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

Abstract

  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.  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.