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WHAT IS JOB EVALUATION?


By: 
Date: July 1 2005

WHAT IS JOB EVALUATION

WHAT IS JOB EVALUATION?

Job evaluation is a systemic process whereby jobs are compared with each other in order to establish their relative worth.   It is a method of comparing jobs by use of formal procedures in order to establish a rank order of jobs, and thus provide the basis for an equitable pay system.   It determines the relative position of the jobs in an organization, as it is the job that is being evaluated, not the jobholder.  

The process of job evaluation involves the acceptance of certain basic assumptions, for instance:

§         The time and trouble involved in such an exercise are worthwhile in that the result can be put to good use.

§         Different kinds of work have, or should have, different values.

§         Similar jobs are often of equal value.

§         The value of work is affected by the supply of labor and the demand for the results of the work, which necessitates continuous job evaluation since the value of a job in the market changes overtime.

§         These demands can be roughly quantified and compared.

Job evaluation can take place for various reasons that may include:

§         It is part of the organization´s overall objectives to see that it is managing, and therefore, paying people effectively.

§         There is an increasing number of pay problems caused by ad hoc grading decisions.

§         The structure of jobs has altered significantly because of, for example, organizational changes, a different management style or the introduction of more sophisticated product lines.

§         The company is about to expand and is seeking a well-structured platform for the recruitment and retention of staff during a potentially stressful period.

§         Discussions with unions have slipped into emotional arguments because there is no objective base on which to prepare a case for negotiation.

§         The present job evaluation scheme is out-dated.

OBJECTIVES OF A JOB EVALUATION:

Job evaluation attempts to provide a systematic basis of comparing jobs and determining the relative value of different jobs.   Thus, job evaluation has two basic objectives:

1.      To compare jobs and determine their level within each occupational group.

2.      To compare jobs between occupational groups to see whether the level of job A in one occupational group is the same as, higher or lower than, job B in another occupational group.

The first objective is important for promotions, career planning and personal development.   Achieving the second objective is important because of wage comparisons.   Job evaluation attempts to achieve both objectives by determining the rank order of all the jobs.   Thus, if job B is higher than job A, and job C is higher than B, then job C is also higher than job A.

A number of more specific goals may be derived from the above basic objectives:

1.      To provide a template for a more objective wage structure.

2.      To provide the means for the ranking of new and changing jobs.

3.      To provide basic information for wage negotiations and wage determinations.

4.      To reduce pay dissatisfaction by providing methods for appeals and grievances and their treatment.

5.      To correct wage inequities resulting from factors such as bargaining pressures, workplace customs and even chance.

METHODS OF JOB EVALUATION:

There are four common methods of job evaluation.   Below are descriptions of the four, accompanied by their various advantages and disadvantages.

A)    Ranking

This method is one of the simplest to administer.   Jobs are compared to each other based on their overall worth to the company.   The ´worth´ of a job is usually measured by judgments of skill, effort (physical and mental), responsibility (fiscal and supervisory), and working conditions.

The advantages of the ranking method are that it is simple and very effective, especially when there are few jobs to be evaluated (less than 30).

The disadvantages are that it is more difficult to implement, as the number of jobs increases and the judgments can be subjective.   As well, because there is no standard used for comparison, the ranking process would have to be repeated every time a new job is added to the organization.

B)    Classification

Jobs are classified into an existing grade/category structure.   Each tier of the structure has a description and associated job titles.   Each job is assigned to the grade/category providing the closest match to the job.   To ensure equity in job grading and wage rates, a common set of job grading standards are used.   Standards are developed mainly along occupational lines.   The standards help identify and describe key characteristics of occupations that are important for distinguishing different levels of work.  

The advantages of this method are that it is simple and the grade/category structure exists independent of the jobs.   Thus, new jobs can be added more easily than the ranking method.

