Start A Compensation Program By Documenting Your Jobs

by on June 26, 2009 · 0 Comment POSTED IN: HR Info Center

Job Documentation Ensures the Compensation Program Matches the Market

The first step in designing a compensation program is to collect job documentation. It is critical that you have documentation of what your jobs are.

The reason for this is what one organization calls an accountant, another organization may call it an accounting clerk and a third organization may call it controller. By looking at job documentations, this allows us to review the duties and responsibilities of the job, rather than merely having our compensation program match based on title alone. The job documentation is what would be used to ensure that our compensation program matches the market.

Job documentation could take a number of formats. The two most common or the single most common would be job descriptions and everybody is familiar with job descriptions. Alternatively, a job analysis questionnaire can be used. The distinction between a job description and a job analysis questionnaire is that a job description tends to describe the job. Using the accountant example, we may have three accountants in our organization and a job description describes all three of them. If however, over time we have three different titles of people who are really all doing accounting. They are all doing the same thing. Or we may have the exact opposite where we have three accountants but they aren’t really doing the same thing.

A job analysis questionnaire looks less on a job by job basis. It actually looks at the duties and responsibilities of each employee. This will allow us to group employees together and confirm, yes these three people that we call accountants are all doing the same thing. And so, we’re going to continue to call them accountant. Or we may say this person has twice the experience of the other two. They’re performing different duties and responsibilities. They’re actually working with management on generating the budgets, where the other two are keeping track of the numbers. And so, we’re going to split that one person out. We’re going to call him a Senior Accountant and put them in a separate grade.

The next step in a compensation program is market pricing. A less fancy term for this is benchmarking. It’s the number one most critical step in this entire process, because the benchmarking data are going to provide the foundation for the rest of our analysis.

Edited Remarks From “How to Set Pay Ranges That are Fair and Effective” by Edward Rataj

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