Space Toy Co. (STC) produced Proportional Value (PV) job rates using the free-hand method, as shown previously, but chose to verify these results and construct a job rate line by using a computer and a statistical method called regression analysis.
Entering data to create a line
Space Toy Co. followed a series of steps to produce Proportional Value job rates using regression. Each step is summarized below. Please refer to your computer's "Help" section on regression analysis if you need further clarification on using this program.
An interactive exercise
Once you've read the step-by-step process below and know how a regression line is developed, you can create one yourself by using the interactive worksheet on the next page.
But first, take the time to learn how to create a Proportional Value line, step-by-step.
Step 1: Enter the male job data
The first step in producing Proportional Value job rates is to enter the representative male job classes, job values and job rates data. Space Toy Co. entered the following:
Chart # 10
Male Job Class Data
|Representative Male Job Classes||Job Values||Job Rates|
Step 2: Apply the formula to the male job data
The statistical formula was then applied to the male job data and the computer program provided the regression output, as shown below.
Chart # 11
|Intercept (constant)|| ||0.188984|
|Std Err of Y Est|| ||0.75658|
|R Squared|| ||0.95469|
|No. of Observations|| ||3|
|Degree of Freedom|| ||1|
|X Coefficient (slope)|| ||0.045178|
|Std Err of Coef.||& ||0.009842|
An R-Squared of 0.95469, or 95%, indicates a line of good fit. Space Toy Co. initially tried to create a line using more data, but found that the representative group of 3 male jobs used in this example produced better results.
Step 3: Enter the female job data
The next set of data to enter is the list of unmatched female job classes, with their job values and job rates. Space Toy Co. entered the following:
Chart # 12
Female Job Class Data
|Female Job Classes||Job Values||Job Rates|
|Customer Service Clerk||391||17.00|
Step 4: Apply the formula to the female job data
Adjustments were identified by applying the formula from the above calculation to the three unmatched female job classes. These are the final regression calculations and Proportional Value job rate results:
Chart # 13
Proportional Value Job Rate Results for Unmatched Female Job Classes
|Unmatched Female Job Classes||Job Values||Job Rates||Proportional Value Rate||Adjustment|
|Customer Service Clerk||391||17.00||17.853719||0.85|
One job rate needed to be adjusted - that of the Customer Service Clerk. The other two female job classes had job rates higher than the Proportional Value rate, therefore they did not require a pay equity adjustment.
The 1991 Pay Equity Plan was amended to reflect this change.
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