Along with market forces and principles of fairness, organizations consider the relative contribution each job should make to the organization's overall performance. In general, an organization's top executives have a great impact on the organization's performance, so they tend to be paid much more than entry level workers. Creation of a pay structure requires that the organization develop an internal structure showing the relative contribution of its various jobs.
To conduct a job evaluation, the committee identifies each job's compensable factors, meaning the characteristics of a job that the organization values and chooses to pay for. Other compensable factors might include working conditions and responsibility, based on the job attributes defined by job analysis, the jobs are rated for each factor. Job evaluation provides the basis for decisions about relative internal worth, that is, value of the job within the organization. The firm may limit its pay survey to jobs evaluated as key jobs. These are jobs that have relatively stable content and are common among many organizations, so it is possible to obtain survey data about what people earn in these jobs. Organizations can make the process of creating a pay structure more practical by defining key jobs.
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