The Civil Rights and Equal Pay Acts The Civil Rights and the Equal Pay Acts, among other laws, protect employees from discrimination. Just as it is illegal to discriminate in hiring, organizations cannot discriminate in pay on the basis of race, color, creed, age, or sex.
The Equal Pay Act of 1963 mandates that organizations compensate men and women doing the same job in the organization with the same rate of pay. The Equal Pay Act was designed to lessen the pay gap between male and female pay rates. Despite progress, women in general still earn roughly 78 percent of what their male counterparts earn. Some of this difference is attributable to perceived male- versus female-dominated occupations, but the Equal Pay Act requires employers to eliminate pay differences for the same job. Salaries should be established based on skill, responsibility, effort, and working conditions. For example, if an organization is hiring customer service representatives, new employees must be paid the same initial salary, regardless of gender, because the attributes for the job are the same. It is important to note that the Equal Pay Act typically affects only initial job salaries. If two workers, one male and one female, perform at different levels during the course of the year, and if performance is rewarded, the act allows that in the next period their pay may be different.
Job Evaluation and the Pay Structure
The essence of compensation administration is job evaluation and the establishment of a pay structure. Let’s now turn our attention to job evaluation topics and practices.
Job Evaluation
In Chapter 5, we introduced job analysis as the process of describing job duties, authority relationships, skills required, conditions of work, and additional relevant information. We stated that job analysis data could help develop job descriptions and specifications, as well as job evaluations. By job evaluation, we mean using job analysis information to systematically determine the value of each job in relation to all jobs within the organization. In short, a job evaluation seeks to rank all jobs in the organization in a hierarchy that reflects the relative worth of each. It’s important to note that this is a ranking of jobs, not people. Job evaluation assumes normal job performance by a typical worker. So, in effect, the process ignores individual abilities or performance.
The ranking that results from job evaluation is not an end in itself. It should be used to determine the organization's pay structure. Note that we say should; in practice, this is not always the case. External labor market conditions, collective bargaining, and individual skill differences may require a compromise between the job evaluation ranking and the actual pay structure. Yet even when such compromises are necessary, job evaluation can provide an objective standard from which modifications can be made.
Isolating Job Evaluation Criteria
The heart of job evaluation is determining appropriate criteria to arrive at the ranking. It is easy to say that jobs are valued and ranked by their relative job worth, but ambiguity increases when we attempt to state what places one job higher than another in the job structure hierarchy. Most job-evaluation plans use responsibility, skill, effort, and working conditions as major criteria, but each of these, in turn, can be broken down into more specific terms. Skill, for example, is “an observable competence to perform a learned psychomotor act (like keyboarding).” But other criteria can and have been used: supervisory controls, complexity, personal contacts, and the physical demands needed.
You should not expect the criteria to be constant across jobs. Because jobs differ, it is traditional to separate them into common groups. For example, production, clerical, sales, professional, and managerial jobs maybe evaluated separately. Treating like groups similarly allows for more valid rankings within categories, but doesn’t necessarily establish the importance of criteria between job categories. Separation by groups may permit HR to say the position of software developer requires more mental effort than that of shipping supervisor, and subsequently receives a higher ranking, but it does not readily resolve whether greater mental effort is necessary for software designers or customer service managers.
Job Evaluation Methods
Three basic methods of job evaluation are currently in use: ordering, classification, and point methods. Let’s review each of these.
Ordering Method The ordering , method (or ranking method) requires a committee—typically composed of both management and employee representatives—to arrange jobs in a simple rank order, from highest to lowest. No attempt is 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 another job with the first two, and so on until all the jobs have been evaluated and ranked.
The most obvious limitation to the ordering method is its sheer unmanageability with numerous jobs. Imagine the difficulty of correctly ranking hundreds or thousands of jobs in an organization. Other drawbacks to consider are the methods subjectivity—no definite or consistent standards by which to justify the rankings—and the fact that because jobs are ranked in order, we cannot know the distance between rankings.
Classification Method The classification method was made popular by the U.S. Civil Service Commission, now the Office of Personnel Management (OPM). The OPM requires that classification grades be established and published in what they call their general schedules. These classifications are created by identifying some common denominator—skills, knowledge, responsibilities—-to create distinct classes or grades of jobs. Examples might include shop jobs, clerical jobs, and sales jobs, depending, of course, on the type of jobs the organization requires.
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 latter action generally requires comparing each positi0n’s job description against the classification description and benchmarked jobs. At the OPM, for example, evaluators have classified both a statistician at the Department of Energy and a chemical engineer at the Environmental Protection Agency as positions at the GS-7 grade, and an electrician at the Department of the Army and an industrial equipment mechanic at the Military District of Washington as positions at the GS-10 grade.
The classification method shares most of the disadvantages of the ordering 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. On the plus side, the classification method has proven itself successful and viable in classifying millions of kinds and levels of civil service jobs.
Point Method HR develops a point method by breaking jobs down into categories such as education, skill, effort, responsibility and working conditions. Points are assigned to each category based on the importance of the criteria to successful performance of the job. Points may be weighted more heavily if increased education, skill or experience are required for the position. Pay grades or ranges are assigned to jobs based on the total number of points.