Question

COMPENSATION AND BENEFITS

LP2 Assignment:

Internal Equity and Job Analysis

This assignment will assess the competency 2. Determine the critical aspects pertaining to the internal alignment of compensation polices and techniques. Directions: Write a paper that addresses the following questions: • Define “internal equity” and explain the reason for its existence and its impact on the organization. • What does job analysis have to do with internal alignment? • What is the critical advantage of quantitative approaches over conventional approaches to job analysis? • Why does the process used in the design of the internal pay structure matter? • Discuss the role of the job description in the process of creating an internal compensation structure. Submit this assignment to your instructor via the dropbox "LP2 Assignment: Internal Equity and Job Analysis.” This assignment is worth 50 points.

Answer 1

INTERNAL EQUITY AND REASONS FOR ITS EXISTENSE

a)Internal equity exists when employees in an organization perceive that they are being rewarded fairly according to the relative value of their jobs within an organization.Another way of stating this is to say that a person’s perception of their responsibilities, rewards and work conditions is seen as fair or equitable when compared with those of other employees in similar positions in the same organization. Factors such as skill level, the effort and the responsibility of the role, as well as working conditions are considered. It exist because Employees are concerned with the aspect of internal equity relating to a system of fair pay, benefits and rewards for the work they do. Well-established internal equity programs are motivating to employees, good from a human resources standpoint, and typically make for a better investment for the company.

IMPACT ON ORGANISATION

Internal equity allows the organization to warrant an equal pay among the employees based on the pay scale or performance. The disadvantage of internal equity is the perception of the employees. An employee can perceive that he or she is doing the same job as another employee and should receive the same pay. Perception of employees may differ from the perception of the employers. The employee may feel that his or her individual performance is the same or above in comparison to the employees who are performing. It creates tension and lowers morale within the workplace.

b)JOB ANALYSIS AND INTERNAL ALIGNMENT

It helps ensure that pay decisions are related to identifiable job similarities and differences within an organization. Recognition of job similarities and differences is an important aspect of internal alignment. Jobs are more likely to be described, differentiated, and valued fairly if reliable, accurate information about the jobs are available

c)Quantitative and conventional approach of job analysis

There is dissatisfaction with conventional job analysis, especially with its costs, time consumption, labour and with the difficulty of keeping the information current. They are qualitative techniques only. Work activities represent the primary descriptor in job analysis for job evaluation purposes. However, these data take considerable effort to obtain and are of questionable reliability. It would be desirable to have a standardized quantitative approach of job analysis that retains the advantages of conventional job analysis, while permitting a less costly and time-consuming approach. The results of quantitative approach are more reliable as they are based on real figures.

d) Importance of process used in designing pay structure

The premise underlying internal alignment is that internal

pay structures need to be aligned with the organization’s

business strategy and values, the design of the work flow,

and a concern for the treatment of employees.

The work relationships within a single organization are an important part of internal alignment. Structures that are acceptable to the stakeholders affect satisfaction with pay, thewillingness to seek and accept promotions to more

responsible jobs, and the effort to keep learning and undertake additional training.

The techniques for establishing internally aligned structures

include job analysis, job evaluation, and person based on approaches for skill/competency based plans.These techniques can aid in achieving the objectives of the pay system when they are properly designed and managed.Without them, the pay objectives of improving competitiveness and fairness are more difficult to achieve.