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07/22/2015

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I love it! I suffered thru 4 years of Hay and that changed my opinion for life. As a Comp Analyst I was asked about 5 times a day to change an evaluation because Johnny or Susie had added a HUGE responsibility to their job. And that was worth at least 5-6 points right? Ha!

I have been a strong market pricing supporter ever since. Seriously though I worked in//with high tech all my life and companies that move fast just don't have the patience to spend hours evaluating jobs especially since the criteria is usually so generic. Plus once it gets all settled, business changes and . . here you go again.

Given the "business-strategy-on-demand" that is going on today where companies have LT strategies for only 1-2 years --- and critical jobs are so . . well critical---- I see the value of differentiating pay. You can say that's a form of job evaluation. So be it --- to me it's a simple matter of defining the business strategy which identifies the critical jobs --- not all jobs. Bump up their pay -- pay them at a higher market position.

For the rest of the jobs (non-critical) the market is what you have to pay to hire people and retain them. That's it.

Just remembered a true story about the company where I worked with the Hay system.

I was walking from the parking lot into the building one morning when I overheard a couple of employees talking. One of them pointed to a gold Mercedes (the head of HR's car) and said: "He must have a lot of Hay points." LOL!

Market pricing has lost some credibility, as employees and managers have access to market pricing services on the internet for individual jobs on the web, which you didn't note.

You also failed to note that job evaluation systems, such as Hay, do have the input of line management when evaluating jobs.

Your comparison between market pricing and job evaluation is not completely accurate.

One of the main limitations for opinion posts like those you see on Compensation Cafe is that authors have only so many words they can use. The point is to be brief. So when someone responds with, "You didn't mention X," or "You failed to note Y" it's a bit frustrating. We're not Moses coming down from the Mount with the tablets, laying down the complete law of the land. We only have space for the key commandments, not all of them.

That being said, I must agree to disagree with Harold. When using Hay (or any evaluation system)the "input of line management" is the job description. Is that what I failed to mention? Anything else is part of an individual company process.

I also continue to believe that internet market pricing services have yet to evolve to a state where they have left their problems with data collection methodology, data cleansing and employee self-reporting behind them. In my experience (another subjective qualifier) senior management still does not want to hear from what they consider questionable sources.

Although you both have made valid points, I would have to agree that the comparison has a bias towards market pricing. And the reasons for not including the points raised by Harold are weak at best, especially one about the lack of space here to include them. With all due respect, Moses, you have to step up your game to have more credibility.

I agree with Chuck's assessments. Having consulted on comp design for small to mid-sized closely held businesses for over 25 years, the job evaluation process is redundant, confusing, and does not yield sufficiently useful results to justify the time and cost. I find that public sector employers still want to use it though (even if not required to), as a 'failsafe' which, of course, it is not. There is always subjectivity involved - we are trying to work through a reasoned process and make reasonable decisions based on the imperfect information available at the time. That's management, and applies to any business decision, not just compensation. AND I agree that the current self-reporting salary sources are suspect, especially having just 'run the numbers' on a position I know a lot about in our local area. It was woefully incorrect, as in $25 vs. $33/hr., so significantly LOW. We would have been laughed out of the client's if we had used that info. "The Market" isn't perfect, but it's more reliable than a point factor system in my opinion. Point factor may validly predict internal job relationships, but it lacks market reliability. It's not a perfect world, which is of course what makes it so interesting!

Job evaluation perfection is as problematic as market pricing perfection. Neither process is precise and both involve subjective decisions. Statistical market reliability actually can be measured via advanced validated customized point-factor (PF) systems which predict current market dollars for benchmarks, thus solving a lot of issues. But such "perfect systems" just create more issues, because the weights and values that "work right" today (just like the original 1948 Hay Points) will need to change in unpredictable ways in future years to properly track exact current external competitive rates in a particular occupation, industry, location, etc.

Continually revalidating a PF system is simply too much trouble for most employers, so the majority either wriggle with the ever-flexing external market or impose internal equity rules around traditional practices as long as it permits them to get and keep competent help.

Great points were made by all commenters. I would add that many traditional job evaluation plans hinge on review committees that include powerful insiders. Line managers almost always have major input.

Remember that reality creates implacable rules. Job pay values that ignore either open market norms or internal equity customs eventually get changed. Ours remains an art, no matter how much science we attempt to build into it, I fear.

I have an anecdote from my own recent experience regarding market pricing services freely available on the internet that highlights the problems they still have with reliability.

An employee went to one of these sites, input their job title, years of experience and location. The resulting median pay was substantially higher that what they were currently earning, so naturally they confronted their boss with a screenshot of the results.

The boss then came to HR for help rather than just put in the request for an increase (rather refreshing, right?). I went to the same site and input the same information the employee had, and got the same result. The employee was a Senior something-or-other, and had used the standard abbreviation for it in their query. I re-did the query, only this time I spelled out the word "Senior", leaving everything else as the employee had input.

The result? "Market" median pay that was $20k less than what the employee had presented to their boss.

Great piece.
For anyone who has spent considerable time in the hazardous halls and alleys of traditional job evaluation, and actually evaluated jobs in the field (and not just from a desk), a little real exposure to modern job evaluation practice, including market-referenced job pricing (I still don't like the popular misnomer 'market pricing') brings a quick realization that the traditional methods are, bluntly put, lots of time wasted in more and more mindless muddling and meddling in things of less and less importance in today's world. But some sectors and people (often those in relatively traditional modes) need these methods to support their focus and/or legacy investments: often anchored around themes of regulatory compliance with special emphasis on INTERNAL equity, maintaining status quo / stability, etc.

I do like detailed job / role analysis outputs (e.g. structured role profiles, descriptions, etc.) that allow us to define TDRs, KSAs, and related dimensions in great detail (never mind those thin summaries we see for some benchmark jobs), and preferably in more strategic terms aligned with the primary Key Result areas of the business/organization. These detailed outputs help in making appropriate Job Matches - and in specifying degrees of the match for the same – relative to nature or work, level of work, etc. Very good job matching is essential for meaningful job comparisons (internal or external), and pricing. On these accounts, many of those (mostly) FREE internet-based surveys are quite problematic and inadequate. They may be cheap (or FREE), but that is what you get: cheap stuff of seriously doubtful vintage and value.

Very often, high-level and 'hot' jobs require more external comparisons for meaningful placement in a pay structure (or the payment of special premiums and / or differentials to make up for failure of inflexible structures based on traditional Job Evaluation).

The practice of well-founded, sustainable adjustments or alignments (some people may misinterpret 'massaging' for something mythical and mysterious) to data is one area that distinguishes true rewards professionals from .... shall we say, mechanical operators. I see the following kinds in Chuck's examples:
- Technical Adjustments or alignments;
- Policy Line Adjustments or alignments;
- (Organization) Structural Adjustments or alignments;
- Special/internal/Strategic Adjustments or alignments.

For me the fun AND real contribution to the practice of rewards comes not so much from having and following relatively rigid rules (which attempt or tend to reduce us into fungible, rule-bound mechanics) as it is in developing unique but sustainable solutions in the face of complex factors in the company's environment: solutions that do not come from simply copying others, or from accepting that there is only one best way.

Traditional job evaluation may work for some people and sectors, but market-referenced job pricing is in for now (and by that I do NOT include internet-based, mostly FREE salary surveys). For those who try transferring relatively rigid mind-sets of the former to the more flexible latter world, life may be particularly troublesome.

Thanks once again, Chuck.

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