Pay Equity

OBJECTIVE

To investigate the changes required to job descriptions and to develop and implement a flexible, equitable and effective job classification system  for employees.


CRITERIA FOR SUCCESSFUL SYSTEMS

The goals of job classification, compensation, and performance systems are to:

• retain employees
• provide employees with an environment which encourages them to reach their performance potential
• shape employee behaviour so that it supports the strategic and tactical direction
• attract top personnel and skills

In order to achieve these goals Fontanie Associates believes that a comprehensive and integrated system should have the following characteristics:

i) Be fair, consistent and competitive - that compensation levels are competitive with other comparable positions within the industry;

ii) Have internal equity - that employees perceive the systems as equitable on two fronts:

a) job equity i.e. different jobs within the organization be paid according to their respective worth; and
b) employee equity i.e. individuals holding the same jobs within --(the company)--are paid according to the contributions they make.
 

iii) Be cost sensitive - that compensation expenditures are planned and controlled within the budgetary goals of the organization.

iv) Ensure legal compliance - that the systems are consistent with existing legislation in the areas of labour standards, unemployment insurance, pensions, labour relations and occupational health and safety, and in the spirit and intent of pay equity principles in Canada.

v) Meet organizational strategy and climate - that the design of the systems is consistent with overall organizational vision, mission, values and climate.

vi) Be flexible - That the design be sensitive to the rapidly changing nature of the transportation industry, organizational requirements of the 21st century, and human resource requirements such as alternative rewards management.

vii)Be easy to understand and administer - that employees are able to readily understand the concepts underlying the systems so they are perceived as fair and that the policies, processes and procedures are easy to follow and maintain so the systems are kept current.

OUR APPROACH

JOB EVALUATION

Job evaluation is a process which provides a reliable base on which to build a salary structure. It seeks to establish a consistent and systematic relationship among the base compensation rates for all positions within the organization.  The proposed Job Evaluation Plan is designed to determine the relative internal worth.  The measurement of job worth considers only the inherent characteristics and duties of the position. Outside factors like supply and demand of employees, local salary rates, geographic location and ability to pay are not considered in job worth. Thus job evaluation measures the worth of each job to the organization when jobs are compared to each other.

Once the appropriate internal ranking of the jobs has been determined using the proposed Job Evaluation plan, competitive and equitable salary ranges are developed and internal salaries are determined based on:

• job hierarchy
• current compensation data obtained through surveys of the external market
• compensation policies of the organization
• The organization's ability to pay.

Fontanie Associates custom designs job evaluation plans. The plan will use "point factors", in which a rating scale is designed and constructed for each of a series of nine "compensable factors". A compensable factor is a specific characteristic or attribute which is present in varying degrees in all jobs in the organization and which the organization believes it must compensate employees for.  Many organizations in the past have seen the choice of the job evaluation system and the compensable factors as a management right. 

Evaluating jobs in this manner will result in a rank-ordering where the value of the job is defined in terms of value to the company, not on the basis of external factors. This is in keeping with the concept of "equal pay for work of equal value" which underlies human rights and equal pay legislation in Canada.  This legislation requires that four essential criteria - skill, effort, responsibility, and working conditions are incorporated into the job evaluation plan in a manner which is free of gender bias. To reinforce the objectivity of the program, each factor is measured in several ways.

Although we would tailor the job evaluation system to meet organization's needs, our starting framework is the Aitken system which is widely used in Canada and has been tested in human rights cases for reliability and validity.

We suggest nine factors for use in job evaluation:

• knowledge gained by formal education
• knowledge gained by experience
• job complexity /decision making
• supervisory, training and advisory responsibilities
• independence of action
• consequence of error or breach of confidentiality
• interpersonal skill/communication/contacts
• physical skills and effort
• work environment and hazards

The relationship between the legislated criteria and these nine suggested factors is illustrated by the following.
 

Legislated Criteria Plan Factors 1. Skill - Physical Mental - Physical skills and effort - Knowledge gained by formal education - Knowledge gained by experience - Job complexity/decision making 2. Effort - Physical Mental - Physical skills and effort - Job complexity/decision making - Independence of action - Consequence of error or breach of confidentiality 3. Responsibility - Job complexity/decision making - Supervisory, training, and advisory   responsibilities - Independence of action - Consequence of error or breach of confidentiality - Interpersonal skill/communication 4. Working Conditions - Working environment and hazards

                      

These factors will provide the basic uniform justification for establishing the pay rates throughout an organization.  They also provide supervisors and employees a basis for understanding salary level.  Regardless of the compensable factors chosen, it is vital to the success of the Job Evaluation Plan that the method is clearly understood in sufficient detail to allow employees to determine if their jobs were evaluated fairly and that the factor rating process is consistently applied.

For each compensable factor, the organization needs to develop a rating scale. This scale consists of a definition or description of the factor, several "degrees" for the factor (which are descriptions of levels within the factor), and a point value for each degree.

Each job is then be independently considered against each compensable factor using the job descriptions and supporting information collected from employees.  If more information is necessary, the employee and the supervisor may be asked to answer questions regarding job content and analysis.  Each job will then be rated according to the extent the factor is represented in the job. The numerical score for each factor is then added to those of other factors to obtain a measure of the value of the job within the organization.

To ensure a solid understanding of the organization and the position requirements, this entire evaluation process is performed by a Committee. The role of Fontanie Associates would be to educate the committee prior to the start of the formal evaluation process, facilitate discussion, maintain the documentation of discussions and decisions, and explore the implications of the decisions.  Reliable scales and consistent, detailed job descriptions help to prevent trouble and controversy in the committee meetings.  Detailed documentation supporting how the evaluation was made must be retained to effectively deal with employee complaints made either to the organization or to the Human Rights Commission.

