Role of Job Evaluation in Determining Remuneration
Concept of Job Evaluation Job evaluation is the rating of jobs in an organisation. It is the process of establishing the value or worth of jobs in a job hierarchy. It attempts to compare the relative intrinsic value or worth of jobs within an organisation. Thus, job evaluation is a comparative process.
According to the International Labour Office (ILO) “Job evaluation is an attempt to determine and compare the demands which the normal performance of a particular job makes on normal workers, without taking into account the individual abilities or performance of the workers concerned”.
Wendell French defines job evaluation as “a process of determining the relative worth of the various jobs within the organisation, so that differential wages may be paid to jobs of different worth. The relative worth of a job means relative value produced. The variables which are assumed to be related to value produced are such factors as responsibility, skill, effort and working conditions”.
It is important to note that job evaluation is ranking of job, not job holder. Job holders are rated through performance appraisal. Job evaluation assumes normal performance of the job by a worker. Thus, the process ignores individual abilities of the job holder. It provides basis for developing job hierarchy and fixing a pay structure. It must be remembered that job evaluation is about relationships and not absolutes. That is why job evaluation cannot be the sole determining factor for deciding pay structures.
The starting point to job evaluation is job analysis. No job can be evaluated unless and until it is analyzed. Job analysis is a process of examining the various components of a job and the circumstances in which it is performed. Job description is a description of the duties, scope and responsibilities associated with the job while job specification refers to the minimum qualifications that a job incumbent must possess to perform the job successfully.
Methods Used In Job Evaluation
Job evaluation approaches can be categorized into non-analytical and analytical evaluations.
1. Non-Analytical Job Evaluation
Non-analytical job evaluation compares whole jobs to place them in a grade or a rank order hence they are not analysed by reference to their elements or factors. The main non-analytical schemes are:
- Job classification
This is the most common non-analytical approach. Jobs as defined in job descriptions are slotted into grades in a hierarchy by comparing the whole job with a grade definition and selecting the grade that provides the best fit. It is based on an initial definition of the number and characteristics of the grades into which jobs will be placed. The grade definitions may therefore refer to such job characteristics as skill, decision making and responsibility.
Job descriptions may be used that include information on the presence of those characteristics but the characteristics are not assessed separately when comparing the description with the grade definition
- Job Ranking
Whole-job ranking is the most primitive form of job evaluation. The process involves comparing jobs with one another and arranging them in order of their perceived size or value to the organization. In a sense, all evaluation schemes are ranking exercises because they place jobs in a hierarchy.
The difference between simple ranking and analytical methods such as point-factor rating is that job ranking does not attempt to quantify judgements. Instead, whole jobs are compared, they are not broken down into factors or elements although, explicitly or implicitly, the comparison may be based on some generalized concept such as the level of responsibility.
- Paired comparison ranking
Paired comparison ranking is a statistical technique that is used to provide a more sophisticated method of whole-job ranking. It is based on the assumption that it is always easier to compare one job with another than to consider a number of jobs and attempt to build up a rank order by multiple comparisons.
The technique requires the comparison of each job as a whole separately with every other job. If a job is considered to be of a higher value than the one with which it is being compared it receives two points; if it is thought to be equally important, it receives one point; if it is regarded as less important, no points are awarded. The scores are added for each job and a rank order is obtained.
The advantage of paired comparison ranking over normal ranking is that it is easier to compare one job with another rather than having to make multi-comparisons.
But it cannot overcome the fundamental objections to any form of whole job ranking that no defined standards for judging relative worth are provided and it is not an acceptable method of assessing equal value.
There is also a limit to the number of jobs that can be compared using this method. Paired comparisons can also be used analytically to compare jobs on a factor by factor basis.
- Internal benchmarking
Internal benchmarking is what people often do intuitively when they are deciding on the value of jobs, although it has never been dignified in the job evaluation texts as a formal method of job evaluation. It simply means comparing the job under review with any internal job that is believed to be properly graded and paid, and placing the job under consideration into the same grade as that job. The comparison is often made on a whole-job basis without analysing the jobs factor by factor.
- Market pricing
Market pricing is the process of assessing rates of pay by reference to the market rates for comparable jobs and is essentially external benchmarking.
