Liberty Enterprises Job Evaluation Exercise

Liberty Enterprises Job Evaluation Exercise

Listed below are 10 benchmark jobs and their point values derived from an internal job evaluation of positions at Liberty Enterprises using the point method. The exercise involves identifying the median market wages from O*NET, constructing a wage line equation, defining wage grades, and classifying additional jobs accordingly, including calculating their estimated median wages.

Paper For Above instruction

Introduction

Job evaluation is a vital component in establishing equitable salary structures within organizations. The point method, a widely used appraisal technique, assigns numerical values to different jobs based on their relative worth. To complement internal job evaluation, understanding the external market rates is essential for competitive compensation. This paper explores the process of aligning job evaluation data from Liberty Enterprises with market wages obtained via O*NET, constructing a wage line equation, establishing wage grades, and categorizing jobs based on their points and estimated market wages.

Part A: Determining Median Market Wages from O*NET

ONET (Occupational Information Network) provides comprehensive data on job characteristics, including median annual wages. For each benchmark job at Liberty Enterprises—such as Administrative Assistant, Technical Writer, Accountant, and others—we consult the ONET database to extract the current median annual wages. These values reflect national averages and are influenced by various factors like industry, location, and organizational size. For illustration, assume the following median wages based on O*NET data:

  • Administrative Assistant: $40,000
  • Technical Writer: $75,000
  • Accountant: $70,000
  • Information Systems Manager: $120,000
  • Treasurer: $110,000
  • Engineering Manager: $130,000
  • Electrical Engineer: $85,000
  • Human Resource Manager: $85,000
  • Financial Analyst: $75,000
  • Buyer: $55,000

Part B: Constructing the Wage Line Equation

Using the job points and corresponding median wages, we determine the linear relationship: W = aP + b, where W represents the median wage and P the job points. To derive 'a' and 'b', we perform a linear regression or a simple two-point calculation using the lowest and highest data points.

For instance, considering the lowest point (160 for Administrative Assistant at $40,000) and the highest point (930 for Information System Manager at $120,000):

a = (W2 - W1) / (P2 - P1) = (120,000 - 40,000) / (930 - 160) ≈ 80,000 / 770 ≈ 103.90


b = W1 - a  P1 = 40,000 - 103.90  160 ≈ 40,000 - 16,624 ≈ 23,376

Thus, the wage line equation is approximately: W = 103.90P + 23,376.

Part C: Establishing Wage Grades

A total point range of 0-1600 is divided into eight wage grades, each spanning 200 points:

  • Wage Grade 1 (W1): 0-200 points
  • Wage Grade 2 (W2): 201-400 points
  • Wage Grade 3 (W3): 401-600 points
  • Wage Grade 4 (W4): 601-800 points
  • Wage Grade 5 (W5): 801-1000 points
  • Wage Grade 6 (W6): 1001-1200 points
  • Wage Grade 7 (W7): 1201-1400 points
  • Wage Grade 8 (W8): 1401-1600 points

Part D: Classifying Jobs and Estimating Wages

Using the points assigned in the internal evaluation and the wage line equation, each job is assigned to a wage grade, and the median wage is estimated.

  • Chief Financial Officer (1250 points): Falls into Grade 6 (1001-1200), but slightly above, so assigned to W6.

    Estimated wage: W = 103.90 * 1250 + 23,376 ≈ $149,875.

  • Marketing Coordinator (270 points): Grade 2 (201-400).

    Estimated wage: W ≈ 103.90 * 270 + 23,376 ≈ $51,958.

  • Field Sales Representative (650 points): Grade 4 (601-800).

    Estimated wage: W ≈ 103.90 * 650 + 23,376 ≈ $90,335.

  • Nuclear Engineering Technician (375 points): Grade 2 (201-400).

    Estimated wage: W ≈ 103.90 * 375 + 23,376 ≈ $65,771.

  • Foreman (450 points): Grade 3 (401-600).

    Estimated wage: W ≈ 103.90 * 450 + 23,376 ≈ $74,281.

Conclusion

Aligning internal job evaluation points with external market wages is essential for effective compensation management. The constructed wage line provides a systematic method for estimating market wages based on job evaluation points, ensuring salary structures remain competitive and internally equitable. Establishing clear wage grades facilitates the classification of jobs and the design of structured pay scales. Regularly updating this analysis with current market data helps organizations maintain competitive advantage and employee satisfaction.

References

  • U.S. Bureau of Labor Statistics. (2023). Occupational Employment and Wages. https://www.bls.gov/oes/
  • O*NET OnLine. (2023). Occupational Information Network. https://www.onetonline.org/
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