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.”
Address the following questions in a 2- to 3-page essay. Support your responses with information from at least 2 reputable sources (library and/or Web-based), and provide the full citation at the end. Use APA format for your references. Share your own personal experiences, readings, and research, where applicable.
1. Select two job evaluation methods that might work well for Jeans. Compare and contrast them. Select one of the methods and justify why you recommend that it be implemented for Jeans Inc.
2. Is the policy of paying 10% more than the prevailing rates a sound one? If so, how should it be determined? If not, what do you recommend?
3. What characteristics of a sound salary structure are needed for Jeans? Why? Justify your answer.
Does the paper fully address all aspects of the assignment? Is the assignment addressed accurately and precisely using sound logic? Does the paper meet minimum length requirements?
· Critical Thinking: Does the paper demonstrate graduate-level analysis, in which information derived from multiple sources, expert opinions, and assumptions has been critically evaluated and synthesized in the formulation of a logical set of conclusions? Does the paper address the topic with sufficient depth of discussion and analysis?
· Business Writing: Are the responses logical, well organized, and well written? Are the grammar, spelling, and vocabulary appropriate for graduate-level work? Are paraphrasing and synthesis of concepts the primary means of responding, or is justification/support instead conveyed through excessive use of direct quotations?
· Effective Use of Information: Does the submission demonstrate that the student has read, understood and can apply the background materials for the module? If required, has the student demonstrated effective research, as evidenced by student’s use of relevant and quality (library?) sources? Do any additional sources used provide strong support for conclusions drawn, and do they help in shaping the overall paper?
Jeans Inc.’s current compensation practices, while well-intentioned, lack the structure and objectivity necessary for long-term success and legal compliance. Relying on informal surveys and gender-based pay disparities creates vulnerabilities related to equity, potential discrimination lawsuits, and an inability to attract and retain top talent. This essay will explore appropriate job evaluation methods, analyze Jeans Inc.’s current compensation policy, and recommend characteristics of a sound salary structure to guide the company toward a more equitable and strategic approach to compensation.
1. Job Evaluation Methods:
Two job evaluation methods that could work well for Jeans Inc., given its current size and operational structure, are the ranking method and the classification method.
Recommendation:
For Jeans Inc., I recommend implementing the classification method as a first step toward a more formalized compensation structure. While the ranking method is simpler, the classification method provides a better framework for future growth. As Jeans Inc. expands, the classification method will provide a more scalable and objective way to evaluate new roles and ensure consistent pay across similar positions. Defining clear job grades and the criteria for each grade will reduce subjectivity and provide a foundation for internal equity.
2. Current Compensation Policy Analysis:
The current policy of paying 10% above “prevailing rates” as determined by informal surveys is problematic for several reasons:
Recommendation:
Jeans Inc. should abandon its current compensation policy immediately. Instead, the company should conduct thorough market research using reputable salary surveys relevant to its industry and geographic location. This data should be used to establish competitive pay ranges for each job grade defined in the classification method. Pay should be based on the job’s value to the organization and the prevailing market rate for similar positions, not on gender or other discriminatory factors.
3. Characteristics of a Sound Salary Structure:
A sound salary structure is essential for attracting, retaining, and motivating employees. For Jeans Inc., the following characteristics are crucial:
By implementing a sound salary structure with these characteristics, Jeans Inc. can create a fair, equitable, and competitive compensation system. This will not only reduce the risk of legal challenges but also enhance the company’s ability to attract and retain qualified employees, fostering a more productive and successful organization.