Question 1. Explain the point method of job evaluation and why it is problematic for firms concerning comparable worth
Job evaluation is a very important and uneasy process. Many companies attempt to evaluate jobs and adjust salaries of their employees based on what other firms pay for similar positions. However, the most effective approach is a point method of job evaluation, and that is why, it is probably the most popular technique among companies (Dessler, 2015). The point method of job evaluation allows defining certain compensable factors and a scale to evaluate each one of them. Thus, it allows evaluating the level of responsibility related to the job, whether or not the employee performs duties and makes decisions on his or her own or collectively with other workers, how much effort or physical work the job presupposes, and so on. After evaluating all these factors and adding the respective points, the HR manager receives figures, allowing the one to estimate the reasonable compensation for the job performed.
However, there are difficulties related to this method as well. In some cases, the point method of job evaluation will put one group of possible employees in a discriminated position as compared to other groups. Thus, to avoid possible cases of discrimination when determining the amount of compensation for the work performed, many companies consider applying a comparable worth evaluation approach, which allows avoiding any manifestation of discrimination against women or other groups when estimating the amount to be paid for the job. However, as a result of this method, employers may incur great expenditures due to raising compensation for positions occupied by women traditionally. To minimize these costs, they will decrease the number of jobs, raising female unemployment automatically (Dessler, 2015). Thus, comparable worth is a two-sided and problematic approach with its pros and cons for both firms and employees.
Question 2. Discuss and provide examples of the two primary ways direct financial payments are made to employees. Compare compensation for managers and professionals with compensation for clerical or production workers
There are two primary ways of providing employees with direct financial payments. These are paying workers for the time they spend at work and another approach based on paying them for their performance. In such a case, the salary of an employee will directly depend on the amount of products they produce or the quality and the level of the work performed. In any case, there need to be some set requirements for meeting which the employee will receive a payment. In many instances, these two approaches are combined. In such a case, an employee will be paid a fixed salary and required to spend a fixed period of time at work. At the same time, there will be a bonus system, which will allow him or her to receive additional payment for the results achieved beyond the requirements, for instance, a fixed amount of money or a fixed percentage for each sale made.
Dessler (2015) particularly underlines that in the majority of cases clerks and workers will be paid on the hourly or daily basis, while the picture is different for managers and professionals. They will be paid on the weekly or monthly basis. Sometimes they receive their salaries yearly. In general, according to Dessler (2015), a direct financial payment is not the only way of encouraging or rather compensating employees for their work and their efforts. There is another one, an indirect method. In this case, employees will be motivated by providing certain non-material benefits. Although this is different from receiving money directly as compensation for the time or performance, in many cases it may appear to be more valuable for the employee. However, direct payments are much more popular with employers as a way of compensating their employees for their work.
Question 3. Explain the equity theory of motivation. Describe the measures managers take to address the various equity issues
As explained by Dessler (2015), the equity theory of motivation consists in the principle that unfair compensation provokes negative emotions in employees and, as a result, negatively influences their motivation. A person who notices that his or her compensation is lower than what other people receive for the same amount of work will be upset with this circumstance and will be less motivated to work. Dessler (2015) also emphasizes that not only underpayment may result in negative motivation. Even overpayment may decrease the performance level of employees in some instances. As stated by Dessler (2015), possible reasons for such a phenomenon may be the feeling of guilt and a number of other emotions related to the overpayment realized by the employee. Thus, it is important to use all tools available to a manager to form a reasonable salary for an employee. Dessler (2015) mentions four types of inequity to be addressed and respectively four types of measures to be taken in order to avoid such an issue. These are external, internal, procedural and individual types of equity. External equity is a payment in one company as compared to that in other companies working in the same field and in the same region. Internal equity stands for the fairness of one job compensation when compared with other jobs within the same company. Individual equity is related to the fairness of compensation considering person’s performance. Lastly, procedural equity is the fairness of applying procedures for calculating compensation for one or another job.
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In order to avoid possible cases of inequity respective measures are taken. For instance, a manager will undertake salary surveys and learn what other companies are paying for similar jobs. In order to ensure that internal equity is maintained within the company, a manager will undertake a job analysis and job evaluation. For the sake of individual equity, performance appraisal is an important measure. In order to avoid procedural inequity, a manager will communicate with employees and find out whether they find their salaries fair and reasonable.