Job Price Compensable Factors and Parameters: The Framework of the Job Evaluation System

Article Information

Title: Job Price Compensable Factors and Parameters: The Framework of the Job Evaluation System

Authors: Shaira Ismail, Azlin Shafinaz Arshad, Nurul Hayani Abd Rahman, Nani Ilyana Shafie

Journal: Sustainable Business and Society in Emerging Economies (SBSEE)

HEC Recognition History

Category	From	To
Y	2024-10-01	2025-12-31
Y	2023-07-01	2024-09-30
Y	2021-07-01	2022-06-30

Publisher: Center for Sustainability Research and Consultancy Pakistan

Country: Pakistan

Year: 2022

Volume: 4

Issue: 4

Language: English

DOI: 10.26710/sbsee.v4i3.2402

Keywords: Job pricingCompensable factorsJob incumbent’s SKAOsEquity pay system and job evaluation method

Abstract

&nbsp;
Purpose: This paper reviews how organizations establish the remuneration system by focusing on job evaluation methods. The goal of these article reviews is to identify the internal and external compensable factors in order to create a win-win situation for both the employer and the employee and to address any inconveniences that may arise regarding wage or pay consistency and equity.
Design/Methodology/Approach: The comprehensive review of the job evaluation methods was conducted to justify its fairness and equality in determining the “right pay for the job”, considering the job incumbents and addressing the internal and external factors.&nbsp; The primary instrument used to construct the pay structure is job evaluation. However, measurement inaccuracy exists in job evaluations as a result of the system's inability to correctly identify the internal and external compensating elements.
Findings: These compensable factors are typically linked to the organization's financial capacity and pay policy, the SKAOs held by job holders, the job tasks, and environmental factors like the local economy, geographic location, rules, regulations, market pricing and more.
Implications/Originality/Value: Compensable factors are essential for figuring out the "appropriate pay" or "right pricing" for specific jobs.

Disclaimer: The following sections are produced through an intensive multi-stage analytical pipeline developed by DefinePK, utilizing advanced natural-language processing, domain-specific knowledge models, and automated cross-referencing systems. Despite the rigor and computational effort involved, the generated summary may still contain inaccuracies or incomplete interpretations. Users are strongly advised to verify all critical information against the original paper and its authoritative sources.

Research Objective

To examine job evaluation methods and analyze how organizations construct compensation systems, identify gaps in the job evaluation process, and compile compensable factors for developing reasonable and equitable remuneration systems.

Methodology

A review of job pricing methods and job evaluation techniques, considering internal and external compensable factors.

Methodology Flowchart

                        graph TD
    A["Review Job Pricing Methods"] --> B["Identify Compensable Factors"];
    B --> C["Categorize Factors"];
    C --> D["Internal Factors"];
    C --> E["External Factors"];
    D --> F["Analyze SKAOs, Duties, Responsibilities"];
    E --> G["Analyze Economic, Government, Market Factors"];
    F --> H["Integrate Factors into Job Evaluation Framework"];
    G --> H;
    H --> I["Develop Equitable Remuneration System"];

Discussion

The article discusses the importance of fairness and equity in pay systems, the limitations of traditional job evaluation methods (like the factor-point system) in considering external market fluctuations, and the impact of government regulations and economic conditions on wages. It highlights the need for a comprehensive job evaluation system that incorporates both internal and external compensable factors to ensure realistic and equitable job pricing.

Key Findings

Internal factors include job holders' SKAOs (Skills, Knowledge, Abilities, Competencies) and job duties/responsibilities. External factors include economic growth rate, geographical location, government wage rulings, and job market competition. Compensable criteria are crucial for determining the "right wage" or "correct pricing" for jobs.

Conclusion

Job evaluation is a systematic process for comparing, grading, and valuing jobs to determine their "price" and establish a pay structure. It is a key component of human resource management that aims to balance internal equity and external competitiveness, aligning HR strategy with business plans. A well-designed job evaluation system can lead to positive working relationships, reduce salary disparities, improve staff retention, and contribute to organizational sustainability, especially during economic challenges.

Fact Check

1. Minimum Wage Increase in Malaysia: The article states that Malaysia's monthly minimum wage increased by 25 percent from 1,200 ringgit (US$273) to 1,500 ringgit (US$341), effective May 1, 2022. This is confirmed by external sources.
2. Unemployment Rate Increase: The text mentions an increase in unemployment rates by 30.1% caused by the pandemic amongst job seekers with tertiary education, from 181,200 to 235,700 in 2020. This aligns with general trends reported during the pandemic.
3. Paterson System: The article refers to the Paterson System as a job evaluation method that uses "Decision Bands." This system is a recognized method in human resource management.

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