Deloittes job evaluation approach

The 8 Factors
Human Capital
The 8 Factors
Sustaining a culture of continuous learning
2
The 8 Factors
Sustaining a culture of continuous learning
3
Contents
Page
The talent crisis is real. Are you ready? 4
Rewards should remain your organisations priority 6
So how does job evaluation fit into all of this? 7
Going beyond internal equity 10
A brief understanding of job evaluation 11
Can we fairly compare apples to oranges? 12
Deloittes 8 Factors of job evaluation 13
Which factors matter most to your organisation? 16
Reward your people and organisation 18
The 8 Factors
Sustaining a culture of continuous learning
4
The talent crisis is real. Are you ready?
Talent today has evolved from a traditionally HR
concern to a key business issue, ranking high
on many CEOs and top executives priority
lists. Businesses are paying more attention to
talent than ever before, and with good reason:
the imminent retirement of the baby boomer
generation, coupled with an ageing workforce,
mean that organisations already face a brain
drain of skills and experience.
Attracting and retaining the right people has
never been so important. Given the current
talent shortage, its vital to understand the new
shape of todays workforce and design your
talent management strategy accordingly.
So whats driving todays talent market?
Shifting demographics. The global working
population looks dramatically different from
30 years ago, as the proportion of women
and racial/ethnic minorities in the workforce
continues to rise.
Values and expectations. The first generation
to have grown up with the internet has begun
to enter the workforce, and theyve brought
their major values flexibility, mobility, and
personal development with them. But those
values arent exclusive to Gen-X or Gen-Y; many
baby boomers and veterans want the same
things their adult children do, causing a shift in
workplace expectations as a whole.
Changing nature of work. Globalisation and
technology have changed the way people and
organisations communicate, and ultimately
work. The concept of the virtual workplace has
become more and more widespread, resulting
in changes to when, where, and how work gets
done.
Supply and demand. The average age of
employees continues to rise, highlighting the
upcoming baby boomer retirement. Knowledge
retention is also an issue, as businesses face a
decrease in the number of middle managers.
The overall demand for workers is already
beginning to exceed supply.
A proactive approach to these trends will keep
you one step ahead in the war for talent.
Are you ready?
The 8 Factors
Sustaining a culture of continuous learning
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In talent management circles, the term Total Rewards includes more
than compensation, benefits and perks. It encompasses all the tangible
and intangible elements of the work experience that affect an employees
on-the-job behaviour, including intangibles such as work/life balance,
corporate culture and opportunities for personal development.
Total rewards
Total compensation
Total cash
Non-cash incentives
Recognition programs
Develop-Deploy-Connect
Culture/environment
Communications
Reward delivery/administration
Global sourcing
Health / Welfare Benefits
Equity
Perks
Base Salary
Annual Cash Incentive
Long-term cash incentive
Annual merit pay
Intrinsic rewards
Job enrichment
Work/life balance
Career advancement
Feedback
Vision and values
Pension, post-
retirement welfare
and Supplemental
Executive Retirement
Plans
The 8 Factors
Sustaining a culture of continuous learning
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Rewards should remain your organisations
priority
We agree that there exists more than one
solution to talent, and more than one way to
combine them. The trick is finding the right
combination of solutions for your organisation.
Whatever combination you eventually settle on,
one element will always be an integral part of it.
In the 2008 Top Five Total Rewards Priorities
Survey, employers agreed that Total Rewards
programme plays a crucial role in their critical
workforce.
Todays employers are caught between trying to
cut reward costs, while improving the ability of
those rewards to attract, motivate, and retain
employees. At the same time, they face rising
costs of rewards and increased competition for
talent; hence maximising rewards efficiency
takes on added importance. The cost of total
rewards can often exceed 40% of a companys
revenue, but that 40% means nothing if its not
invested wisely. Where are those dollars going to
make the biggest difference?
Trying to figure out where to invest can be
tricky, as total rewards encompass all elements
of the work experience.
