Question

Explain the factors used in job pricing.

What are compensable factors, and how are they applied in determining pay ranges?

Discuss the point and job content methods, and give an example of how each is applied in determining compensation.

What would you recommend an organization use to define compensation for a customer service representative?

Answer 1

answer-

1- the factors used in job pricing are-

Years of experience and education level
It probably goes without saying, but the more experience and education a candidate has, the higher their expected compensation. So, if you’re hoping to attract job seekers with master’s degrees or more than 5 years’ experience, you need be ready and willing to compensate accordingly.

Industry
Workers with similar, or even the same job title can expect vastly different wages depending on what industry they’re in. There are many reasons for this discrepancy – in some cases their job function may be critical to a particular industry, or it may simply be a matter of one industry being considerably larger than the others.

Location
Cost of living, a major factor to consider when determining compensation, is largely dependent on location and, more specifically, the cost of housing. This is at least partially why salaries in large urban areas are generally higher than salaries for similar positions in more rural locations.  

In-demand skill sets
When it comes to determining compensation, key skills may be an even more reliable metric to compare against than job title. After all, different companies may have very different definitions of the same job title. On top of that, many skill sets can apply to a wide variety of roles – all of which are effectively competing for the same talent. That’s why it’s important for employers to consider the value of key skills when determining compensation.

Supply and demand
It’s crucial to be aware of the availability of relevant talent in the geographic region where you’re recruiting. If you’re recruiting in an area where the demand for a certain skill sets and experience outweighs the supply, you should expect to pay more in order to attract talent.

2- Compensable factors can be simply understood as the criteria used to evaluate a job and on the basis of which salary/wages of the employee is computed. It is like the organization is willing to pay based on certain must have competencies or other eligibility factors. Compensable factors are usually determined and defined based on the values and objectives of the organization.

The Equal Pay Act of 1963 has defined 4 most basic compensable factors: effort, skill, responsibility and working condition .

these compensable factors are experience, education, responsibilities and Mental and physical demands . these are applied to determine pay ranges. for example- a fresher in accounting firm will be paid less or half the employee who has more experience like 3 to 4 years in accounting. also MBA student will be paid more than a BBA student in future jobs.

3-Point-Ranking Method: Under this method, each job’s key factor is identified and then the subfactors are determined. These sub-factors are then assigned the points by its importance.

For example, the key factor to perform a job is skills, and then it can be further classified into sub-factors such as training required, communication skills, social skills, persuasion skills, etc.

The point ranking method is less subjective and is an error free as the rater sees the job from all the perspectives. But however it is a complex method and is time-consuming since the points and wage scale has to be decided for each factor and the sub factors.

A clerk might not need the same level of knowledge or skills and that job's point score might only total 400. From there, the job is graded with the higher-level positions holding a higher grade. The manager might sit at grade 10, while the clerk is at grade four.

Job content Method: Also known as Job-Classification Method.

The classification method creates a grading system for each job. The job position might be generic, such as creative associate, but the person filling this level of competency has specific skills and specific duties. For example, you may advertise the job with pay commensurate with experience and education. The classifications would then break down that experience and education into three levels: level one, level two and level three.

Level three might be the most educated person with a four-year university degree and three years of applicable experience. Level two might have the requirement of a two-year degree and two years of experience. The level one candidate has no degree but has two years of experience in the related job activities.

4- i would recommend organization to use job content or classification method because in this customer service representative should be paid based on education, experience and skills he/she had to address customer's issue and solve them so that customers can be satisfied with work of CR.

*as per HomeworkLib policy, i can answer only one question out of many different questions of same chapter, topic or course. but i tried to answer all.