- The power of collective bargaining: In countries and organisations where trade
unions are strong, they tend to influence the reward systems. However, with
increasing contract based employment, the power of trade unions in collective
bargaining has decreased. - Demand and supply for labour: Like any other factor of production, when the labour
supply is scarce, it also becomes expensive and hence the employers who can
reward more are the only ones who would be able to recruit and retain. In an ideal
situation, the pay package should strike a balance between the employee and
employer expectations. However, although common sense would dictate that
rational means should be used to reward staff, quite often decisions on rewarding,
particularly in public service, depend on a rule of thumb even if salary commissions
may have been created to advise the government on the pay structure. - Job evaluation: It appears quite logical that fairness in rewarding job should be the
most important concern of employers and employees. The fairness can mostly be
achieved by objective evaluation of the worthiness of a particular job relative to
others and hence reward accordingly. ACAS (1984) has defined job evaluation quite
well saying that it is concerned with assessing the relative demands of different jobs
within an organisation in order to provide the basis for comparing jobs and hence
pay.
There are different job evaluation methods, some of which are highly judgemental while
others are more systematic and rational, although some kind of value judgement is not
easy to eliminate completely (Torrington et al. 2005; Hook & Foot 2008. The most
common job evaluation methods are:
- Job ranking. Comparing the job as whole rather than different aspects of the job. For
example, a job of a senior economist with procurement manager or chief internal
auditor. - Job grading/classification. In this case, jobs are assigned grades e.g. A, B, C etc. by
taking into account key skills, competencies and responsibilities required by the job
to be done effectively. - Grade. A job may be the one with just simple tasks which do not require higher edu-
cation or experience. - Skill-based evaluation. This is a method that grades jobs according to the level of
skills or expertise required in performing those jobs. The method focuses on
individuals and the inputs they are capable of providing. Therefore, skills compared
between different jobs are the main decisive factors in determining the worthiness of
a particular job against another. - Competence Approach (Harris 2005). Measuring the size of jobs by preference to
the level of competence required for the accomplishment of performance and which
include attributes such as:- Ability and willingness,
- Leadership,
- Innovation,
- Creativity,
- Risk taking,
- Team working, and