job satisfaction generally have at
least one or more of the following characteristics:
1. Task variety, i.e., enabling employees to move from one job to another
within the organization.
2. Task identity, i.e., fitting tasks together to make a complete job from the
beginning to the end, with a visible output.
3. Task significance, i.e., to make workers feel that they have achieved
something meaningful in the course of their working.
4. Autonomy, i.e., providing inputs to employees about how their jobs are
done, the order of tasks, the speed of work, etc. Later, these employees
should be given a free hand by reducing the extent of supervision and
control, so that they realize that they are doing their own jobs and that
they are the job owners.
5. Feedback, i.e., providing an opportunity to workers to understand their
strengths, weaknesses, and areas of opportunity. This helps them mature
and do better in their job assignments.

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Strategies and techniques of job design

Robertson and Smith (1985) have recommended following strategies for analysing
jobs:
Review literature and other existing data such as prevailing job
descriptions, training manuals, assess job designs from manuals of
technology providers or vendors.
Interview immediate managers to understand the responsibilities of a job
and tasks required to perform the job well
Interview employees who are in the same type of job to assess job
requirements
Observe employees while they do the job
Try to do the job wherever possible to rationalize the job requirements
Write job descriptions detailing all findings and observations
These apart, one must also refer to policies, incentives, and feedback systems of an
organization while designing jobs as they affect the efficiency and motivation of
employees.

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Important Techniques of job design

Some of the important techniques of job design are:

1.
2.

3.
4.
5.

Job rotation, which involves periodic vertical and horizontal

movement of employees within a set of jobs or tasks.
Job enlargement, which is essentially horizontal expansion of jobs. It
involves grouping of a variety of jobs within bands rather than
between bands.
Job enrichment, which is another important process of job design or
re-design. It reverses the effects of repetitive tasks.
Autonomous work groups, which requires organizations to provide
employees functional autonomy for their assigned tasks or jobs.
Sub-contracting, which is another form of autonomous work group.
The difference is that, in this process workers no longer remain on the
pay roll of organizations. They form their own organizations and
become self-employed. Here, workers are responsible for the results.
Such an arrangement helps to make work design more specific and
measurable, price jobs more accurately, and fix responsibility properly.
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Components of job design

Various components of job design are:

1.

2.

3.

4.

Job information is an essential input for effective job analysis. It not only
facilitates job evaluation for compensation designing, but also helps with
disseminating information to employees about their duties and
responsibilities.
Job analysis is the process of gathering information about the job and
evaluating such information in terms of what is necessary and relevant.
Essentially, job analysis involves three questions: What is a job? What
should be analysed? What methods of analysis should be used?
Job questionnaire, which is a special tool for collecting job information. It
is a printed form, in which essential information about the job may be
listed either by the employee or by his supervisors. The major advantage
of the job questionnaire is that compiled information can be used as a job
description.
Assessment centres, which can provide opportunity to employees to
experience microcosm of the job, while testing them on work-related
activities as individuals and in groups
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Job Description
The compiled job information is translated into job descriptions. These are written
records of job duties and responsibilities, which provide a factual basis for job
evaluation.
1.

In terms of format, the job description should first name the job, using a
title which accurately summarizes duties assigned.

2.

Secondly, job description should then document a list of duties assigned.

3.

For operational positions, job description may be about one page;

whereas for top management, it may run to several pages.

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Objectives of Job Description

Job descriptions help management to accomplish the following objectives:

1.

Efficient organizing of jobs

2.

Recruiting for the organization

3.

Assigning jobs to people by communicating their duties and

responsibilities, and by setting job standards

4.

Reviewing performances of people

5.

Improving performances through appraisal and training

6.

Rewarding employees

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Job Specifications
Job descriptions also outline the basic specifications of the job.

Such specifications include the education or experience required to do the

job; and the special knowledge and skills necessary to carry out the job.
In addition, specifications also identify soft skills such as inter-personal
skills, analytical ability, problem-solving skills, or decision-making skills
required to perform the assigned duties.

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Compensation Design through Compensable

Factor
Compensable factors are characteristics of a job on which organizations assign
weights.
These characteristics are identified as the ones that would help organizations
achieving its goals and strategies.

Hence, compensable factors are used as job evaluation criteria. From organizational
point of view, some 5-6 compensable factors are identified. Their degree of
importance may differ in accordance with nature and level of the job.
Degree of importance is tested in a 5-point Likert Type Scale and the result is
multiplied with the pre-assigned weight to get the total score.
Aggregated scores are ranked and the job with highest rank gets higher
compensation in comparison to other jobs.
Weights on compensable factors are pre-assigned depending on the goals and
strategies of the organization. Total weight assigned for compensable factors adds to
100.
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Ranking of compensable factors

HR Job Family
HR Assistant
HR Executive
HR Manager
General Manager -HR

Ranking of Compensable Factor

125
131
164
222

Calculation of aggregate compensable factor score for HR Executive job position

Compensable Factor
Education

Degree
1

Weight
14

Total
14

Communication
Skills
Job complexity

11

33

22

22

Coaching and
Mentoring Ability

18

Responsibility

24

24

Technical Skills

20

20

Total

131

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