You are a newly hired HR professional now working for Jeans, Inc. Jeans does not have a formal wage structure, rate ranges and does not use compensable factors. Wages are basically set on prevailing wages in surrounding communities coupled with some attempt for internal equity among workers.
Jeans does not participate in formal pay surveys. Instead, the President's Assistant routinely looks over online job openings and conducts informal surveys among her friends in local organizations. Jeans has always followed a policy of paying employees about 10% above what the Assistant feels are the prevailing rates. She thinks this reduces turnover and fosters employee loyalty. The practice is to pay men about 20% more than women for the same job. The Assistant explains, "When we hire males, they have families, and they are stronger and can work harder for longer hours."
1. Compare and contrast the following methods of job evaluation: ranking, classification, factor comparison and point method. Which method (if any) do you recommend for the Jeans company? Why?
2. Is the Jeans company to a point where it should set up a formal salary structure based on a complete job evaluation? Why?
3. Is the policy of paying 10% more than the prevailing rates a sound one, and how could it be determined?
4. What would you do now with respect to a pay plan process at Jeans? Why?