Rainbow Life Insurance Company, based in Toronto, uses a job evaluation system of their own design.

The system is based on five job characteristics: Skill, Mental Effort, Physical Effort, Responsibility and Working Conditions.

For each job characteristic there are four levels, or ‘degrees’. These degrees reflect the amount of knowledge, skills or experience required and, in some cases (e.g., working conditions) a measure of the challenge or difficulties experienced in the working environment (e.g. the level of stress, safety concerns, etc.)

Here, for example, is a portion of the job evaluation table based on their system.

	Degree 1	Degree 2	Degree 3	Degree 4
Skill	50	100	200	300
Mental Effort	60	120	180	?300
Physical Effort	25	50	75	100
Responsibility	60	120	160	200
Working Conditions	20	40	60	100

Please answer the following questions:

1 – What kind of job evaluation system is this? Assuming that the system is based on a maximum allocation of one thousand job evaluation points, what is the point value for degree 4 of the job characteristic ‘Mental Effort’?

2 - What is the job evaluation score for each of the following jobs?

Accountant I: Skill level 2, Mental Effort 2, Physical Effort 2, Responsibility 1, Working Conditions 2

Accountant II: Skill level 3, Mental Effort 3, Physical Effort 2, Responsibility 2, Working Conditions 1

Accountant III: Skill level 4, Mental Effort 3, Physical Effort 2, Responsibility 3, Working Conditions 1

Accounting Manager: Skill level 4, Mental Effort 4, Physical Effort 3, Responsibility 4, Working Conditions 1

The following table contains the current salary of the members of the accounting department of Rainbow Life.

Employee Number	Job Level	Job Evaluation Points	Annual Salary (C$)
1	Accountant I		80,000
2	Accountant I		80,000
3	Accountant I		81,000
4	Accountant I		81,500
5	Accountant I		85,000
6	Accountant I		90,000
7	Accountant I		91,000
8	Accountant I		92,000
9	Accountant I		93,000
10	Accountant I		95,000
11	Accountant I		95,500
12	Accountant II		90,000
13	Accountant II		94,000
14	Accountant II		95,000
15	Accountant II		96,000
16	Accountant II		100,000
17	Accountant II		101,000
18	Accountant II		105,000
19	Accountant II		107,000
20	Accountant II		107,000
21	Accountant II		108,000
22	Accountant II		109,000
23	Accountant III		105,000
24	Accountant III		109,000
25	Accountant III		109,000
26	Accountant III		110,000
27	Accountant III		110,000
28	Accountant III		110,500
29	Accountant III		112,000
30	Accountant III		115,000
31	Accounting Manager		120,000
32	Accounting Manager		127,500

Plot the salary data against the job evaluation points you calculated. The annual salary in dollars is the Y axis, the job evaluation score in points is the X axis.

Calculate a ‘best fit’ salary line and, using that line, develop an equation for converting job evaluation points into an annual salary. (i.e. y = mx + b … where the salary equals y, and the number of job evaluation points equals x).

Using your formula, calculate the average salary that should be paid to a fully competent employee, for a new job at Rainbow Life worth 800 job evaluation points.

3 – Plot the salary data against the four accounting jobs. That is, the annual salary is on the Y axis, each of the four jobs, in increasing order of job level, is on the bottom.

Use this data to create a ‘salary range’ for each job. For each job, recommend a starting salary, a job rate and a maximum salary.

4 – Assume that employees 2,3,4 and 6 are female. Is there a pay equity problem with the job Accountant I?  

5 – Assuming that Rainbow Life wanted to pay their accounting staff, on average, at the 70^th percentile of the average salaries paid by their competition in the Toronto marketplace, how would you validate your salary model (equation) and the salary ranges you’ve established?

Answer rating: 100% (QA)

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