Job evaluation is the process of analyzing and assessing various jobs systematically to ascertain their relative worth in an organization.
Job evaluation is an assessment of the relative worth of various jobs on the basis of a consistent set of job and personal factors, such as qualifications and skills required.
The objective of job evaluation is to determine which jobs should get more pay than others. Several methods such as job ranking, job grading, and factor comparison are employed in job evaluation. Research indicates, however, that each method is nearly as accurate and reliable as the other in ranking and pricing different jobs. Job evaluation forms the basis for wage and salary negotiations.
Background of Job Evaluation
Job evaluation developed out of civil service classification practices and some early employer job and pay classification systems. Whether formal job evaluation began with the United States Civil Service Commission in 1871 or with Frederick W. Taylor in 1881, it is now over 120 years old and still of great value. The first point system was developed in the 1920s. Employer associations have contributed greatly to the adoption of certain plans. The spread of unionism has influenced the installation of job evaluation in that employers gave more attention to rationalized wage structures as unionism advanced. During World War II, the National War Labor Board encouraged the expansion of job evaluation as a method of reducing wage inequities.
As organizations became larger and larger and more bureaucratized the
need for a rational system of paying employees became evident. Wage
structures became more complex and needed some way to bring order to the
chaos perpetuated by supervisors setting pay rates for their employees
on their own. Job evaluation became a major part of the answer. The
techniques and processes of job evaluation were developed and perfected
during this time period of the late 1950s.
With the advent of the Civil Rights movement, job evaluation literally got written into the law. The Equal Pay Act of 1963 required jobs to be compared on the basis of skill, effort, and responsibility to determine if they were or were not equal. A 1979 study of job evaluation, as a potential source of and/or a potential solution to sex discrimination in pay, was made by the National Research Council under a contract from the Equal Employment Opportunity Commission. The study suggested that jobs held predominantly by women and minorities could be undervalued. Such discrimination resulted from the use of different plans for different employee groups, from the compensable factors employed, from the weights assigned to factors, and from the stereotypes associated with jobs. Although the preliminary report failed to take a position on job evaluation, the final report concluded that job evaluation holds some potential for solving problems of discrimination.
Definitions of Job Evaluation
Below are given some important definitions of job analysis:
Job Evaluation involves determination of relative worth of each job for the purpose of establishing wage and salary differentials. Relative worth is determined mainly on the basis of Job Description and Job Specification only. Job Evaluation helps to determine wages and salary grades for all jobs. Employees need to be compensated depending on the grades of jobs they perform. Remuneration must be based on the relative worth of each job. Ignoring this basic principle results in inequitable compensation and attendant ill effects on employees’ morale. A perception of inequity is a sure way of De-motivating an employee.
- In the words of Edwin B. Flippo. "Job evaluation is a systematic and orderly process of determining the worth of a job in relation to other jobs."
- According to Kimball and Kimball Jr., "Job evaluation represents an effort to determine the relative value of every job in a plant and to determine what the fair basic wage for such a job should be."
- According to Bethel, Atwater and Smith et at, "Job evaluation as a personal term has both a specific and genetic meaning specifically, it means job rating or the grading of occupations in terms of duties ; generally it means the entire field of wages and salary administration along modern lines"
- According to International Labour Organisation, "Job evaluation may be defined as an attempt to determine and compare the demands which the normal performance of particular job makes on normal workers without taking account of the individual abilities or performance of the workers concerned."
- In the words of Dale Yoder, "Job evaluation is a practice which seeks to provide a degree of objectivity in measuring the comparative value of jobs within an organisation and among similar organisations."
- According to Bureau of Labour Statistics, "Job evaluation is the evaluation or rating of job to determine their position in job hierarchy. The evaluation may be achievement through asssignment of points or the use of some other systematic rating method for essential job requirements such as skill, experience and responsibility."
A commonly used job evaluation method is the paired comparison evaluation system. The paired comparison system compares each job within a company with every other job within the company. A job's resulting score is determined from the comparisons. The jobs are then ranked by score.
THE JOB EVALUATION PROCESS
Job analysis describes a job. Job evaluation develops a plan for comparing jobs in terms of those things the organization considers important determinants of job worth. This process involves a number of steps that will be briefly stated here and then discussed more fully.
- Job Analysis. The first step is a study of the jobs in the organization. Through job analysis, information on job content is obtained, together with an appreciation of worker requirements for successful performance of the job. This information is recorded in the precise, consistent language of a job description. This was the topic of chapter 10.
