The 8 Factors

7/29/2019 The 8 Factors

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Deloitte’s job evaluation approach

The 8 Factors

Human Capital



The 8 Factors

Sustaining a culture of continuous learning

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The 8 Factors


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Contents

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The talent crisis is real. Are you ready? 4

Rewards should remain your organisation’s 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

Deloitte’s 8 Factors of job evaluation 13

Which factors matter most to your organisation? 16

Reward your people and organisation 18



The 8 Factors


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The talent crisis is real. Are you ready?

Talent today has evolved from a traditionally HRconcern to a key business issue, ranking highon many CEOs’ and top executives’ prioritylists. Businesses are paying more attention totalent than ever before, and with good reason:the imminent retirement of the baby boomergeneration, coupled with an ageing workforce,mean that organisations already face a braindrain of skills and experience.

Attracting and retaining the right people hasnever been so important. Given the currenttalent shortage, it’s vital to understand the newshape of today’s workforce and design yourtalent management strategy accordingly.

So what’s driving today’s talent market?

Shifting demographics. The global workingpopulation looks dramatically different from

30 years ago, as the proportion of womenand racial/ethnic minorities in the workforcecontinues to rise.

Values and expectations. The first generationto have grown up with the internet has begunto enter the workforce, and they’ve broughttheir major values – flexibility, mobility, andpersonal development – with them. But thosevalues aren’t exclusive to Gen-X or Gen-Y; many

baby boomers and veterans want the samethings their adult children do, causing a shift inworkplace expectations as a whole.

Changing nature of work. Globalisation andtechnology have changed the way people andorganisations communicate, and ultimatelywork. The concept of the virtual workplace hasbecome more and more widespread, resultingin changes to when, where, and how work getsdone.

Supply and demand. The average age ofemployees continues to rise, highlighting theupcoming baby boomer retirement. Knowledgeretention is also an issue, as businesses face adecrease in the number of middle managers.The overall demand for workers is alreadybeginning to exceed supply.

A proactive approach to these trends will keepyou one step ahead in the war for talent.

Are you ready?



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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 employee’s

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-cashincentives•Recognitionprograms•Develop-Deploy-Connect•Culture/environment•Communications•Rewarddelivery/administration•Globalsourcing

•Health/WelfareBenefits•Equity•Perks

•BaseSalary•AnnualCashIncentive•Long-termcashincentive•Annualmeritpay

•Intrinsicrewards•Jobenrichment•Work/lifebalance•Careeradvancement•Feedback•Visionandvalues

•Pension,post-retirement welfareand SupplementalExecutive RetirementPlans



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Rewards should remain your organisation’spriorityWe agree that there exists more than onesolution to talent, and more than one way tocombine them. The trick is finding the rightcombination of solutions for your organisation.

Whatever combination you eventually settle on,one element will always be an integral part of it.

Inthe2008TopFiveTotalRewardsPrioritiesSurvey, employers agreed that Total Rewards

programme plays a crucial role in their criticalworkforce.

Today’s employers are caught between trying tocut reward costs, while improving the ability ofthose rewards to attract, motivate, and retainemployees. At the same time, they face risingcosts of rewards and increased competition fortalent; hence maximising rewards efficiencytakes on added importance. The cost of total

rewards can often exceed 40% of a company’srevenue, but that 40% means nothing if it’s notinvested wisely. Where are those dollars going tomake the biggest difference?

Trying to figure out where to invest can betricky, as total rewards encompass all elementsof the work experience.

So where do you start?

Well, before you can get to where you’re going,you have to find out where you are.

Establish internal equity within your own

organisation first. Make sure you’re committedto the concept of equal work, equal pay; there’sno point in trying to create more value throughyour employees if you don’t know their value tobegin with.

Once you establish internal consistency and geteveryone on the same page, then you can tailoryour rewards programme to better meet youremployees’ needs.



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So how does job evaluation fit into all of this?

Jobevaluation(“JE”)determinestherelativevalue of jobs within an organisation, whichenables you to establish that all-importantinternalequity.Ifyouwanttoput“equalworkequalpay”intopractice,youfirstneedtomakesure that it is equal work.

AnyJEsystemworthitssaltshouldstrikeabalance between art and science. Of course youcan’t fully eliminate subjectivity, but all methods

should use a consistent, systematic approach.RemembertoothataJEevaluatesthecontent,roles, and responsibilities of the job – not thepeople performing it.

Initssimplestform,JEordersjobsbyrank.Ontheotherhand,ananalyticalJEassignsscores to jobs, going beyond simple ranking toquantifying job value.

Effectively, you need the latter to provide a fair,defensible basis for a rewards structure.It’snotenoughtosimplyknowthatonejobhasmore value to your organisation compared toanother; you need to know how much more

value that job holds, and begin to determineyour rewards philosophy from there.