Its disadvantages include the fact that classification judgments are subjective, and the standard used for comparison may have built in biases that would affect certain groups of employees (women and minorities).   As well, some jobs may fit into more than one grade/category; therefore, some further decision-making may be required.

C)    Factor Comparison

Sets of compensable factors are identified as determining the worth of jobs.   The number of factors is usually small (4 or 5), for example, skill, responsibility, effort and working conditions.   Benchmark jobs are then identified that should contain the characteristics:

1.      Equitable pay

2.      Range of factors (for each factor, some jobs would be at the low end of the factor while others would be at the high end)

The jobs are then priced and the total pay for each job is divided into pay for each factor.   This process establishes the rate of pay for each factor for each benchmark job.   The organization´s other jobs are then compared to the benchmark jobs and rates of pay for each of the other jobs.  

Factor comparison holds advantages as the value of the job is expressed in monetary terms, and the method is applicable to a wide range of jobs and newly created jobs.

The method´s disadvantages are that the pay points for each factor is based on subjective judgments, and the standard used for determining factor pay many have built in biases that would effect certain groups of employees (women and minorities).

D)    Point Method

The point method is an extension of the factor comparison method.   A set of compensable factors is identified as determining the worth of jobs.   These factors are then further defined.   For example:

1.      Skill                                            

§         Education

§         Experience

§         Ability

2.      Responsibilities  

§         Supervisory

§         Fiscal

3.      Effort  

§         Mental

§         Physical

4.      Working Conditions

§         Location

§         Hazards

                     

Each factor is then divided into levels that are assigned points.   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 grades so that similarly rated jobs would be placed in the same wage category.

The point method is advantageous as the job value is expressed in monetary terms.   As well, this method is applicable to a wide range of jobs and newly created jobs.

The disadvantages are that the pay for each factor is based on subjective judgments, and the standard used for determining the factors´ pay may have built in biases that would effect certain groups of employees (women and minorities).

THE MINIMUM YOU NEED TO KNOW ABOUT JOB EVALUATION:

  • What is it?        

Job evaluation is a method of comparing jobs by use of formal and systemic procedures in order to establish a rank order of jobs, and thus provide the basis for an equitable pay system.   It determines the relative position of the jobs in an organization.

  • Primary Objectives:

1. To compare jobs and determine their level within each occupational group.

2. To compare jobs between occupational groups to see whether the level of job A in one occupational group is the same as, higher or lower than, job B in another occupational group.

  • Secondary Objectives:              

1.     To provide a template for a more objective wage structure.

2.     To provide the means for the ranking of new and changing jobs.

3.      To provide basic information for wage negotiations and determinations.

4.      To reduce pay dissatisfaction by providing methods for appeals and grievances and their treatment.

5.     To correct wage inequities resulting from bargaining pressures or to other factors, such as chance.

  • Common Methods of Job Evaluation:

Ranking:

  • Jobs are compared to each other via their over all worth to the company.
  • Advantages: it is simple and effective when used with a small number of jobs.
  • Disadvantages: it may contain subjective judgments, since there are no standards used for comparison. As such, it is increasingly more difficult to use as the number of jobs increases.

Classification:

  • Jobs are classified into an existing grade/category structure.
  • Advantages: it is simple and a standard assessment is employed (unlike the ranking method).
  • Disadvantages: it may contain subjective judgments and the standards used may have built in biases.

Factor Comparison:                  

  • A set of compensable factors is identified as determining the worth of jobs.
  • Advantages: the job´s value is expressed in monetary terms and the method is applicable to a wide range of jobs and newly created jobs.
  • Disadvantages: judgments are subjective, since the standard used may have built in biases and some jobs may fit into more than one grade/category.

Point Method:

  • An extension of the factor comparison method in which factors are further defined.
  • Advantages: the job´s value is expressed in monetary terms and it is applicable to a wide range of jobs and newly created jobs.
  • Disadvantages: pay for each factor is based on subjective judgments and the standards used may have built in biases.


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