Time for Change in Pay Plans? – Jean Inc Scenario

Jean Inc Scenario

You are a newly hired HR professional now working for Jeans Inc. Jeans does not have a formal wage structure or rate ranges and does not use compensable factors. Wages are basically set on prevailing wages in surrounding communities coupled with some attempt for internal equity among workers.

Jeans does not participate in formal pay surveys. Instead, the administrative assistant routinely looks over online job openings and conducts informal surveys among her friends in local organizations. Jeans has always followed a policy of paying employees about 10% above what the assistant determines are the prevailing rates. She thinks this reduces turnover and fosters employee loyalty. The practice is to pay men about 20% more than women for the same job. The assistant explains, “When we hire males, they have families, and they are stronger and can work harder for longer hours.”

Discussion Questions

Question 1 – Compare and contrast two job evaluation methods discussed in this module. Which method (if any) do you recommend for Jeans Inc.? Why

There are two methods of job evaluation. They include analytical and non-analytical job evaluation methods. Non-analytical method can comprise of job ranking, number of job evaluation methods that an organization can use to create job ranking in an paired comparison and job classification methods while analytical method include factor comparison, point factor ranking. This paper compares paired comparison ranking non-analytical job evaluation to factor comparison analytical job evaluation method. In the paired comparison ranking, the jobs are compared with one another. In this case the job evaluator tends to determine whether one job is less or more than the other, and give points based on the answer. The summation of the points is done and the ranking is done based on the point each job gets in total against the others. A job higher in ranking then receives more pay compared to a job lower in ranking. Factor comparison on the other hand involves breaking down a job in terms of working conditions,, job, responsibility, hourly rate. A mandatory value is assigned to each job based on the said aspects. This finally provides a rank that should suit each job. The job compensation in the two methods is based on the rank, with the higher ranked jobs getting more compared to the lowly ranked jobs (Timeless TimeHR, 2014). 

Between the two, I would recommend the use of factor comparison method of job compensation in the Jeans Inc. Factor comparison is recommendable because, the measures used to rank the job are quantifiable. One can clearly give factual reasons as to why a certain job is ranked higher than the other. Paired comparison does not clearly states aspects that would make one job ranked higher than the other. A person with different opinion can also give reasons to change the order. Thus, it is not consistent and the criteria used in ranking are not quantifiable.

Question 1 – Should Jeans Inc. set up a formal salary structure based on a complete job evaluation? Why or why not?

I find the current informal salary structure quite logical and manageable. Although it is not formalized the company ensures that their payment system is slightly above the market value which makes it more competitive in its local market. Nevertheless, the system fails in valuing the workers as they should be valued based on the work they do, the skills needed, effort put, and challenges experienced.  A formal pay structure does not only consider the external aspects that influence job payment but also the individual job requirements that make it unique (Course Videos 2015). This compensation system ensures fairness to workers and hence making them to feel valued and appreciated. The system also makes it easy for the company to make workers understand why they have different pays but having well defined criteria for wage evaluation. Thus, other than surpassing the market value, having a formal salary structure ensures every employee gets what she or he truly deserve, an aspect that can assist in enhancing workers retention. 

Question 3 – Is the policy of paying 10% more than the prevailing rates a sound one? If so, how could it be determined? If not,
what do you recommend?

The policy of paying 10% more than the prevailing market rates sounds logical to me. Assuming that the surrounding organizations source workers from the surrounding, then adding 10% of the prevailing salary makes the company more competitive in the market. The soundness of the policy can be determines by evaluating the level of workers turnover in Jeans, Inc compared to other surrounding organization. It can also be determined by evaluating the kind of workers the company attracts in terms of skills, ability, and experience compared to its surrounding competitors. High level of effectiveness can be indicated by presence of the best workers in terms of skills and performance in Jeans Inc.

Question 4 – What would you do now with respect to a pay plan process at Jeans Inc.? Why?

As the new HR of the Jeans Inc., I would develop a new pay structure based on formal job evaluation and to be specific using the factor comparison methods. This will assist in determining which job is more valuable to the organization and which is less valuable. The organization jobs will then be ranked from the highest to the lowest. I will then start determining the salary range in each job. In this case, other factors that include the market, government regulations, and competitiveness in the market will be considered (Phillips & Robinson, 2016). This will give the workers a chance to work hard to increase their salary through adding experience, enhancing performance and sticking to the company to acquire long stay salary increment. This will be done to ensure that the company pays its workers as deserved as per their job specifications and needs. It will also ensure that workers’ wages remain competitive in the market despite their job rank in the organization. This will make it the HR management easy. It will also make it easy for the organization to determine the pay range of any other arising job as per its importance in the organization.

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