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TheneedforaJEmaybetriggeredinternallyorexternally,byoneorseveralfactors.Here’saquicktesttoseeifyourorganisationwouldrequireJE.(Checkallthatapply.)

Ifyoucheckedoneormoreboxes,thenyoushouldconductJEforyourorganisation.JEmaynotdirectly alleviate some of these triggers; however, it acts as a stepping stone and foundation forsolutions that will.

Take the test

Internal Triggers External Triggers

oEmployee grievances with current rewardspackage

oA need to maximise rewards efficiency

oA need to standardise rewards structure

oAn unexpected or unexplained increasein employee turnover, especially in criticalworkforce segments

oAn unexpected or unexplained decrease inemployee productivity

oSignificant introduction of new job or revisionof existing jobs

oA merger, acquisition, or divestiture

oA significant shift in business model or strategy

oOrganisation redesign / transformation

oIncreasedcompetitionforcriticaltalent

oOrganisation is entering a new market oroffering new services

oSignificant change in competitors’ rewards

packages



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“Theloftiestedificesneedthedeepestfoundations.”--GeorgeSantayana

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

Encompassingthe design ofworkgroupsand individualroles,responsibilities,

accountabilities,competencies,and metricsto enabledeploymentof process,technology, orcompliance-driven change.This helps

to align anindividual’s

job with theorganisation’sobjectives.

OrganisationDesign Comprisingthe design ofthe hierarchy,roles andresponsibilities,competencies,

and metrics ofthe functional/ business unit/ process-drivenstructures.This includesorganisationsizing andstaffingrequirements.

SalaryStructure

Ensuringinternal andexternal equityof the basicsalary, includingthe formulation

of the minimumand maximumpay, midpointand rangedifferential, andoverlappingdegree of thesalary structure,in order toadminister the

orgnisation’spay philosophy.

Job Grading

Determiningthe cleardelineationand number ofgrades withinthe organisation

to form thebasis ofcompensationand benefitsstructure, joblevels andfamilies, andreportinghierarchy.

Career Pathing

Paving thecareer structurefor theorganisation,encompassingshared and

specialisedcompetencies,capabilitydevelopmentplan, leadershipdevelopmentplan, andtraining needsanalysis,in order to

manage thecontinuousprogression ofthe employees.



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Going beyond internal equity

Beyond establishing internal equity for yourrewardsprogramme,thesolidfoundationJEprovides also serves as a stepping stone tomanyotherHRsolutions.Furthermore,JEhasadditional benefits in and of itself for yourorganisation as a whole:

It helps to set and clarify standards. After aJE,youremployeesshouldbeclearontheirownroles and responsibilities, as well as their job’s

relationship to other roles in your organisation.Your HR department should also have a betterunderstanding of everyone’s roles – along withyour organisation’s structure – that allows themto tailor job descriptions, recruitment, andtraining appropriately.

It makes your HR more efficient.AfteraJE,you may realise that you have a lot of peopledoing essentially the same job, except theyall have different titles. You can potentiallyeliminate a lot of redundant job titles anddescriptions, creating a leaner, more efficientorganisation.

It serves as a wake-up call.Issomeone’spaycheck off the charts for the work they do?Or is someone getting underpaid compared toanother person with similar responsibilities? OrperhapswhenparticipatingintheJE,youfoundout that someone is actually working in thatabandonedcubicle(well,theoneyouthoughtwasabandoned).ByconductingaJE,youcanidentify pay anomalies, poor working conditions,or environmental hazards you may not havenoticed otherwise.



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A brief understanding of job evaluation

There are two widely recognised approaches toJE:non-analyticalandanalytical.

Non-analyticalJEsincludejobrankingandwhole job classification, and involve simply ranking jobsaccording to their relative value. This approachhas the advantages of being simple, fast andrelatively inexpensive. However, it does notconsider different compensable factors of a job(forinstance,thephysicaleffortitrequires)and

is more subjective, making it difficult to ensurepay equity compliance.

Incontrast,analyticalJEsuseanumberofcompensable factors that are broadly defined,and assign points to each factor. These includepoint factor rating and weighted point factorcomparison.Therefore,analyticalJEsprovideanobjective, systematic approach to quantifying

job value, ensuring pay equity compliance.

From Deloitte’s point of view, the weightedpoint factor comparison method is an effectivemix of both qualitative and quantitativemeasures, as it:

• Usesanumberofcompensablefactorsthat arebroadlydefined(acompensablefactoris

a job element that is valued by theorganisation and that they are willing to pay

for)

• Assignspointstoeachfactor,whereeachfactor is typically weighted differently withinthe overall framework based on a number ofquantitative and qualitative considerations.