So where do you start?
Well, before you can get to where youre going,
you have to find out where you are.
Establish internal equity within your own
organisation first. Make sure youre committed
to the concept of equal work, equal pay; theres
no point in trying to create more value through
your employees if you dont know their value to
begin with.
Once you establish internal consistency and get
everyone on the same page, then you can tailor
your rewards programme to better meet your
employees needs.
The 8 Factors
Sustaining a culture of continuous learning
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So how does job evaluation fit into all of this?
Job evaluation (JE) determines the relative
value of jobs within an organisation, which
enables you to establish that all-important
internal equity. If you want to put equal work
equal pay into practice, you first need to make
sure that it is equal work.
Any JE system worth its salt should strike a
balance between art and science. Of course you
cant fully eliminate subjectivity, but all methods
should use a consistent, systematic approach.
Remember too that a JE evaluates the content,
roles, and responsibilities of the job not the
people performing it.
In its simplest form, JE orders jobs by rank.
On the other hand, an analytical JE assigns
scores to jobs, going beyond simple ranking to
quantifying job value.
Effectively, you need the latter to provide a fair,
defensible basis for a rewards structure.
Its not enough to simply know that one job has
more value to your organisation compared to
another; you need to know how much more
value that job holds, and begin to determine
your rewards philosophy from there.
The 8 Factors
Sustaining a culture of continuous learning
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The need for a JE may be triggered internally or externally, by one or several factors. Heres a quick
test to see if your organisation would require JE. (Check all that apply.)
If you checked one or more boxes, then you should conduct JE for your organisation. JE may not
directly alleviate some of these triggers; however, it acts as a stepping stone and foundation for
solutions that will.
Take the test
Internal Triggers External Triggers
o Employee grievances with current rewards
package
o A need to maximise rewards efficiency
o A need to standardise rewards structure
o An unexpected or unexplained increase
in employee turnover, especially in critical
workforce segments
o An unexpected or unexplained decrease in
employee productivity
o Significant introduction of new job or revision
of existing jobs
o A merger, acquisition, or divestiture
o A significant shift in business model or strategy
o Organisation redesign / transformation
o Increased competition for critical talent
o Organisation is entering a new market or
offering new services
o Significant change in competitors rewards
packages
The 8 Factors
Sustaining a culture of continuous learning
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The loftiest edifices need the deepest foundations.-- George Santayana
A well-executed job evaluation lays the groundwork for strong HR
solutions such as Job Design, Organisation Design, Salary Structure, Job
Grading, or Career Pathing.
Job Evaluation
HR Solutions
Job Design
Encompassing
the design of
workgroups
and individual
roles,
responsibilities,
accountabilities,
competencies,
and metrics
to enable
deployment
of process,
technology, or
compliance-
driven change.
This helps
to align an
individuals
job with the
organisations
objectives.
Organisation
Design

Comprising
the design of
the hierarchy,
roles and
responsibilities,
competencies,
and metrics of
the functional/
business unit/
process-driven
structures.
This includes
organisation
sizing and
staffing
requirements.
Salary
Structure
Ensuring
internal and
external equity
of the basic
salary, including
the formulation
of the minimum
and maximum
pay, midpoint
and range
differential, and
overlapping
degree of the
salary structure,
in order to
administer the
orgnisations
pay philosophy.
Job Grading
Determining
the clear
delineation
and number of
grades within
the organisation
to form the
basis of
compensation
and benefits
structure, job
levels and
families, and
reporting
hierarchy.
Career Pathing
Paving the
career structure
for the
organisation,
encompassing
shared and
specialised
competencies,
capability
development
plan, leadership
development
plan, and
training needs
analysis,
in order to
manage the
continuous
progression of
the employees.
