Pay Equity in Smaller Establishments

Section 11 of the Canadian Human Rights Act does not provide an exemption from pay equity provisions based on the size of the employer. It is important for smaller employers to become more aware of their pay equity obligations.

A high percentage of women in the federally-regulated private sector work in small establishments where average wages may be lower. Specific issues often arise for employers implementing pay equity in smaller establishments. These issues are different from those encountered in larger organizations for several reasons. Small establishments:

  • often do not have formal compensation systems;
  • often have predominantly male or predominantly female staff;
  • may not have the resources to implement pay equity;
  • often do not have formal job descriptions;
  • may have too few male comparator positions; and
  • may have positions where the value points are tightly clustered, leading to unreliable wage estimates.

To meet legislative pay equity requirements, most large- and medium sized employers use relatively sophisticated job evaluation systems that are often too complex for smaller employers. Simpler systems that still allow for a methodical and reliable evaluation of the relative worth of jobs exist for smaller employers. For example, a small employer may choose to use a sample ranking method job evaluation plan that considers the four factors (skill, effort, responsibility and working conditions) required by the Canadian Human Rights Act.

Sample Ranking Method for Small Employers

The Canadian Human Rights Act and Part III of the Canada Labour Code require that women and men be paid equal wages for work of equal value. This means that jobs must be compared to each other to determine their relative worth. However, job evaluation systems for larger employers can be quite complex.

Simpler systems that still allow for a methodical and reliable evaluation of the relative worth of jobs exist for smaller employers. For example, a small employer may choose to use a ranking method of job evaluation that considers the four factors (skill, effort, responsibility and working conditions) required by the Act.

One sub-type of the ranking method is the paired comparison method. Paired comparison is a simple system that permits an employer to review each job and establish its relative value in comparison to all other jobs, based on each of the four factors.

If there are too many job comparisons, this system becomes complex and unwieldy. It is only appropriate for smaller establishments or occupational groups with fewer than 15 distinct jobs.

A job is a collection of duties and responsibilities. Some jobs are unique to one individual employee, for example the Controller, while other distinct jobs are occupied by a number of individual employees, such as Accounting Clerk or Welder. Most companies have more employees than they have distinct jobs. For example, a trucking firm may have 45 truck drivers and 8 diesel mechanics; 53 people occupying 2 distinct jobs.

Pay equity requires that all jobs within an employer's establishment be compared using four factors:

  • Skill: The intellectual and physical qualifications required to do the job, acquired by experience, training, education or natural ability.
  • Effort: The intellectual and physical effort required to do the job.
  • Responsibility: The extent to which the employee is responsible for technical, financial and human resources.
  • Working Conditions: The physical and psychological work environment required to do the job, including noise, work accommodations, temperature, isolation, physical danger, health hazards and stress.

The basic tools required for this evaluation are job descriptions or questionnaires. They provide a way to objectively and systematically gather information on jobs and objectively review job specifications.

Job descriptions do not need to be long and complicated documents. Some employment situations will require only simple statements based on the four factors. Remember that the descriptions and analyses are based on the jobs, not the people who are in the jobs.

Ranking method

A) Analysis

Paired comparison is a simple system that allows an employer to review each distinct job and establish its comparative value in each of the four factors. In this system, jobs are compared as follows:

For an employer assessing four distinct jobs, the job with the greatest value to the establishment is determined by comparing the four jobs as follows:

Responsibility

Job A vs. Job B

Job A vs. Job C

Job A vs. Job D

Job B vs. Job C (The comparison of Jobs A and Job B was done above)

Job B vs. Job D

Job C vs. Job D (The comparisons of Jobs C and Jobs A and B were done above)

In all, these four distinct jobs require six comparisons for the responsibility factor. The same steps are repeated for the three other factors, for a total of 24 individual comparisons.

To determine the number of comparisons needed, the following formula can be applied:

x = (n(n-1)÷2)m

x = number of comparisons

n = number of distinct jobs

m = number of factors (4)

For example, if we have 15 distinct jobs, the number of comparison would be 420:

(15×14÷2) × 4=420 comparisons

In an establishment where there are 20 jobs, paired comparison can become unwieldy as this would require 760 comparisons. It is advisable to use this method with 15 or fewer distinct jobs.

There are many tools that an employer could use to help in the comparison of distinct jobs. The method that is easiest to follow and simplest to administer is a system based on a simple chart that allows the evaluators:

  • to view each job in relation to the others being compared,
  • to compare the relative value of each,
  • to chart the results of the analysis, and
  • to see the number of times a particular job is considered the most valuable in these comparisons.