Infact,aweightedpointfactorcomparisoncanbe applied to more than just jobs; you can evencompare apples to oranges!



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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, andproperties when eaten.

These criteria are then further divided into eight specific factors: Texture, Colour, Weight, Size,Taste,Calories,Watercontent,andNutrionalvalue.

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)

Nutritionalvalue(1:Low;9:High)



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Deloitte’s 8 Factors of job evaluation

Similarly, every job has four standard criteria recognised in all pay equity legislation. When makinga pay equity claim, the claimant has to be able to show that his or her job holds equal value toanother one, based on an analysis of these four criteria: Skill, Effort, Responsibility and WorkingConditions.

FactorsAccountant Secretary

Knowledge

Minimumlevelofjobknowledge(skills,expertise,know-howandability)requiredtodothejob.

Interpersonal SkillsJobrequirementsforusinginterpersonal

communication skills. Please consider all forms ofinterpersonal contact.

Physical, Visual and Auditory DemandsDemands placed upon employee that are not

creative or mental job requirements. E.g. manual

dexterity.Complexity

Amount and difficulty of analysis, problem solvingand reasoning required to perform job related duties.

Accountability and Decision MakingLevelofaccountabilityanddecisionmaking

associated with position. E.g. level of work review orsupervision received.

ImpactMeasures impact of the work as a result of activities

performed.

Development and Leadership of OthersDirect accountability for supervision of others.

Environmental Working ConditionsLikelihood,frequency,andseverityofexposureto

undesirable features in the work environment.



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Factors

Knowledge

(1:Basic;8:Extensive)

Interpersonal Skills(1:Verylimited;9:Veryhigh)

Physical, Visual and Auditory Demands(1:Veryminor&lowfrequency;9:Veryhigh&high

frequency)

Complexity(1:Verylimited;9:Extremelyhigh/Verysubstantial)

Accountability and Decision Making(1:Verylimited;9:Extreme)

Impact(1:Verylimited;9:Extreme)

Development and Leadership of Others(1:Guidanceandadvice;9:Multipleandlarge

groupresponsibility)

Environmental Working Conditions(1:Doesnotapply;7:Extremelyadverse/severe&

highfrequency)

Try it!

Skill ResponsibilityEffort Working conditions



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Deloitte’s 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

InterpersonalSkill(IS)

Developmentand

LeadershipofOthers(DLO)

Accountability

and DecisionMaking(ADM) Complexity

Impact

EnvironmentalWorking

Conditions(EWC)

Physical,VisualandAuditoryDemands(PVA)

Skill ResponsibilityEffort Working conditions



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Which factors matter most to yourorganisation?TheoppositepageshowsaJEforanorganisationthatplacesequalweightonalleightfactors.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 job’svalue – 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

Ifthisorganisationconsidersknowledge and complexityespecially crucial to theiremployee productivity, their 8Factors could look like this:

Organisation II

Ifthisorganisationvaluesresponsibility most highly,their 8 Factors could looklike this:

ResponsibilityEffort Working conditions



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Jobevaluation

Organisation Employees

Direct ROIMore effectiveHR processes

Indirect ROI(passedonthroughemployeebenefits).Increasedemployeesatisfactionandproductivity

Investment in JE• Time

•Money• Effort

Benefits for employees• Moreeffectivetotal

rewards programme• Greatertrustand

understanding oforganisation



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Reward your people and organisation

JEgivesyouafoundationforfarmorethanjusttotalrewards.ItstrengthensyourHRfunctionasa whole, directly benefitting the organisation.

However,JE’sdirectROIisjustonepartofit;itbrings just as much value to the table throughyouremployees.AJEanalysisprovidesthefactsyou need to establish internal equity. Fromthere, you can be sure of aligning your rewardsprogramme with pay equity – so everyone gets

rewarded appropriately for the work they do.That increased satisfaction and loyalty getspassed on to your organisation, in the form ofgreater productivity and retention.

NottomentiontheveryactofconductingJEbuilds trust between employer and employee.DoingJEasajointexercisefostersbetterunderstanding of your rewards programme, andthat in turn gives it more credibility.

JEbyitselfwon’tautomaticallysolveyourtalentproblems, increase reward efficiency or maintaininternal equity. But it will give you a greatspringboard from which to do so. A stronger HRfunction, reward efficiency, and higher employeeretention are just a step away.



Contact us

AndrewLee,DirectorHuman Capital Services GroupDeloitte Consulting Malaysia

Tel: +603 7723 6500Fax: +603 7726 3986Email: [email protected]

DeloitteLevel19,Uptown1,1JalanSS21/58,DamansaraUptown47400PetalingJaya,SelangorMalaysia



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The 8 Factors

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