IEPM Assign 6
IEPM Assign 6
IEPM Assign 6
28. Define Job Evaluation? What are the objectives of it? Explain various
methods of Job Evaluation?
Ans.
A job evaluation is a systematic way of determining the value/worth of a job in relation to
other jobs in an organization. It tries to make a systematic comparison between jobs to
assess their relative worth for establishing a rational pay structure.
(i) It aims at developing a systematic and rational wage structure.
(ii) It aims at establishing consistency between the wage and salary structure adopted within
the firm and that of the other firms.
(iii)Proper job evaluation helps to settle disputes relating to salaries between the employers
and employees and thus helps promoting industrial peace and harmony.
(iv) It discloses characteristics and conditions relating to different jobs which are very helpful
at the time of recruitment.
There are 4 basic methods of job evaluation:
Ranking or job comparison: The ranking method is the simplest form of job evaluation. In
this method, each job is compared with other and this comparison of jobs goes on until all
the jobs have been evaluated and ranked. All jobs are ranked in the order of their importance
from the simplest to the hardest or from the highest to the lowest. The importance of order
of job is judged in terms of duties, responsibilities and demands on the job holder. The jobs
are ranked according to “the whole job” rather than several compensable factors.
Grading or job classification: Grading method is also known as ‘classification method’.
This method of job evaluation was made popular by the U.S. Civil Service Commission.
Under this method, job grades or classes are established by an authorised body or committee
appointed for this purpose. A job grade is defined as a group of different jobs of similar
difficulty or requiring similar skills to perform them. Job grades are determined based on
information derived from job analysis.
Once the grades are established, each job is then placed into its appropriate grade or class
depending on how well its characteristics fit in a grade. In this way, a series of job grades is
created. Then, different wage/salary rate is fixed for each grade.
Points rating: This is the most widely used method of job evaluation. Under this method,
jobs are broken down based on various identifiable factors such as skill, effort, training,
knowledge, hazards, responsibility, etc. Thereafter, points are allocated to each of these
factors.
Weights are given to factors depending on their importance to perform the job. Points so
allocated to various factors of a job are then summed. Then, the jobs with similar total of
points are placed in similar pay grades. The sum of points gives an index of the relative
significance of the jobs that are rated.
Factor comparison method: This method is a combination of both ranking and point
methods in the sense that it rates jobs by comparing them and makes analysis by breaking
jobs into compensable factors. This system is usually used to evaluate white collar,
professional and managerial positions.
29. What is Value? What are various types of it? Explain significance of
Value Engineering? Explain the procedure of Value Engineering?
Ans.
Value is basically the utility associated with a person, product, or a service.
Types of values:
Use value: There are certain characteristics of a product which make it useful for certain
purposes. For example, a book of Cost Accountancy if written for ICWA—Inter students,
has a use value provided it serves the purpose of such category of students. It measures the
quality of performance of a product. Use value may be primary use value, secondary use
value and auxiliary use value.
Primary use value indicates the attributes of a product which are essential for its
performance as engine, steering wheel, and axle in a motor car without which car cannot
run. Secondary use value refers to such devices as bonnet or the mudguard or the
windscreen without which motor car can be driven but these are necessary for the
protection of engine and other parts.
Auxiliary use value is essential for better control and operation as speed meter, electric horn
etc in motor car.
Esteem value: Certain properties of a product do not increase its utility or performance, but
they make it estimable which would induce customers to purchase the product. For example,
a watch with gold cover has esteem value. A rich customer may prefer a watch with gold
cover although a watch with a steel cover may serve the same purpose of keeping time.
Some products may have both use as well as esteem value and yet both may be important.
For example, a fountain pen with a gold-plated body will have both use and esteem value as
it will not only look better but will also last longer.
Cost value: This value is measured in terms of cost involved. In case of a manufacturing
concern it refers to the cost of production of the product produced and if some part of the
product is purchased from outside, it means cost of purchase of that part.
Exchange value: Certain characteristics of a product facilitate its exchange for something
else and what we get is the exchange value of that product. It is equivalent to its sale value.
All these values play an important part in our personal lives, but in value analysis, we are
mainly concerned with use value and to some extent to the esteem value.
