Job Evaluation

 

Job Evaluation

Job Evaluation: Employees seek justice and want to be treated fairly in an organization. Equity is the balance between the contributions an employee brings to a job (such as knowledge, skills, experience, effort, time invested, etc.) and the results he or she gets from it (such as pay, benefits, recognition, appreciation, etc.). Whenever employees encounter imbalances between inputs and outputs, whether comparing themselves to others in the same organization or comparing themselves to others working in a different organization, they become frustrated. Satisfaction with pay is a crucial issue, therefore, from an employee's point of view. To strike a good balance, organizations generally keep three important things in the background when designing a compensation system:

a. Internal equity: How fair a job’s pay rate compared to other jobs within the same organization?

b. External equity: How does the rate of pay for a job in one organization compare to the rate of pay for job in other organization?

c. Individual equity: Comparisons among employees in the same job within the same organization.

Job Evaluation is a systematic way of determining the value of a job in relation to other jobs in an organization. Job Evaluation tries to do a systematic comparison between jobs to assess their relative value in order to establish a rational pay structure. Job Evaluation should be distinguished from job analysis. Job analysis is a systematic way of gathering information about a job. Any method of job evaluation requires at least some basic job analysis to provide factual information about the jobs concerned. Therefore, Job Evaluation begins with job analysis and ends at the point where the value of a job is determined to achieve pay-equity between jobs.

FEATURES OF JOB EVALUATION:

The important features of Job Evaluation may be summarized as:  (Henderson)

1. Try to evaluate jobs, not people.

2. Job Evaluation standards are relative, not absolute.

3. The basic information on which job evaluations are performed is obtained from job analysis.

4. Job Evaluations are done by groups, not by individuals.

5. A certain degree of subjectivity is always present in Job Evaluation.

6. Job Evaluation does not set pay scales, but simply provides a basis for evaluating a rational pay structure.

PROCESS OF JOB EVALUATION:

A. Gaining Acceptance: Before understanding Job Evaluation, top management must explain the goals and uses of the program to employees and unions.

B. Creating job evaluation committee: It is not possible for one person to evaluate all the key positions in an organization. Typically, a job evaluation committee made up of experienced employees, union representatives and human resources experts is created to get the ball rolling.

C. Finding the jobs to be evaluated: It is not necessary to evaluate all jobs. This can be too tiring and expensive. Certain key jobs can be identified in each department. When collecting papers, care must be taken to ensure that they represent the type of work performed in that department.

D. Analyze and prepare the job description: This requires the preparation of a job description and also an analysis of the job needs for successful performance.

E. Selection of evaluation method: The most important method for evaluating positions should be identified now, taking into account the factors of the job and the demands of the organization.

F. Classification of jobs: The relative value of various jobs in an organization can be found out after organizing the jobs in order of importance using criteria such as skill requirements, necessary experience, under what conditions the work is performed, type of responsibilities to be assumed , degree of supervision needed, amount of stress caused by work, etc. Weights can be assigned to each factor. When we finally add up all the weights, the value of a job is determined. The points can then be converted into monetary values.

G. Installation of the Program: Once the evaluation process is completed and an action plan is ready, management must explain it to the employees and put it into operation.

H. Periodic review: In light of changes in environmental conditions, jobs should be closely examined. New job descriptions need to be written and the skill needs of new jobs should be properly incorporated into the evaluation process.

 

BENEFITS OF JOB EVALUATION:

1. Try to link the payment to the job requirements.

2. Job Evaluation provides a systematic procedure for determining the relative value of jobs. Jobs are classified on the basis of rational criteria such as skills, education, responsibilities, hazards, etc., and are priced accordingly.

3. An equitable salary structure is a natural result of Job Evaluation. An unbiased Job Evaluation tends to eliminate salary inequalities by placing jobs that have similar requirements in the same salary range.

4. Both employees and unions participate as members of the Job Evaluation committee while determining rate grades for different jobs. This helps to quickly resolve wage-related complaints.

5. Job Evaluation, when done correctly and carefully, helps in evaluating new jobs.

6. Point out the possibilities for a more appropriate use of the plant's labor by indicating the jobs that need more or less qualified workers than those currently occupying these jobs.

 

JOB EVALUATION METHODS OR TECHNIQUES:

There are four basic methods of Job Evaluation: 1. Ranking, 2. Classification, 3. Factor comparison, 4. Point:  (Madigam; Collins)

A. Ranking method: Perhaps the simplest method of Job Evaluation is the Ranking method. According to this method, the works are organized from highest to lowest, in order of their value or merit for the organization. Jobs can also be organized according to the relative difficulty of performing them. Jobs are reviewed as a whole and not on the basis of important job factors; the job at the top of the list has the highest value and obviously the job at the bottom of the list will have the lowest value.

B. Classification Method: According to this method, a predetermined number of job groups or job classes are established and works are assigned to these classifications. This method places groups of jobs into job classes or job grades. A brief description of such an office classification is given below.

Class I – Executives

Class II – Skilled workers

Class III – Semi-skilled workers

C. Factor Comparison Method: A more systematic and scientific method of Job Evaluation is the factor comparison method. Although it is the most complex method of all, it is consistent and appreciable. In this method, instead of ranking entire jobs, each job is ranked based on a number of factors. These factors include mental effort, physical effort, necessary skills, responsibility, supervisory responsibility, working conditions and other similar factors. The pay will be assigned in this method by comparing the required factor weights for each job, i.e., the present wages paid for key jobs may be divided among the factors weighted by importance. In other words, wages are assigned to the job compared to its ranking on each job factor.

D. Point Method: This method is widely used today. Here, the jobs are expressed in terms of key factors. Points are assigned to each factor after prioritizing each factor in order of importance. The points are summed up to determine the wage rate for the job. Jobs with similar total point are placed in similar pay grades.

References:

1. Rao, V S P, (2010). “Human Resource Management Text and Cases”, 3^rd ed., Excel Books, New Delhi.

2. R.I. Henderson, "Compensation Management in a Knowledge-based World", Pearson, New Delhi, 2006.

3. R. Madigam, D. Hoover, "Effects of Alternative Job Evaluation Methods on Decision Involving Pay Equity", Academy of Management Journal, 1986.

4. J. Collins, P. Muchinsky, "An Assessment of Construct Validity of Three Job Evaluation Methods", Academy of Management Journal, 36, 1993.