Strictly speaking, market pricing is not a process of job evaluation in the sense that those described above only deal with internal relativities and are not directly concerned with market values, although in conjunction with a formal job evaluation scheme, establishing market rates is a necessary part of a programme for developing a pay structure.
However, the term ‘market pricing’ in its extreme form is used to denote a process of directly pricing jobs on the basis of external relativities with no regard to internal relativities.
2. Analytical Schemes
- Point-factor evaluation
Point-factor schemes are the most commonly used type of analytical job evaluation. The methodology is to break down jobs into factors or key elements representing the demands made by the job on job holders, the competencies required and, in some cases, the impact the job makes. It is assumed that each of the factors will contribute to job size (i.e. the value of the job) and is an aspect of all the jobs to be evaluated but to different degrees.
Using numerical scales, points are allocated to a job under each factor heading according to the extent to which it is present in the job. The separate factor scores are then added together to give a total score, which represents job size.
- Analytical matching
Like point-factor job evaluation, analytical matching is based on the analysis of a number of defined factors.
Grade or level profiles are produced which define the characteristics of jobs in each grade in a grade structure in terms of those factors.
Role profiles are produced for the jobs to be evaluated set out on the basis of analysis under the same factor headings as the grade profiles.
The roles profiles are then ‘matched’ with the range of grade or level profiles to establish the best fit and thus grade the job.
Alternatively or additionally, role profiles for jobs to be evaluated can be matched analytically with generic role profiles for jobs that have already been graded.
Analytical matching may be used to grade jobs following the initial evaluation of a sufficiently large and representative sample of ‘benchmark’ jobs, i.e. jobs that can be used as a basis for comparison with other jobs. This can happen in large organizations when it is believed that it is not necessary to go through the whole process of point factor evaluation for every job. This especially applies where ‘generic’ roles are concerned, i.e. roles that are performed by a number of job holders, which are essentially similar although there may be minor differences.
- Factor comparison
The original and now little used factor comparison method compared jobs factor by factor using a scale of money values to provide a direct indication of the rate for the job. The main form of factor comparison now in use is graduated factor comparison, which involves comparing jobs factor by factor with a graduated scale. The scale may have only three value levels – for example lower, equal, higher – and factor scores are not necessarily used.
It is a method often used by the independent experts engaged by Employment Tribunals to advice on an equal pay claim. Their job is simply to compare one job with one or two others, not to review internal relativities over the whole spectrum of jobs in order to produce a rank order. Independent experts may score their judgements of comparative levels, in which case graduated factor comparison resembles the point factor method, except that the number of levels and range of scores are limited, and the factors may not be weighted.
- Proprietary brands
There are a number of job evaluation schemes offered by management consultants. By far the most popular is the Hay Guide Chart Profile Method, which is a factor comparison scheme. It uses three broad factors (know-how, problem solving and accountability) each of which is further divided into sub-factors, although these cannot be scored individually. Definitions of each level have been produced for each sub-factor to guide evaluators and ensure consistency of application.
Criteria for Selecting Job Evaluation Method
The main criteria for selecting a job evaluation scheme are that it should be:
- Analytical – it should be based on the analysis and evaluation of the degree to which various defined elements or factors are present in a job.
- Application – Thorough in analysis and impartial application in its application, the scheme should have been carefully constructed to ensure that its analytical framework is sound and appropriate in terms of all the jobs it has to cater for. It should also have been tested and tried to check that it can be applied impartially to those jobs.
- Appropriate – it should cater for the particular demands made on all the jobs to be covered by the scheme.
- Comprehensive – the scheme should be applicable to all the jobs in the organization covering all categories of staff, and the factors should be common to all those jobs. There should therefore be a single scheme that can be used across different occupations or job families and to enable benchmarking to take place as required.
- Transparent – the processes used in the scheme from the initial role analysis through to the grading decision should be clear to all concerned.
- Non-discriminatory – the scheme must meet equal pay for work of equal value requirements.
Procedure of Job Evaluation
Though the common objective of job evaluation is to establish the relative worth of jobs in a job hierarchy, there is no common procedure of job evaluation followed by all organisations. As such, the procedure of job evaluation varies from organisation to organisation.
