The measurement of human capital as an alternative method of job evaluation for purposes of remuneration

Abstract

Contemporary science and business practice in the field of remuneration management includes many concepts and models of the remuneration systems and job evaluation. Despite this rich achievement, many basic concepts and elements related to salaries are differently interpreted and defined, therefore practice of payroll systems is based on the compromise. Usually it is a compromise between the expectations of employees and the financial capacity of the employer or as a result of interaction between the market forces, supply and demand. Depending on the circumstances, there is a risk of distortions resulting in too low or too high salaries or an incorrect pay relationship in the organization. As a result, the welfare of the employees is reduced or the employer’s financial balance is at risk. The aim of the article is to present the method of human capital measurement as a conceptual base of job evaluation aimed at improving the remuneration system in the organization. This method allows an objective measurement in monetary units the necessary qualifications of the employees to perform work on most traditional jobs. As a result, it is possible to provide a pay standard for such a job. The supplement to the considerations is to provide an example application of the described model to several selected workplaces and a comparison with the existing solution in the company.

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