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WMS Perspective
 Equi-Comp®
- A Modern Job Measurement and Job Pricing System
G. Jonathan Meng, General Partner
INTRODUCTION
For an organization to assure that its
compensation practices are internally equitable, and competitive in the
marketplace, it must have a reliable and valid job measurement system. To
this end, organizations have employed many evaluation techniques over the
years, from simple ranking to complex multifactor comparisons. The simple
approaches seldom work effectively. The complex ones take time and expense
to install and maintain, and are often justly criticized for relying on too
many subjective factors.
CRITERIA FOR AN EFFECTIVE EVALUATION PROCESS
To obtain the maximum utility
from a job evaluation process, a measurement system should have the
following characteristics:
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The system should produce a management process.
It should provide management with a common language for discussing
jobs, quantifying differences of opinion, and a means of achieving a
consensus.
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The measurement process
should be as simple as possible, involving only as many key elements of
job content as are needed to produce sound and equitable job
evaluations.
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The resulting job
evaluations should be readily translated into an internal compensation
structure.
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The compensation
structure should be easily related to the job market in order to
determine relative competitiveness.
THE EQUI-COMP® APPROACH TO JOB EVALUATION
The Equi-Comp® approach
involves the use of four factors on two tables.
Table
1 entitled “Education and Experience” responds to the common sense view that
every job has certain knowledge requirements which can be met through formal
education, work experience, or both. The Table reflects the relationships and
trade-offs that most organizations tend to make. Thus, the Education and
Experience Table has two strengths:
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Rationality: It is reasonable to value the
depth of training and the length of work-related experience required in a
job. As the requirement along either of the two factors increases, so does
the point value of the job.
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Common Practice: Most organizations and employees accept valuing jobs in
these terms, and in fact do so.
Management committees find it quite simple to evaluate positions on the
Education and Experience Table. These committees readily pick a knowledge level
that assures an acceptable performance level after an appropriate time in the
position.
Table
II, entitled “Impact,” responds to the widely held and rational view that there
are two criteria for measuring the managerial side of a job.
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Where a job fits into the management
hierarchy in terms of authority level.
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What percentage of the organization it affects as it exercises its authority
or influence.
Because organizations vary
greatly in size, complexity and in job titling practices, any table
custom-tailored to one is unlikely to be appropriate to another. The Equi-Comp®
approach eliminates this difficulty by utilizing criteria with universal
application. Titles or definitions are placed on the Impact Table after
identifying the various relationships found in a specific organization.
The
“influence” factor utilizes the percentage of total organization dollars,
rather than absolute dollars, as the measurement criterion. This precludes the
necessity of modifying the Table as the organization grows or shrinks or the
value of the dollar changes. Total job size is then determined by adding the
values obtained from Tables I and II.
LINE
VS. STAFF JOBS
Tradition has dictated
that in most organizations production and sales jobs are considered to be
“line,” i.e., having a major effect upon overall results. Accounting,
research, personnel, etc., jobs are viewed as being supportive of the main
effort and so are characterized as “staff”. In practice, many jobs are difficult to categorize in this manner. The
Equi-Comp® system allows for the modern emphasis of many staff jobs, and
committees have little trouble in quickly arriving at point evaluations
which satisfy their sense of correctness for the weighted ranking of all
positions as these positions function in that particular client
organization.
THE EQUI-COMP® APPROACH TO JOB PRICING
Two elements must be considered in job pricing:
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Internal job relationships
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Competitive job pricing
Internal relationships are
established by the points adopted for each job.
External relationships are
determined by relating company evaluation points to an appropriate external job
market.
The CEO represents the high point of a company
salary line and is compared to CEO’s of other companies of the same size,
complexity, and degree of operating autonomy. Our data bank of over 1,000 CEO
salaries permits us to make these comparisons. The entry level exempt
position represents the low point of a company salary line and is easily
determined from our own data bank as well as many specialized data banks to
which WMS subscribes.
To determine the slope and/or shape of the line
between these two points, benchmark jobs representative of the major functional
areas and the management levels of the company are compared to the marketplace.
In those instances in which comparisons with specific companies are desired, WMS
designs and conducts special compensation surveys.
Use of this approach, in
conjunction with determining how competitive a company wishes to become, allows
a salary policy to be established. Each position can then have its own salary
range or a grade structure can be developed.
CONCLUSION
WMS and Company, Inc. believes that a simplified
factor comparison method of job evaluation, when combined with market pricing,
offers the best opportunity for an organization to obtain an equitable and
competitive compensation program in an expeditious and economical fashion. In
most cases, the greatest cost element in installing and maintaining a
compensation program is the “hidden” cost of the internal management time
involved in the process. The Equi-Comp® Job Measurement and Pricing System
minimizes these costs and therefore is both economical to install and maintain.
For More Information Contact:
WMS and Company, Inc.
20128 Valley Forge Circle, King of Prussia, PA 19406
Tel: PA: 610-783-7733 CO: 720-890-1528
Fax: PA: 610-783-6591 CO: 720-890-1529
Internet:
info@wms-wms.com
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