What is Job Evaluation?
Evaluation; the methods and practices of ordering jobs or positions with
respect to their value or worth to the organization.
The
information collected through job analysis and summarized in job descriptions
has a variety of uses in human resources management, none of them more
important to the overall human resources program than job evaluation and
pricing. Together, job evaluation and job pricing establish what each job
should pay and ensure that the pay is fair in two ways: internally, so that
jobs that are of relatively greater value to the organization are paid higher
than those of lower value; and externally, so that rates paid to jobs within
the organization are competitive with those paid by other firms in the labor
market for similar work.
Job
evaluation determines the relative worth of a job as compared with another job
or many others. It does not set rates of pay (that's what job pricing does);
rather, it compares jobs with one another or measures them against a standard, so
that we can say, for example:
The
job of Executive Secretary ranks higher than that of Stenographer, or
The
job of Executive Secretary is classified in Grade 29 while Stenographer is
assigned to Grade24, or
The
Executive Secretary job scores 1400 points whereas Stenographer scores 625
points.
Such
information is vital to the organization because it serves as the foundation
for many aspects of the human resources program. First, it carries over into
the job pricing phase, with the result that jobs of relatively greater value
within the firm are compensated more highly than those of relatively less
value. For example, the pay range for the Executive Secretary would be higher
than for the Stenographer, as the table below illustrates:
|
Weekly Salary |
||
Title |
Minimum |
Midpoint |
Maximum |
Executive Secretary |
Rs466.80 |
Rs622.40 |
Rs778.00 |
Stenoghrapher |
Rs375.60 |
Rs500.80 |
Rs626.00 |
Next,
job evaluation pinpoints existing wage inequities. Job evaluation exposes
situations in which jobs are not being compensated in proportion to their
relative value. For instance, if we know that the Executive Secretary job is
classified in Grade 29 and the Stenographer in Grade 24, and if we then
discover that the differential in the average rates paid to the two jobs is
only Rs50 per week, we can conclude without question that either the
Stenographer job is being paid too high or the Executive Secretary position is
being paid too low.
Job
evaluation also gives the organization a system for assigning wage rates to
newly created jobs in accordance with their contribution to the firm. A new
job, such as E-Mail Order Clerk, can be evaluated and placed in the appropriate
grade. This ensures that the E-Mail Order Clerks hired by the firm will be paid
fairly in relation to other jobs within the organization because the job has
been placed in a grade with other positions of similar worth.
Through
a formal program of job evaluation, the firm can provide a sound basis for the
rates paid to employees who are transferred, demoted, or promoted from one job
to another. Because job evaluation gives us the relative value of each
position, we know that when an employee moves from Stenographer to Executive
Secretary, this is a promotion to a job of significantly higher value to the
firm and thus deserving of a higher rate of pay.
Finally,
job evaluation is the underpinning for an effective program of employee
performance evaluation. If there is no system that places jobs in the right
grades relative to each other, there is a greater likelihood that base rates
will be incorrect, and any attempt to correlate performance with pay will be
thwarted. For example, how can one hope properly to reward a Stenographer whose
performance is superior, when rates for that job have been set two grades below
what would be called for under a formal system of job evaluation?
Methods of Job Evaluation
There
are four basic methods that are used to evaluate the relative worth of jobs to
the organization: ranking, job classification, factor comparison, and the point
method. Each of these has its pros and cons and is better suited to certain
types of organizations than others. So careful selection of the method to be
used is critical and must take into consideration such factors as organization
size, availability of staff and funds, and the pressures placed on the
organization by unions, the courts, and other external agencies.
The
following schematic will serve as a starting point for understanding the
differences in job evaluation methods:
|
Method |
|
|
Qualitative* |
Quantitative** |
Jobs Compared with Each Other |
Ranking |
Factor Comparison |
Jobs Compared With Standards |
Job classification |
Point |
*jobs
treated as a whole |
The
Ranking and Job Classification approaches to job evaluation are referred to as
"qualitative" methods because, unlike the "quantitative"
methods, they do not use numerical point scores to determine relative job
worth. They also differ in that each job is judged as a whole during the
evaluation process, whereas the quantitative approaches break the job down into
compensable factors (such as education required, experience required, and
working conditions), and evaluation centers on these factors rather than on the
entire job description.
A
second major difference in the job evaluation methods is that some assess
relative job worth by comparing one job with another-much as we might lay two
pencils alongside each other and state that by comparison the longer one has
more relative worth than the shorter one. Ranking and Factor Comparison use
this approach. Job Classification and the Point methods, on the other hand,
determine relative value by comparing the jobs to a predetermined standard.
Using the pencil illustration, we would do this by holding each pencil next to
a ruler (standard) and stating that the one that measures 5 inches has more
relative worth than the one that measures 4 1/2 inches.
his
method is one of the simplest to administer. Jobs are compared to each other
based on the overall worth of the job to the organization. The 'worth' of a job
is usually based on judgements of skill, effort (physical and mental),
responsibility (supervisory and fiscal), and working conditions.
Advantages
|
Disadvantages
|
|
After
ranking, the jobs should be grouped to determine the appropriate slary levels
Classification
Classification Jobs are classified into an existing grade/category
structure or hierarchy. Each level in the grade/category structure has a
description and associated job titles. Each job is assigned to the
grade/category profiding the closest match to the job. The classification of a
position is decided by comparing the whole job with the appropriate job grading
standard. To ensure equity in job grading and wage rates, a common set of job
grading standards and instructions are used. Because of differences in duties,
skills and knowledge, and other aspects of trades and labor jobs, job grading
standards are developed mainly along occupational lines.
The
standards do not attempt to describe every work assignment of each position in
the occupation covered. The standards identify and describe those key characteristics
of occupations which are significant for distinguishing different levels of
work. They define these key characteristics in such a way as to provide a basis
for assigning the appropriate grade level to all positions in the occupation to
which the standards apply.
Advantages
|
Disadvantages
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||
Tips
Well Defined Grades/Categories Attempt to define the grades/categories so that they do not overlap one another. Overlaps in the descriptions and factors used to identify the grade would lead to problems when assigning jobs to the grades where there is overlap between them. Point Method Point
Method A set of compensable factors are identified as determining
the worth of jobs. Typically the compensable factors include the major
categories of:
These factors can then be
further defined.
The point method is an
extension of the factor comparison method. Each factor is then
divided into levels or degrees which are then assigned points. Each job is
rated using the job evaluation instrument. The points for each factor are
summed to form a total point score for the job. Jobs are then grouped by
total point scores and assigned to wage/salary grades so that similarly rated
jobs would be placed in the same wage/salary grade.
Factor Comparison Factor Comparison A set of compensable factors are identified as determining the worth of jobs. Typically the number of compensable factors is small (4 or 5). Examples of compensable factors are:
Next, benchmark jobs are identified. Benchmark jobs should be selected as having certain characteristics.
The jobs are then priced and the total pay for each job is divided into pay for each factor. See example matrix below:
This process establishes
the rate of pay for each factor for each benchmark job. Slight adjustments
may need o be made to the matrix to ensure equitable dollar weighting of the
factors. The other jobs in the
organization are then compared with the benchmark jobs and rates of pay for
each factor are summed to determine the rates of pay for each of the other
jobs.
|