Job Evaluation for Knowledge-Based Organizations

In this paper the author formulates new method for job evaluation and job remuneration for knowledge-based organizations, which will be essential for competitive organizations in the future. The paper starts with a brief presentation of the standard methods of job evaluation as they have been formulated and used all throughout the twentieth century, contrasting their methodology and essence with the tenets of the knowledge-based economy. Showing deep incompatibilities between the two allows the author to conclude that these methods cannot be sufficient in the new economy and therefore new approaches are needed if companies are to evaluate work in a satisfying manner. Author presents a few methods of knowledge work evaluation proposed in literature, concluding that they are not sufficient either, due to their insistence on elementary analysis stemming from Frederick Taylor's work, which is not suitable for highly interdependent knowledge work tasks, and also from their lack of applicability to creating remuneration systems for knowledge workers. Therefore a model for knowledge work evaluation and fixed salaries derivation for knowledge workers is presented, using knowledge resources and knowledge tasks instead of dividing knowledge work into elementary tasks. It is argued that this model will more accurately estimate the impact of particular knowledge worker's job on the company bottom line and therefore will be a better basis for creation of fixed salaries systems in knowledge-based organizations. The salary in this model depends on the minimum and maximum salaries derived using market and economic constraints (Dobija 2011). A salary of a particular knowledge worker is located between these two and its exact value is dependent upon the importance of the knowledge tasks and resources he's working on. A new method for bonus payment system creation is proposed, based on the above model and standard bonus pay system requirements (Ziebicki 2006). Bonus pay is determined by the real impact of a given employee (as opposed to a potential impact of the position measured for the fixed salaries) on the knowledge resources and knowledge tasks he undertakes and on the ROA of the company relative to the plan or another standard candle, such as the economic constant of potential growth (Kurek 2008). A methodology is presented to provide an empirical way of implementing these methods in knowledge-based organizations. The author also discusses intermediary solutions, which can be useful for organizations which aren't yet fully based on knowledge. Arguably as more organizations become increasingly dependent on knowledge in their operations systems allowing them to evaluate work on particular positions and devise fixed salaries and bonuses in a scientific manner will be essential to maintaining procedural excellence and competitive advantage. This paper presents one of the first ways to do it in a manner consistent with current state of knowledge in economics and management science.