Introduction

Do you want to open or run a company that will have the identity of fair employment? Here is the ultimate guide to job evaluation. If you don’t know why job evaluation is important, this article covers the concept of job evaluation and how to do job evaluation. Job evaluation is a logical way of determining the worth of a job with other jobs in an organization, how to decide the employees’ salary and how it will differ at various levels of hierarchy. The main objective of job evaluation is to have fair and healthy work culture in the organization.

  • Difference between job analysis and job evaluation: Job analysis is done to prepare a job description for the employee.  Through job description, a person would know his/her responsibilities in the organization. Job evaluation is done by HR and senior personnel to determine the job’s worth to decide a fair pay scale. Both are different, but job evaluation includes job analysis. Job evaluation is a wider concept and crucial for an organization to heave a healthy working environment. 
  1. Job evaluation Methods
  2. Conducting Job evaluations
  3. Advantages and disadvantages of job evaluation
  4. Auditing and Maintaining Job evaluations
  5. Legal consideration

1. Job evaluation Methods

For most organizations, job evaluation components would be within the organization to determine fair compensation according to experience, qualification, role and responsibilities. Traditionally, job evaluations were internal evaluations of a job’s worth. However, in current times of the technological environment and with emerging roles, employers have started using an amalgamation of internal and external market benchmarking. There are many types of job evaluation methods.

  • Internal Job evaluation Methods:

Ranking method:  It is the simplest method followed by small organizations. Jobs are arranged in order of their worth or merit in the organization. Jobs are arranged from highest to lowest in the hierarchy. Jobs are ranked department wise, and then all the departments are combined to provide a ranking to the job. It is not suitable for big organizations because rankings are highly subjective.

Classification/grading method: Groups of jobs are placed as per job grades or job classes.

Grade 1 – Executives such as manager, assistant manager, department superintendent, supervisor, etc.

Grade 2 – Skilled workers such as sales assistant, cashier, clerk, etc.

Grade 3 – Semi-skilled workers such as typists, operators, switchboard workers, etc.

Grade 4 – Unskilled workers may comprise messengers, peons, file clerks, office boys, housekeeping staff etc.

Employees accept it without hesitation as the job grading method is more objective when compared to the ranking method, as it is based on skill and educational qualification.

Point Method: In this method, jobs are evaluated in terms of key factors. It is more scientific than earlier methods. Points are given to each factor after evaluating each factor in order of significance. Points are added to conclude the pay scale for the job. The most frequent factors taken in the point system are educational qualification, training required, experience, PR skills, and analytic skills. 

  • External job evaluation method:

Internal job evaluations may be inappropriate for some organizations. Jobs with special skill sets have a shortage in the market, as an example.  Additionally, components of job evaluation in medium organizations with tiny hierarchies would not find job ranking or point-factor method suitable. To stay fair and competitive, organizations often review external pay scales and monitor market data. Market-pricing the peripheral value of individual jobs enables effective and competitive pay plans and allocates compensation costs wisely. The common source for such market data is third-party compensation surveys.

2. Conducting Job evaluations

Job evaluation methods are more or less subjective be it external or internal. The decision involves personal and emotional factors. Hiring consultants can help the organization have productive and objective discussions about job factors and their relative weights. As the women workforce is increasing the organization should ensure gender equality in pay structure and equal employment opportunities.  

3. Advantages and disadvantages of job evaluation

There are many benefits of job evaluation elimination of personal bias, better control over labour , cost, and employee morale. Despite all the steps of job evaluation, it still has its limitation. Limitations of job evaluation are lack of complete accuracy, unrealistic assumptions, selection of a particular method and unsuitable for small concerns.

4. Auditing and Maintaining Job evaluations

Periodic review of techniques of job evaluation is required to handle job changes and additions. Organizations must, on any deficiencies they find during the audit. 

The legal and regulatory environment is a major administration concern. Discrimination of pay structure based on caste, creed and gender needs explanation. Any unexplained differences need investigation. Once an organization documents its job evaluation process, it needs to be reviewed periodically. 

Conclusion

An employee’s salary or compensation is a highly emotional topic. Most of the organizations debar employees to discuss their compensation with peers, because it may cause conflict. It’s confidential data of a company. While deciding pay structure, an employer should consider it to be internally fair, externally competitive, feasible, and legally explainable. Lastly, it should be in the favor of both organization and the workforce in the long run. The importance of job evaluation should not get neglected irrespective of the size of the organization.

Are you interested in learning more about Analytics in Workforce Management? Take a look at our People Analytics and Digital HR program, in collaboration with IIM Indore. This is a 3-month long program with instructor-led sessions by IIM-I faculty.

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