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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

$466.80

$622.40

$778.00

Stenoghrapher

$375.60

$500.80

$626.00

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 $50 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
**jobs compared with factors

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

  • Simple.
  • Very effective when there are relatively few jobs to be evaluated (less than 30).

Disadvantages

  • Difficult to administer as the number of jobs increases.
  • Rank judgements are subjective.
  • Since there is no standard used for comparison, new jobs would have to be compared with the existing jobs to determine its appropriate rank. In essence, the ranking process would have to be repeated each time a new job is added to the organization.

Ranking Methods

  1. Ordering Simply place job titles on 3x5 inch index cards then order the titles by relative importance to the organization.
  2. Weighting
  3. Paired Comparison

Grouping

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

  • Simple.
  • The grade/category structure exists independent of the jobs. Therefore, new jobs can be classified more easily than the Ranking Mtehod.

Disadvantages

  • Classification judgements are subjective.
  • The standard used for comparison (the grade/category strucutre) may have build in biases that would affect certain groups of employees (females or minorities).
  • Some jobs may appear to fit within more than one grade/category.

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:

  1. Skill
  2. Responsibilities
  3. Effort
  4. Working Conditions

These factors can then be further defined.

  1. Skill
    1. Experience
    2. Education
    3. Ability
  2. Responsibilities
    1. Fiscal
    2. Supervisory
  3. Effort
    1. Mental
    2. Physical
  4. Working Conditions
    1. Location
    2. Hazards
    3. Extremes in Environment

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.

Advantages

  • The value of the job is expressed in monetary terms.
  • Can be applied to a wide range of jobs.
  • Can be applied to newly created jobs.

Disadvantages

  • The pay for each factor is based on judgements that are subjective.
  • The standard used for determining the pay for each factor may have build in biases that would affect certain groups of employees (females or minorities).

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:

  1. Skill
  2. Responsibilities
  3. Effort
  4. Working Conditions

Next, benchmark jobs are identified. Benchmark jobs should be selected as having certain characteristics.

  1. equitable pay (not overpaid or underpaid)
  2. range of the factors (for each factor, some jobs would be at the low end of the factor while others would be at the high end of the factor).

The jobs are then priced and the total pay for each job is divided into pay for each factor. See example matrix below:

Job Evaluation: Factor Comparison

 

The hourly rate is divided into pay for each of the following factors:

Job

Hourly Rate

.

Pay for Skill

Pay for Effort

Pay for Responsibility

Pay for Working Conditions


Secretary

$9.00

 

4.50

2.00

2.00

0.50

Admin Assistant

$11.00

 

5.50

2.50

2.50

0.50

Supervisor

$15.00

 

6.00

3.50

4.00

1.50

Manager

$21.00

 

9.00

3.50

7.00

1.50

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.

Advantages

  • The value of the job is expressed in monetary terms.
  • Can be applied to a wide range of jobs.
  • Can be applied to newly created jobs.

Disadvantages

  • The pay for each factor is based on judgements that are subjective.
  • The standard used for determining the pay for each factor may have build in biases that would affect certain groups of employees (females or minorities).

 

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