Bases for Pay Systems

Discuss the steps involved in building internally consistent compensation systems.
Two key processes are at the heart of building an internally consistent compensation system for an organization. The first process is job analysis which is the process of determining, in detail, what a given job consists of. The job analysis assists with being consistent and fair in many areas. Detailing the responsibilities and duties of a given position also assists an organization in developing job descriptions, training, minimum qualifications, work environment, and many other vital aspects of a given job. The job analysis process collects information about each given job in an organization through several different ways. The organization will first want to determine what kind of analysis is best for them and who the best people are to perform the job analysis. Once this is done, the analysts should go through a research period to learn what is relevant for analyzing each given job and then begin the process of the job analysis. After the analysis is completed the information that is gathered will be used to write job descriptions. The job description should include the title, a brief summary, a description of duties, and the qualifications for the given position. The second key step in creating a consistent compensation system is the job evaluation process. Job evaluation is used to assign each job a given rank within the organization from the highest to lowest in terms of the value of each job (not the people performing the jobs). There are several different methods that can be used for job evaluation. The organization just needs to decide which process will work best for them. Once the job evaluations are completed and each job is given a rank, those ranks can be used to begin determining the pay scales for the organization.