Essay: Case Job Evaluation, Market Pricing & Pay Structures

Nowadays job evaluation plays an important role in any organization that successfully operates under the tough conditions of the competitive market. It is known that employers go against high turnover rates in their companies and unproductive employees who weaken their business and fail to perform their duties in a proper way.

Moreover, job evaluation establishes a basis for appropriate internal job rankings. Job evaluation gives an opportunity to determine whether this or that job in the organization helps to increase the organization’s productivity, or it should be eliminated.(Hilling, 2003, p.14)

JOB EVALUATION AND MARKET PRICING AT J.C.PENNEY

Job evaluation and market pricing at J.C. Penney are discussed by Donna R. Graebner, who is a compensation director at J.C. Penney, and Kevin A. Seaweard, who is a reward practice leader for Hay Group in one of their articles. It is known that J.C. Penney Company, Inc. is one of the leading American companies which represent a chain of mid-range department stores with headquarters in Texas. There are more than 1100 department stores of J.C. Penney located throughout the United States. It is known that the compensation team at J.C. Penney Company developed a project that completely overhauled J.C. Penney company’s 20-year-old pay program. It was concluded that it was necessary to completely change the company’s business model as well as its work culture in order to take the leading position in the competitive market. So, the company’s HR Management department was focused on hiring the right person for the right position in the company. The authors of the article state that “the company’s performance management tool has been revised and performance ratings are now aligned with business results and objectives”. (Graebner & Seaweard, 2004, para.1) What is more important is that pay was determined by job accountabilities and results, but not by effort and tenure.

The compensation team of the company not only reviewed market and salary surveys, but also it grouped jobs of the company according to their “relative impact on the company”, identified benchmark jobs in the company with the help of line and HR management, and established “a job value based on the “going rate” for jobs”. (Graebner & Seaweard, 2004, para.5)To sum up, job evaluation which was combined with market pricing helped the compensation team of the company to get accurate market data and successfully implement market-based pay ranges.

JOB EVALUATION APPROACH AND ITS STRENGHTS AND DRAWBACKS

Job evaluation approach is the best method used by leading companies in business and industry to value jobs. Laurent Dufetel, the managing director of Hay Group’s Worldwide Compensation Practice, argues that “the strength of job evaluation approach is that it does not ignore the value of pricing or the value of paying for talent; it provides the means to integrate both”. (Duferel, 1991, p.56) Moreover, Duferel states that job evaluation approach is “a powerful managerial tool”. The other strengths of job evaluation approach is that it helps to establish a rational and consistent job structure which is based on the value of each job including complexity and significance and provides a basis for pay-for-performance compensation. Besides, the strength of job evaluation approach is that it provides compliance with federal and state laws and regulations on equal pay. The drawback of job evaluation approach is concluded in the fact that the process of evaluating each job in the organization may be rather complex and require a lot of time. The other drawback is that job evaluation can create “real controversy or political difficulties within the organization” because this approach can reveal the hidden conflicts. (Dufetel, 1991, p.63)

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