The 8 Factors
Sustaining a culture of continuous learning
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Going beyond internal equity
Beyond establishing internal equity for your
rewards programme, the solid foundation JE
provides also serves as a stepping stone to
many other HR solutions. Furthermore, JE has
additional benefits in and of itself for your
organisation as a whole:
It helps to set and clarify standards. After a
JE, your employees should be clear on their own
roles and responsibilities, as well as their jobs
relationship to other roles in your organisation.
Your HR department should also have a better
understanding of everyones roles along with
your organisations structure that allows them
to tailor job descriptions, recruitment, and
training appropriately.
It makes your HR more efficient. After a JE,
you may realise that you have a lot of people
doing essentially the same job, except they
all have different titles. You can potentially
eliminate a lot of redundant job titles and
descriptions, creating a leaner, more efficient
organisation.
It serves as a wake-up call. Is someones
paycheck off the charts for the work they do?
Or is someone getting underpaid compared to
another person with similar responsibilities? Or
perhaps when participating in the JE, you found
out that someone is actually working in that
abandoned cubicle (well, the one you thought
was abandoned). By conducting a JE, you can
identify pay anomalies, poor working conditions,
or environmental hazards you may not have
noticed otherwise.
The 8 Factors
Sustaining a culture of continuous learning
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A brief understanding of job evaluation
There are two widely recognised approaches to
JE: non-analytical and analytical.
Non-analytical JEs include job ranking and whole
job classification, and involve simply ranking jobs
according to their relative value. This approach
has the advantages of being simple, fast and
relatively inexpensive. However, it does not
consider different compensable factors of a job
(for instance, the physical effort it requires) and
is more subjective, making it difficult to ensure
pay equity compliance.
In contrast, analytical JEs use a number of
compensable factors that are broadly defined,
and assign points to each factor. These include
point factor rating and weighted point factor
comparison. Therefore, analytical JEs provide an
objective, systematic approach to quantifying
job value, ensuring pay equity compliance.
From Deloittes point of view, the weighted
point factor comparison method is an effective
mix of both qualitative and quantitative
measures, as it:
Uses a number of compensable factors that
are broadly defined (a compensable factor is
a job element that is valued by the
organisation and that they are willing to pay
for)
Assigns points to each factor, where each
factor is typically weighted differently within
the overall framework based on a number of
quantitative and qualitative considerations.
In fact, a weighted point factor comparison can
be applied to more than just jobs; you can even
compare apples to oranges!
The 8 Factors
Sustaining a culture of continuous learning
12
Can we fairly compare apples to oranges?
We sure can.
As an example, we can compare apples and oranges in two main aspects: physical appearance, and
properties when eaten.
These criteria are then further divided into eight specific factors: Texture, Colour, Weight, Size,
Taste, Calories, Water content, and Nutrional value.
Factors
Appearance
Effect
Apple Orange
Texture
(1: Smooth; 7: Rough)
Colour
(1: Light; 9: Dark)
Weight
(1: Light; 10: Heavy)
Size
(1: Small; 7: Large)
Taste
(1: Sour; 8: Sweet)
Calories
(1: Low; 8: High)
Water content
(1: Low; 8: High)
Nutritional value
(1: Low; 9: High)
The 8 Factors
Sustaining a culture of continuous learning
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Deloittes 8 Factors of job evaluation
Similarly, every job has four standard criteria recognised in all pay equity legislation. When making
a pay equity claim, the claimant has to be able to show that his or her job holds equal value to
another one, based on an analysis of these four criteria: Skill, Effort, Responsibility and Working
Conditions.
Factors Accountant Secretary
Knowledge
Minimum level of job knowledge (skills, expertise,
know-how and ability) required to do the job.
Interpersonal Skills
Job requirements for using interpersonal
communication skills. Please consider all forms of
interpersonal contact.
Physical, Visual and Auditory Demands
Demands placed upon employee that are not
creative or mental job requirements. E.g. manual
dexterity.
Complexity
Amount and difficulty of analysis, problem solving
and reasoning required to perform job related duties.
Accountability and Decision Making
Level of accountability and decision making
associated with position. E.g. level of work review or
supervision received.