All other valued should be subordinated to use value in varying degrees. Value of a product
manufactured for sale is the least amount spent in manufacturing it to create appropriate use
and esteem values. Thus, value analysis seeks to provide the different values required in a
product or service at the least cost without impairing its quality, efficiency, and
attractiveness.
Following points are to be applied when an activity or function decide to do the value
engineering:
a) Value Engineering determines the basic function of an item.
b) Value Engineering evaluating high cost areas and systematically reducing those costs.
c) Value Engineering analyses a problem area and developing alternative ways of resolving
the problem.
d) Value Engineering selects the best possible alternative to perform the basic function at
the lowest cost.
e) Value Engineering presents and promotes a proposal.
f) Value Engineering also simplifies, resulting in increased reliability and ease
of maintenance.
g) Value Engineering extends financial, labor, and material resources.
The steps for Value Analysis process:
Value Analysis is based on the application of a systematic work plan that may be divided in
six steps.
Steps involved in the application of Value Analysis:
i. Orientation/preparation
Identify what is to be analysed. This will typically be one of:
• A manufactured item. This can be anything from a screw to an engine,
although a more complex item is likely to result in a more complex and time-
consuming analysis.
• A process or service. Again, all levels can be analysed, from a hand
assembly process to a complete customer service organisation.
ii. Information
• This may include external customers, such as ‘auto suppliers’ and internal
customers, such as ‘finance manager’.
• Note that external customers are usually more important than internal
customers, and that seniority does not necessarily equate with priority. A
customer’s preference for a product feature should be more important than
the opinion of a senior designer.
iii. Analysis
• In this phase the functions of the product are analysed by Functional Analysis,
which is aimed at identifying functions given by a product or part of it.
• Functions have an importance (weight) and a cost. These costs are
quantified, and this leads to a list of functions ordered by their importance
and value.
• This means that there is an analysis of how each function satisfies customer
needs, and then, an analysis of what the cost of those functions is.
• This phase of Value Analysis may be considered as the key one of the whole
methodology as it represents the translation of needs to functions.
iv. Innovation/creativity
• For this phase it is necessary to use creative techniques that generate
alternatives. Starting from the analysis of functions and costs, there is a
search for means that allow elimination, change or improvement of
components and functions.
• It is important to look for different ways of satisfying the basic functions,
even if it means rejecting the current approach and starting again with a
clean drawing board. This requires the product or process to be ‘mentally
destroyed’ and then rebuild a new one.
v. Evaluation
• It represents a confrontation of ideas, a collection of information about the
feasibility and cost of those ideas and measures the value of the best
alternatives.
• This analysis or evaluation uses the same techniques of value measurement
that have been used in previous steps. At this point an examination is done
about the grade of functional accomplishment and the economic analysis of
those alternatives that offer the higher value. Some of the techniques are
well-known such as Cash-flow analysis and break-even point.
• The team involved in Value Analysis needs an objective analysis of the ideas
generated through the innovation phase. The evaluation phase is carried out
in two main steps:
▪
A qualitative analysis of value regarding objectives in design, cost,
implementation facilities, etc.
▪
A quantitative analysis using numerical techniques of value
measurement that leads to a few alternatives of high value that will
be analysed in depth.
• This process usually involves determining the cost and selects those ideas
that can be practically implemented. This may include work to develop and
refine promising ideas into practical and optimum solutions.
vi. Implementation and monitoring
• In this phase it is necessary to prepare a report that summarizes the work
that has been done, including conclusions and specific proposals.
• It will be also necessary to describe actions plans for implementation, in
which project management techniques would be useful.
• Finally, a plan should be included for monitoring of the actions. This
should be based in the accomplishment of objectives.
The application of Value Analysis only needs to make use of Basic Techniques such as
matrixes, pare to chart, pert and Gantt diagrams, etc., in most of the Value Analysis steps.
30. What are Incentives and its objectives? Explain the steps to implement
an Incentive scheme?
Ans.
An essential part of running a successful small business is motivating employees and finding
ways to make their incentives fall in line with the incentives of the company. Many
companies offer employees special incentives -- such as bonus pay, commissions and fringe
benefits -- with certain goals in mind, such as increasing productivity or morale. The
underlying objective of special incentives is often to boost company profits.