Using the same example of four distinct job assessments, the chart could look like the following one:

1. Responsibility
Table of Responsibility
Job A Job B Job C Job D Total
Job A X

(Job A cannot be compared to itself)
A

(Job A is more important than Job B)
C

(Job C is more important than Job A)
A

(Job A is more important than Job D
2

(The number of times that Job A has been identified in this chart as being the more important job under the responsibility factor)
Job B X

(Job B was compared to Job A above)
X

(Job B cannot be compared to itself)
C

(Job C is more important than Job B)
D

(Job D is more important than Job B)
0

(The number of times that Job B has been identified in this chart as being the more important job in the responsibility factor)
Job C X

(Job C was compared to Job A above)
X

(Job C was compared to Job B above)
X

(Job C cannot be compared to itself)
C

(Job C was more important than Job D)
3

(The number of times that Job C has been identified in this chart as being the more important job in the responsibility factor)
Job D X

(Job D was compared to Job A above)
X

(Job D was compared to Job B above)
X

(Job D was compared to Job C above)
X

(Job D cannot be compared to itself)
1

(The number of times that Job D has been identified in this chart as being the more important job in the responsibility factor)

In the "Responsibility" factor, the chart shows that Job C was chosen as the most important or valuable three times, while Job A was chosen twice, Job D once, and Job B was not chosen.

2. Skill
Table of Skill
Job A Job B Job C Job D Total
Job A X A C A 2
Job B X X C D 0
Job C X X X C 3
Job D X X X X 1
3. Effort
Table of Effort
Job A Job B Job C Job D Total
Job A X B A B 1
Job B X X B B 4
Job C X X X D 0
Job D X X X X 1
4. Working Conditions
Table of working conditions
Job A Job B Job C Job D Total
Job A X B D B 0
Job B X X B B 4
Job C X X X D 0
Job D X X X X 2
Second Chart

A simple way to summarize the review is to create a second chart:

Second Chart
Job A Job B Job C Job D
Responsibility 2 0 3 1
Skill 2 0 3 1
Effort 1 4 0 1
Working

Conditions
0 4 0 2
Totals 5 8 6 5

Job B was chosen eight times and Job C, six times, while Jobs A and B were each chosen five times. This method of analysis allows the employer to see the relative strengths of each job and easily keep track of the results. It also shows that, even though there are 24 individual comparisons, each job comparison is fair and the task is not very complicated.

This is the first step of the process. The "raw" numbers above now have to be refined.

B) Weighting

The next step is to set each factor's relative importance to the employer. This is called "weighting."

In most cases, working conditions and responsibility do not have the same value for an organization, and skill will usually be more important than effort. The first step is to put the factors in order of importance to the employer. This exercise could result in the following priority list:

  1. Skill
  2. Responsibility
  3. Effort
  4. Working Conditions

Next, the employer must consider the relative value of each factor. This is probably the most important decision the employer has to make.

The easiest way to do this is to record the values in the form of a percentage. For the above example, a review of the employer's work and business requirements could result in the following weights:

  1. Skill 40%
  2. Responsibility 30%
  3. Effort 20%
  4. Working Conditions 10%

C) Value

Once an employer has established the ranking and the weights for each factor, the "value" of each job can be determined. There are a number of methods available to do this, but the simplest is to multiply the total by the weight.

This method can be applied to the chart as follows:

1. Skill
Skill Chart
Job A Job B Job C Job D Total Weight Points
Job A X A C A 2 40 80

(2×40, i.e., the total multiplied by the weight)
Job B X X C D 0 40 0
Job C X X X C 3 40 120
Job D X X X X 1 40 40
2. Responsibility
Responsibility Chart
Job A Job B Job C Job D Total Weight Points
Job A X A C A 2 30 60
Job B X X C D 0 30 0
Job C X X X C 3 30 90
Job D X X X X 1 30 30
3. Effort
Effort Chart
Job A Job B Job C Job D Total Weight Points
Job A X B A B 1 20 20
Job B X X B B 4 20 80
Job C X X X D 0 20 0
Job D X X X X 1 20 20
4. Working conditions
Working conditions Chart
Job A Job B Job C Job D Total Weight Points
Job A X B D B 0 10 0
Job B X X B B 4 10 40
Job C X X X D 0 10 0
Job D X X X X 2 10 20

A simple addition of the totals will result in the following point values:

  • Job A = 160 points
  • Job B = 120 points
  • Job C = 210 points
  • Job D = 110 points

The hierarchy of jobs, in order of their value to the employer, is:

  1. Job C
  2. Job A
  3. Job B
  4. Job D

It is now necessary to look at the salaries of the incumbents of these jobs and to ensure that they reflect the relative value outlined above.

Job Evaluation Worksheet

Job Evaluation Worksheet - description follows image

The image is a graphic representation of a Job Evaluation Work Sheet. A worksheet is completed for each job based on information and rating previously compiled under the headings of Nature of Work (Duties, Responsibilities); Level of Work (Skill, Effort, Responsibility and Working Conditions) and then concludes with Overall Rating.

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