Impact
Measures impact of the work as a result of activities
performed.
Development and Leadership of Others
Direct accountability for supervision of others.
Environmental Working Conditions
Likelihood, frequency, and severity of exposure to
undesirable features in the work environment.
The 8 Factors
Sustaining a culture of continuous learning
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Factors
Knowledge
(1: Basic; 8: Extensive)
Interpersonal Skills
(1: Very limited; 9: Very high)
Physical, Visual and Auditory Demands
(1: Very minor & low frequency; 9: Very high & high
frequency)
Complexity
(1: Very limited; 9: Extremely high/Very substantial)
Accountability and Decision Making
(1: Very limited; 9: Extreme)
Impact
(1: Very limited; 9: Extreme)
Development and Leadership of Others
(1: Guidance and advice; 9: Multiple and large
group responsibility)
Environmental Working Conditions
(1: Does not apply; 7: Extremely adverse/severe &
high frequency)
Try it!
Skill Responsibility Effort Working conditions
The 8 Factors
Sustaining a culture of continuous learning
15
Deloittes 8 Factors are developed based on these criteria, providing a
gender-neutral, pay equity compliant tool that is equally applicable to
all positions within an organisation.
The 8 Factors
Knowledge
Interpersonal
Skill (IS)
Development
and
Leadership of
Others (DLO)
Accountability
and Decision
Making (ADM)
Complexity
Impact
Environmental
Working
Conditions
(EWC)
Physical,
Visual and
Auditory
Demands
(PVA)
Skill Responsibility Effort Working conditions
The 8 Factors
Sustaining a culture of continuous learning
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Which factors matter most to your
organisation?
The opposite page shows a JE for an organisation that places equal weight on all eight factors.
However, in practice, every organisation has different needs and priorities.
The 8 Factors are carefully tailored and weighted to give you a more accurate picture of a jobs
value specific to your organisation.
The 8 Factors
The 8 Factors
Knowledge
Knowledge
IS
IS
DLO
DLO
ADM
ADM
Complexity
Complexity
Impact
Impact
EWC
EWC
PVA
PVA
Skill
Organisation I
If this organisation considers
knowledge and complexity
especially crucial to their
employee productivity, their 8
Factors could look like this:
Organisation II
If this organisation values
responsibility most highly,
their 8 Factors could look
like this:
Responsibility Effort Working conditions
The 8 Factors
Sustaining a culture of continuous learning
17
Job evaluation
Organisation Employees
Direct ROI
More effective
HR processes
Indirect ROI
(passed on through employee benefits).
Increased employee satisfaction and productivity
Investment in JE
Time
Money
Effort
Benefits for employees
More effective total
rewards programme
Greater trust and
understanding of
organisation
The 8 Factors
Sustaining a culture of continuous learning
18
Reward your people and organisation
JE gives you a foundation for far more than just
total rewards. It strengthens your HR function as
a whole, directly benefitting the organisation.
However, JEs direct ROI is just one part of it; it
brings just as much value to the table through
your employees. A JE analysis provides the facts
you need to establish internal equity. From
there, you can be sure of aligning your rewards
programme with pay equity so everyone gets
rewarded appropriately for the work they do.
That increased satisfaction and loyalty gets
passed on to your organisation, in the form of
greater productivity and retention.
Not to mention the very act of conducting JE
builds trust between employer and employee.
Doing JE as a joint exercise fosters better
understanding of your rewards programme, and
that in turn gives it more credibility.
JE by itself wont automatically solve your talent
problems, increase reward efficiency or maintain
internal equity. But it will give you a great
springboard from which to do so. A stronger HR
function, reward efficiency, and higher employee
retention are just a step away.
Contact us
Andrew Lee, Director
Human Capital Services Group
Deloitte Consulting Malaysia
Tel: +603 7723 6500
Fax: +603 7726 3986
Email: myHC@deloitte.com
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