However, a job e valuation procedure may consist of the eight stages as outlined below:
Stage 1: Preliminary Stage
This is the stage setting for job evaluation programme. In this stage, the required information’s obtained about present arrangements, decisions are made on the need for a new programme or revision of an existing one and a clear cut choice is made of the type of programme is to be used by the organisation.
Stage 2: Planning Stage
In this stage, the evaluation programme is drawn up and the job holders to be affected are informed. Due arrangements are made for setting up joint working parties and the sample of jobs to be evaluated is selected. I
Stage 3: Analysis Stage
This is the stage when required information about the sample of jobs is collected. This information serves as a basis for the internal and external evaluation of jobs.
Stage 4: Internal Evaluation Stage
Next to analysis stage is internal evaluation stage. In the internal evaluation stage, the sample of bench-mark jobs are ranked by means of the chosen evaluation scheme as drawn up at the planning stage. Jobs are then graded on the basis of data pending the collection of market rate data. Relative worth of jobs is ascertained by comparing grades between the jobs.
Stage 5: External Evaluation Stage
In this stage, information is collected on market rates at that time.
Stage 6: Design Stage
Having ascertained grades for jobs, salary structure is designed in this stage.
Stage 7: Grading Stage
This is the stage in which different jobs are slotted into the salary structure as designed in the preceding stage 6.
Stage 8: Developing and Maintaining Stage
This is the final stage in a job evaluation programme. In this stage, procedures for maintaining the salary structure are developed with a view to accommodate inflationary pressures in the salary levels, grading new jobs into the structure and regarding the existing jobs in the light of changes in their responsibilities and market rates.
Other procedures may have less steps, for example the Indian Institute of Personnel Management, suggests five steps namely: Analyze and Prepare Job Description ; Select and Prepare a Job Evaluation Programme/Plan; Classify Jobs; Install the Programme; and Maintain the Programme.
Advantages of Job Evaluation
Job evaluation offers the following advantages:
- Job evaluation being a logical process and objective technique helps in developing an equitable and consistent wage and salary structure based on the relative worth of jobs in an organisation.
- By eliminating wage differentials within the organisation, job evaluation helps in minimizing conflict between labour unions and management and, in turn, helps in promoting harmonious relations between them.
- Job evaluation simplifies wage administration by establishing uniformity in wage rates.
- It provides a logical basis for wage negotiations and collective bargaining.
- In the case of new jobs, job evaluation facilitates spotting them into the existing wage and salary structure.
- In the modem times of mechanization, performance depends much on the machines than on the worker himself/herself. In such cases, job evaluation provides the realistic basis for determination of wages.
- The information generated by job evaluation may also be used for improvement of selection, transfer and promotion procedures on the basis of comparative job requirements.
- Job evaluation rates the job, not the workers. Organisations have large number of jobs with specializations. It is job evaluation here again which helps in rating all these jobs and determining the wages and salary and also removing ambiguity in them.
Disadvantages of job evaluation
In spite of many advantages, job evaluation suffers from the following drawbacks/limitations:
- Job evaluation is susceptible because of human error and subjective judgment. While there is no standard list of factors to be considered for job evaluation, there are some factors that cannot be measured accurately.
- There is a variation between wages fixed through job evaluation and market forces. Say Kerr and Fisher, the jobs which tend to rate high as compared with the market are those of junior, nurse and typist, while craft rates are relatively low. Weaker groups are better served by an evaluation plan than by the market, the former places the emphasis not on force but on equity”.
- When job evaluation is applied for the first time in an organisation, it creates doubts in the minds of workers whose jobs are evaluated and trade unions that it may do away with collective bargaining for fixing wage rates.
- Job evaluation methods being lacking in scientific basis are often looked upon as suspicious about the efficacy of methods of job evaluation.
- Job evaluation is a time-consuming process requiring specialised technical personnel to undertake it and, thus, is likely to be costly also.
- Job evaluation is not found suitable for establishing the relative worth of the managerial jobs which are skill oriented. But, these skills cannot be measured in quantitative terms.
- Given the changes in job contents and work conditions, frequent evaluation of jobs is essential. This is not always so easy and simple.
- Job evaluation leads to frequent and substantial changes in wage and salary structures. This, in turn, creates financial burden on organisation.