- Compensable Factors. The next step is deciding what the organization "is paying for" -- that is, what factor or factors place one job at a higher level in the job hierarchy than another. These compensable factors are the yardsticks used to determine the relative position of jobs. In a sense, choosing compensable factors is the heart of job evaluation. Not only do these factors place jobs in the organization's job hierarchy, but they also serve to inform job incumbents which contributions are rewarded.
- Developing the Method. The third step in job evaluation is to select a method of appraising the organization's jobs according to the factor(s) chosen. The method should permit consistent placement of the organization's jobs containing more of the factors higher in the job hierarchy, than those jobs lower in the hierarchy.
- Job Structure. The fourth step is comparing jobs to develop a job structure. This involves choosing and assigning decision makers, reaching and recording decisions, and setting up the job hierarchy.
- Wage Structure. The final step is pricing the job structure to arrive at a wage structure.
Features of Job Evaluation
The primary objective of job evaluation is to find out the value of work, but this is a value which varies from time to time and from place to place under the influence of certain economic pressure, not least of which is the worth of money itself. The main features of job evaluations are:
- To supply bases for wage negotiation founded on facts rather than on vague intermediate ideas.
- It attempts to assess jobs, not people.
- Job evaluation is the output provided by job analysis.
- Job evaluation does not design wage structure, it helps in rationalising the system by reducing number of separate and different rates.
- Job evaluation is not made by individuals rather it is done by group of experts.
- Job evaluation determines the value of job. Further the value of each of the aspects such as skill and responsibility levels are also related and studied in connection with the job.
- Job evaluation helps the management to maintain high levels of employee productivity and employee satisfaction.
The objectives of job evaluation
- To establish an orderly, rational, systematic structure of jobs based on their worth to the organization.
- To justify an existing pay rate structure or to develop one that provides for internal equity.
- To assist in setting pay rates that are comparable to those of in similar jobs in other organizations to compete in market place for best talent.
- To provide a rational basis for negotiating pay rates when bargaining collectively with a recognized union.
- To ensure the fair and equitable compensation of employees in relation to their duties.
- To ensure equity in pay for jobs of similar skill, effort, responsibility and working conditions by using a system that consistently and accurately assesses differences in relative value among jobs and
- To establish a framework of procedures to determine the grade levels and the consequent salary range for new jobs or jobs which have evolved and changed.
- To identify a ladder of progression for future movement to all employees interested in improving their compensation.
- To comply with equal pay legislation and regulations determining pay differences according to job content.
- To develop a base for merit or pay-for-performance.
Job evaluation is a process of determining the relative worth of a job. It is a process which is helpful even for framing compensation plans by the personnel manager. Job evaluation as a process is advantageous to a company in many ways:
- Reduction in inequalities in salary structure - It is found that people and their motivation is dependent upon how well they are being paid. Therefore the main objective of job evaluation is to have external and internal consistency in salary structure so that inequalities in salaries are reduced.
- Specialization - Because of division of labour and thereby specialization, a large number of enterprises have got hundred jobs and many employees to perform them. Therefore, an attempt should be made to define a job and thereby fix salaries for it. This is possible only through job evaluation.
- Helps in selection of employees - The job evaluation information can be helpful at the time of selection of candidates. The factors that are determined for job evaluation can be taken into account while selecting the employees.
- Harmonious relationship between employees and manager - Through job evaluation, harmonious and congenial relations can be maintained between employees and management, so that all kinds of salaries controversies can be minimized.
- Standardization - The process of determining the salary differentials for different jobs become standardized through job evaluation. This helps in bringing uniformity into salary structure.
- Relevance of new jobs - Through job evaluation, one can understand the relative value of new jobs in a concern.
- Though there are many ways of applying job evaluation in a flexible manner, rapid changes in technology and in the supply of and demand for particular skills, create problems of adjustment that may need further study.
- When job evaluation results in substantial changes in the existing wage structure, the possibility of implementing these changes in a relatively short period may be restricted by the financial limits within which the firm has to operate.
- When there are a large proportion of incentive workers, it may be difficult to maintain a reasonable and acceptable structure of relative earnings.
- The process of job rating is, to some extent, inexact because some of the factors and degrees can be measured with accuracy.
- Job evaluation takes a long time to complete, requires specialized technical personnel and is quite expensive.
After job analysis preparations of job descriptions comes the essential stage of job evaluation, namely, the systematic comparison of jobs in order to establish a job hierarchy. The techniques which have been commonly used tend to fall into one of the two main categories:
Non-analytical or Non-quantitative or summary methods
Analytical or quantitative methods.
Qualitative methods are:
- Job Ranking
- Job Classification or grading
- Factor Comparison
- Point rating or assessment