Setting remuneration

Job evaluation is a process to set the “size” of a job.

At an interview with the job holder, the skills, complexities and accountabilities are assessed by experienced professionals.

The Authority draws on the Hay Group in evaluating positions for which it sets pay. The Hay system of job evaluation is widely used in the public and private sectors in New Zealand.

Job evaluation allows consistent comparison of different roles. It is designed to ensure that decisions on pay fairly reflect the responsibilities of the job.

Methods to approaching job evaluation

The most common reason for “sizing” a job is to help the organisation benchmark how much it pays for a particular role in order to be sufficiently competitive. There are several approaches to coming up with an answer.

There are job title match surveys, which assume, for example, that all “Marketing Managers” basically do the same things and that there is a single market for these roles.

The second approach is Job Matching - job title plus representative activities in which organisations “Match” their roles to the job that best represents their position, and looks for the size of organisation to get a reasonable comparison.

These two approaches rely on jobs being the same or a close match to the generic, and on other organisations (or the job holder in surveys such as IPENZ and ICANZ) correctly matching to the right position.

The third option is to use a factor based system, such as the Hay method, which looks at the specific content of the job and assesses each aspect against a set of standard scales and descriptions to find the most accurate requirements of the role, when performed to a fully competent standard. It therefore is responsive to organisations that have different combinations of functions or responsibilities within roles.

The resulting job size can then be accurately matched to other jobs of the same size (within or across functional or industry boundaries) or slotted into the appropriate band or grade within an organisation’s pay framework.

The Authority uses the Hay system

The Remuneration Authority uses the latter factor based Hay system.  Job evaluations are carried out independently by the HayGroup.

The Hay system makes judgements in three major areas:

1. Know-how

Know-how, which is the combination of knowledge, skills and experience required for fully acceptable job performance. Know-How is considered in three dimensions:

  1. Practical / technical know-how
  2. Planning, organising & integrating (managerial) knowledge
  3. Communicating & influencing skills

2. Problem solving

Problem solving - The span, complexity and level of analytical, evaluative and innovative thought required in the job - expressed as a utilisation of Know-How. Problem solving is considered in two dimensions:

  1. Thinking environment
  2. Thinking challenge

3. Accountability

Accountability - The scope given to the job holder to direct resources of all kinds and to influence or determine the course of events, and their answerability for the consequences of their decisions and actions on the organisation. Accountability is also considered in three dimensions:

  1. Freedom to Act
  2. Magnitude - Area of Impact
  3. Job Impact

Methods for setting remuneration for elected local authority members

The Authority has separate methods for setting the remuneration of:

  • Mayors and chairs of regional or unitary councils, where remuneration is based on an independent job evaluation.  Remuneration takes into account population and expenses of each authority
  • Councillors, where a base councillor rate is set for each local authority based on the population and expenses of each authority
  • Community board members, where a community board member rate is set for each community based on the community’s population
  • A pool for each local authority, from which additional remuneration for councillor positions of additional responsibility can be met, based on base councillor salary for each authority.  Out of the pool each elected member position of additional responsibility has remuneration set by the Remuneration Authority after consideration of the recommendations of each local authority
  • Auckland City, all Councillors have a set remuneration with additional payment available to reflect additional responsibilities and establishment activities.  A population-based approach sets remuneration for the Chairs and members of local boards.