IS IT THE JOB OR THE PERSON THAT DETERMINES PAY?
Throughout 2011, I have frequently been asked this question. Just this month two TSG members asked me about paying for the job versus paying for the person in the role. And, during a Human Resources Director Group meeting last month, someone asked the same question.
I told the 50 attendees at the meeting I would address the question in the next newsletter. Since I publically committed, this month I’ll answer the question: Is it the job or the person that determines pay?
While most organizations use some form of job evaluation to determine the worth of jobs, there are many factors to consider when valuing work. There are internal factors such as being fair and consistent with how employees are compensated.
Organizations typically use the following techniques to measure the job's value:
- Perform job analysis to collect information about jobs
- Develop job descriptions that describe the work being performed
- Place jobs into a structure or hierarchy based on job content, skills required and contribution to the organization
Equally important are the external factors, namely measuring the marketplace to determine the market value of the job. To pay competitively in the marketplace organizations use salary surveys to market price their jobs. Using credible market data is crucial in attracting and retaining good employees.
Using internal job evaluation and external market pricing helps organizations determine what to pay the job, but what impact does the person have on his or her pay?
Focusing on the person means looking at the individual worth of each employee or potential employee. To place a value on an employee’s performance there are several key factors to consider:
- Performance of the employee against the standards for the job
- Contribution to the organization
- Skills and competencies
- Potential
- Length of service
In short, the answer to the question is most organizations pay for both the job and the person.
Have a safe and Happy New Year! I look forward to answering your compensation questions in 2012 (although maybe not having to write an article each month...).
