Reference no: EM133177374

Case Study

"Whether you are an hourly associate or a salaried professional, SERS offers a comprehensive benefits package designed to enhance your work life and your personal life  All of SERS benefits can be accessed online through our employee website so you can easily monitor and manage the details wherever you are - at home, at work, through your mobile device, or anywhere you connect to the Internet."  This is the slogan posted on SERS Selections website but the below excerpt tells a different story after the company's internal compensations package  was thoroughly analyzed.  

Having been in business for over 25 years, SERS has experienced highs and lows in organizational performance. Over  the past years the firm has faced a dramatically changing retail environment from competitors. As a result, SERS increasingly became seen by customers and analysts in their industry as lagging in its strategies.

Even the compensation system at SERS was viewed as archaic in nature, because it emphasized rewarding employees primarily for their length of service. Also,

most promotions were made internally, which created a more static organizational culture. The traditional pay structure at the firm contained many pay grades and was based on job analysis and job evaluations to establish those grades. Its performance review system emphasized employee tenure and effort to a greater degree than performance results.

To respond to the competitive environment, the firm's executives decided that SERS had to become more dynamic and able to change more quickly. One of the changes identified was that a new compensation system was needed. The restructured compensation system that was developed and implemented focused on benchmarking, using pay survey data that specifically matched job responsibilities.

The greatest change was the development of " job banding." These job bands grouped jobs together based on survey data and job responsibilities, which resulted in there being fewer grades with wider ranges. The job bands represented a broad banding approach that was based on benchmark jobs for which market pricing data were available. Jobs for which market data could not be found were analyzed using a job evaluation system. Use of the career bands was designed to identify career paths for employees throughout the company, as well as better link compensation to all of the jobs.

By having job bands, greater flexibility was provided for employees to be rewarded for both current performance and continuing career growth. To support this new compensation system, three conventional pay-level policies were analyzed:  lead, lag, or flexible pay policies.  

The company's internal consistency was analyzed and a hierarchical system was implemented moving away from the egalitarian compensation system. In order to achieve internal consistency, the company's compensation professionals use job analysis and job evaluation.

A new HR Director was hired who implemented flexi work week; overtime wages for employees; stock option purchase after six years of employment with the company .  This new HR Director also added life insurance for  employees family members amongst the non-discretionary  to attract more qualified workers.

Question 1

1. SERS Selections uses  job analysis and job evaluation in reviewing their compensation package. Discuss two differences between job analysis and job evaluation. How do these practices help establish internally consistent job structures?