In designing the compensation scheme

Published: 2018-10-30 17:38:19
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The point method of job evaluation

In designing the compensation scheme for the various employees of Territorial Electric, I will employ the point method (Gluck, 2017) of job evaluation. Although point method is a complex technique of job evaluation, I will have to sue it because it can give me more accurate criteria of compensating the staff. In this method, I will have to assign points to the various characteristics of compensation that I am going to use. This includes the level of responsibility of each staff, skill level, the working conditions of the job, and the effort required to accomplish the job. For example, staff who employ advanced skills in their job would receive higher compensation than low-skilled staff. Staff also who holds a lot of responsibilities will earn more than those who have little responsibilities in the workplace. For example, managers would earn more than foremen or supervisors. Employees working conditions also determine the pay. An employee who handles highly risky electrical work such as an electrician would earn more than an employee who is involved with digging the ground where cables would pass. Finally, the effort required to accomplish a job also determines the compensation level. In the case of lower level staff, those who are involved in more difficult assignments would earn slightly higher than those who put a little effort to accomplish their work.

When designing the pay structure, market pricing needs to be factored in. The company aims to attract and retain the best talent in the market. The company also ensures that its employees are compensated within or slightly above the market rates so that they can be motivated. Considering the market price also helps guide the company to ensure that the wages they pay employees are within the legally acceptable rates. The company is involved in profit making business, and by considering the market rates, it puts itself in a position where it can compete well with its rivals. Paying employees too higher than the market rates can easily erode the profit margins or require that the company bid higher than its competitors for the job. Higher bids make the company uncompetitive and may not get any business to do. There are job descriptions for every staff member. The job descriptions will play a key role in the job evaluation. Although the journeymen are the lowest in rank in the organization, there is a slight difference in the compensation scheme for each journeyman based on the working conditions as well as the level of effort required to perform the job. For example, an electrician will earn more than a journeyman who assists the estimator in performing measurements. Table 1 shows the job evaluation for four staff using point method. 

 

Job Title

Skill level

Effort required

Responsibility

Working conditions

Compensation level

Journeyman

low

high

low

bad

very low

Storeman

moderate

low

low

moderate

low

Estimator

high

high

low

bad

high

Project Manager

high

high

high

good

very high

 

Journeyman in the company

Journeyman: In the company, journeymen are employees who have completed their apprenticeship at the electrical trades and other handicrafts that are essential to the company’s operations. They are usually involved in routine work. However, only competent and certified apprentices are hired in the company. The selection process is very thorough, and the company aims to have a pool of journeymen who are very reliable and competent to complete their jobs to the satisfaction of the clients. The company aims to pay them slightly more than the current market price to attract and retain competent journeymen. They do not have a high level of education, and the work they are involved with do not require advanced skills. They just need basic skills to accomplish their jobs. The journeymen also have a little responsibility since they are the lowest in rank in the company. Storeman carries routine jobs of receiving supplies and issuing out materials that are required to perform the job.  Storeman is also involved in stock taking and ensuring that the supplies are delivered on time, and the proper records are kept in store to ensure there is an optimum level of supply at any given time. The store man uses some high level of skill than the journeyman but less than that of a project manager. Furthermore, the skill used by a store man is quite less than that required by a project manager. Both the working conditions and the effort required to do the job is not as high as a store man as to estimator. Furthermore, the current store man has a little overall experience since he joined the company four years ago after having worked with another company as an intern for barely a year. The estimator has a higher level of responsibility than the storeman, requires greater effort to complete a task, employ an almost equivalent level of skills, but sometimes works under dangerous conditions. Additionally, the estimator has accumulated a total of 25 years working for the company. A project manager employs a higher level of skills set in his work and greater responsibility in his job. Although he works in an environment with good working conditions, he puts a lot of effort to ensure that projects are delivered within time, scope, quality, and budget. Furthermore, the current project manager has accumulated a total of 32 years of experience working for the company. There is more than one project manager, and their pay will be slightly different based on their accumulated years of experience and additional qualifications. Based on this information, the project manager will receive the highest compensation followed by the estimator. The journeyman will receive the lowest compensation, but the storeman will receive compensation that is higher than that of a storeman but less that of an estimator. Table 2 show the compensation for a journeyman electrician, estimator, storeman, and project manager for 1st, 2nd, 3ed, and 4th year. 

Job Title

Year-1

Year-2

Year-3

Year-4

Jorneyman

$29

$31

$37

$43

Storeman

$35,750

$39,325

$46,475

$53,625

Estimator

$58,370

$64,207

$75,881

$87,555

Project Manager

$78,910

$86,801

$102,583

$118,365

 

Performance incentive plan

To motivate the employees to do their best, the company will adopt a performance incentive plan that promotes exceptional performance and behavior within a certain period. It is expected that the incentive will result in increased performance as per the research findings of Garber and Konradt (2014).  The performance plan will also be useful for attracting employees to the company as well as encouraging company loyalty among the employees. The performance incentive system that is used for the organization is appropriate for the jobs since each employee’s incentive compensation is tied to their performance. All of the jobs in the organization can be easily measured. It is, therefore, easier to measure whether employee’s performance has met or failed to meet the targets. Table 3 indicates the bonus earned by employees upon achieving various targets. 

Job Title

Year-1

35-50% target

51-75% target

76- 100% target

Jorneyman

$29

$1

$2

$3

Storeman

$35,750

$1,788

$2,145

$3,575

Estimator

$58,370

$2,919

$3,502

$5,837

Project Manager

$78,910

$3,946

$4,735

$7,891

 

References

Gluck, S. (2017). Types of Job Evaluation. Retrieved from: http://smallbusiness.chron.com/types-job-evaluation-2581.html

Garbers, Y., & Konradt, U. (2014). The effect of financial incentives on performance: A quantitative review of individual and teambased financial incentives. Journal of occupational and organizational psychology, 87(1), 102-137.

 

sheldon

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