EVALUATION COMMITTEE

The selection of Evaluation Committee members is very sensitive. The committee members will be responsible for comparing, understanding, evaluating, and classifying each position.   This is a great undertaking and responsibility. Their role is critically important to employees believing the process is fair and equitable.  They also serve as ambassadors after the new plan is shared with all employees. Therefore, the Committee members need to be seen as reasonable, rationale, knowledgeable about many positions, capable of maintaining confidential information, and widely respected.

We also recommend that members of the evaluation committee do not have any responsibility for negotiating contracts on behalf of either the employees or management.

It is important to understand from the start that there will be disagreement among the committee members as to the worth of the jobs. Discussion, review of job content, and referencing back to previous decisions will help the committee reach a consensus.

JOB EVALUATION INFORMATION

All permanent positions within an organization, including managerial positions, needs to be evaluated and placed in their appropriate location in the salary structure.  To accurately evaluate the value of positions, the Committee will require reliable, accurate, current, and approved written descriptions and analysis of the positions.  These descriptions ensure that dependence on memory or incomplete knowledge is reduced.  All descriptions and analysis should be reviewed and approved by a member of senior management.

Job descriptions alone are not sufficient for evaluation purposes. Each position also requires specific information about the compensable factors. This information is collected through completion of a questionnaire by the employee in conjunction with the immediate supervisor.

COMPENSATION

In establishing compensation (wages and benefits) Fontanie Associates uses "comparable" criteria. This criterion:

• embraces the notion of pay equity
• fits one of the major compensation goals of attracting and retaining employees, and is
• reasonably measurable.

One of the key decisions the company will need to make in applying the comparable wage and benefit criterion will be to determine whether it will lead, match or lag behind the market.

To determine comparable compensation we recommend conducting a custom designed wage and salary survey.  The first step is to select key jobs (benchmarks) - with clearly defined duties, with reasonable stability, and representative of all levels of job worth.  The internal sample will also include positions which have been shown to have over-representation of men or women.

An external sample of firms in the labour market is also chosen. The labour market for different jobs will vary and may be local, provincial, or national in scope. Thus, the committee will assist in deciding which firms should be contacted for which positions. The  external results will be compared against data provided by such sources as Statistics Canada, Labour Canada and the Pay Research Bureau and other sources. 

The data collection procedures used in the wage survey will ensure comparability of information at two levels - jobs and wages. This is achieved by: applying a common job evaluation system for the jobs within the organization and the surveyed jobs; clearly defining wage and benefit terminology, checking assumptions such as hours worked and classification structures; and seeking actual numbers of employees and actual rates of pay.

The results of the survey will measure minimum, maximum, and weighted average rates. A wage-trend line will be constructed based upon the dollar values of jobs and their related points

INVOLVEMENT AND COMMUNICATION

Key to Fontanie Associates Consulting Service process is ensuring mutual ownership by all staff of the classification and compensation systems.  The final realization of job evaluation design is whether the results are accepted as fair and equitable by the employees.  Fundamental to acceptance is participation and communication. Therefore our implementation strategy includes:

1. Consultations with senior management, industry experts and employees to identify changing skill requirements to meet emerging trends.
2. A Job Evaluation Coordinating Committee to oversee the developments of the process. This committee includes representatives from all levels of employees.  The committee should also include people who will have on-going responsibility for the maintenance of the system.
3. Participation of all employees through large and small group sessions, questionnaires and face to face interviews.
4. Active participation of in and out of scope employees for each step of the process.
5. Information to all staff regarding work in progress through information bulletins and regular staff meetings.
6. A mutually agreed to sign-off process for each agreed step.
7. A skills training program for the use and maintenance of the job evaluation and compensation review system
8. Employee group discussions of classification and compensation changes and implications.

PROCESS OVERVIEW

Step 1   Clarify the organizational strategy and design.  This is a process of clearly understanding the organization's vision, mission, values, management style and how it wishes to organize itself to meet its future.

Step 2   Establish and educate the Job Evaluation Committee.  Assign internal project manager for liaison and coordination.

Step 3   Communicate with all employees in either a large group meeting or smaller work unit meetings.  The purpose of the meetings is to increase understanding, gain support, and decrease anxiety. They will focus on why reviews of the job evaluation and compensation systems are necessary; the potential benefits of participating in the review; what exactly   will be done; when the process will be completed; what communication they can expect.  The other important message will be reassurances that people's salaries will not decrease as a result of the review.

Step 4   Decide on the compensable factors and the information to be collected.  In establishing the characteristics for assessing and comparing values of jobs we will ensure agreement on: the degree of measurability, variability and applicability within similar and/or dissimilar job classes.  Our process is sensitive to emerging organizational realities including employee participation, team work, quality improvement methods and rapid technological change

Step 5   Collect Job Information. We involve employees and management in the process of identifying responsibilities, duties, knowledge and skill requirements, decision-making authorities, psycho-social and environmental factors. Because some employees many feel anxious about having their positions evaluated, our techniques include choices of: group discussions, face to face interviews and feed-back driven questionnaires.

Step 6   Evaluate the positions.

Step 7   Agree on pay equity approach.  Two alternative standards are used in establishing "equality" of work performed: job content (equal pay for the same or similar work) and job value (equal pay for work of equal value). We will work with the committee to establish the appropriate approach for the organization.

Step 8   Establish the job ladder.  Determining job hierarchy requires greater flexibility today than in the past.  Bands need to be developed for positions of comparable worth.

Step 9   Survey the market to determine compensation for benchmark positions.

Step 10    Establish compensation line, and develop strategies to bring positions in line and recommend these to senior management.

Step 11    Communicate the changes in compensation to the employees through a series of large groups and work unit meetings.

Step 12    Establish a process for on-going review