Increasing Productivity
The more work employees accomplish, the more revenue a company is likely to make,
which leads to higher profits. Many incentives that businesses offer to workers revolve
around increasing productivity. For instance, companies often offer commissions to
salespeople, which means the sales staff receives pay based on a certain percentage of the
sales they make. This can motivate salespeople to work harder and make as many sales as
possible. Similarly, companies sometimes offer bonuses at the end of the year to especially
productive workers. This can motivate employees to work harder in the hopes of getting a
bonus.
Improving Safety
In businesses that hire physical laborers, such as manufacturers and building contractors,
worker safety is an important issue. When workers are hurt on the job it can cost employers a
lot of money, both in terms of workers' compensation and lost productivity. Employers can
offer special incentives to workers who promote safety, such as giving out extra
compensation or prizes if workers avoid injuries on the job.
Increasing Morale
Another possible goal of incentives is to improve employee morale. The pay and other benefits
workers receive for doing a job can determine how happy they are with their jobs.
For instance, if a salaried worker puts in hundreds of extra hours of work in a year, a bonus
is a way to make him feel like his extra effort was worthwhile. Workers who feel rewarded
for their efforts are likely to be happier and more loyal to their employers. Increased loyalty
can reduce employee turnover and the costs of having to recruit and train new workers.
Customer Incentive Programs
Businesses can also offer incentive programs to consumers to retain customers, increase
sales and ultimately increase profit. Examples of common types of customer incentive
programs include membership programs that grant customers reduced prices or access to
special deals, and points programs in which customers earn points for purchases that they
can redeem for cash, prizes, or discounts.
The above discussed wage payment methods were based on the time while the wage
payment methods based on the productivity are going to be discussed below:
ii) The production based individual incentive plans are:
Under the production-based incentive plan a standard output is fixed and the workers are
paid based on the production. They are given incentive if they produced more number of
units than the standard fixed. it includes the
a) Taylor’s differential piece rate system: In this plan, Taylor did not give minimum guarantee
to each worker. As per his statement it is possible to calculate standard workload
for every worker based on time and motion studies. He gave two-piece rates for the
workers. The lower rate for average and less efficient workers who produce less than the
standard production and the higher piece rate for the above average or efficient workers.
So, the efficient workers are paid more than the inefficient workers. Standard production =
40 units in a day
Wage rate = between 60 to 70 Rs
If the worker produces 40 units in a day, he will be paid 40* 70= Rs 280
If the worker produces 30 units in a day, he will be paid 30* 60 = Rs
180
As only those who give standard output or more will be paid at Rs 70 and rest will be paid at
Rs 60 only.
Thus, in this method inefficient workers are penalized. Workers are treated like machines
and there is no guarantee of minimum wages in this method.
b) Merrick’s multiple piece rate plan: Under this plan there are three grade piece rate
rather than two given by Taylor.
Workers who produce Less than 83% are paid basic piece rate
Workers who produce between 83%- 100% are paid 110% of basic piece rate
Workers who produce more than 110% paid 120% of basic
Thus, this system is improvement over the Taylor’s plan. But this system also does not give
guarantee minimum wages to the workers. All the workers producing between 1 to 82% of
standard output are considered same and paid at the same piece rate.
c) Gantt’s bonus plan: Under this method minimum wages are guaranteed. If the worker
fails to complete the task within the standard time he receives only the wages for actual
time spent at the specified rate. But if he completes the task within time he gets extra
wages.
Standard time= 10 hours
Rate= Rs 8 per hour
Bonus 25% of the standard time
If the worker finishes his job within 8 hours he will get Rs 80 plus 25% of the day’s wages
i.e. 80*25%=20 that means total Rs 80+20= Rs 100 so he will get bonus for 8 hours work.
2) Group incentive plan: Under this method group bonus is given instead of
individual bonus. The bonus is distributed among all the employees of the organization
on the different basis which are as follows:
a) Priest man’s plan: Under this method Bonus is increased in proportion to increase in
output.
Increased production/standard production*100
b) Profit sharing method: Under this method increased profit is shared among the workers
and management as agreed between both the parties.
c) Scanlon plan: Under this method bonus is paid in proportion to the production 1% bonus
if 1% increases in production.