Is job evaluation still relevant and useful in determining the relative value of jobs in the managerial level?

Job evaluation A job evaluation is a systematic way of determining the value/worth of a job in relation to other jobs in an organization. It tries to make a systematic comparison between jobs to assess their relative worth for the purpose of establishing a rational pay structure. Job evaluation needs to be differentiated from job analysis. Job analysis is a systematic way of gathering information about a job. Every job evaluation method requires at least some basic job analysis in order to provide factual information about the jobs concerned. Thus, job evaluation begins with job analysis and ends at that point where the worth of a job is ascertained for achieving pay equity between jobs. •

4 Job evaluation methods o

4.1 Ranking method

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4.2 Classification method

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4.3 Factor comparison method

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4.4 Point method

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4.5 Market Pricing

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8 Techniques for designing jobs o

8.1 Job simplification

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8.2 Job enlargement

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8.3 Job rotation

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8.4 Job enrichment

Features[edit] The purpose of job evaluation is to produce a ranking of jobs on which a rational and acceptable pay structure can be built. The important features of job evaluation may be summarised thus: •

It tries to assess jobs, not people.

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The standards of job evaluation are relative, not absolute.

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

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Job evaluations are carried out by groups, not by individuals.

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Some degree of subjectivity is always present in job evaluation.

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Job evaluation does not fix pay scales, but merely provides a basis for evaluating a rational wage structure.

Purpose of Job evaluation •

Balance 2 goals: Job evaluation aims at balancing two goals i.e., internal equity and external competitiveness. internal equity:- paying different jobs differently, based on what the job entails. And, external competitiveness :- Paying satisfactory performers what the market is paying.

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Focus on job content: - It basically focuses on what each individual is doing their part of the jobs efficiently and effectively.

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Ranks all jobs :- It seeks to rank all the jobs in a hierarchy with in a hierarchy. This helps to create job structure as well as payment structure for the organization.

Process of job evaluation[edit] The process of job evaluation involves the following steps: •

Gaining acceptance: Before undertaking job evaluation, top management must explain the aims) and uses of the programme to the employees and unions. To elaborate the program further, oral presentations could be made. Letters, booklets could be used to classify all relevant aspects of the job evaluation programme.

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Creating job evaluation committee: It is not possible for a single person to evaluate all the key jobs in an organization. Usually a job evaluation committee consisting of experienced employees, union representatives and HR experts is created to set the ball rolling.

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Finding the jobs to be evaluated: Every job needs not be evaluated. This may be too taxing and costly. Certain key jobs in each department may be identified. While picking up the jobs, care must be taken to ensure that they represent the type of work performed in that department.

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Analysing and preparing job description: This requires the preparation of a job description and also an analysis of job needs for successful performance.

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Selecting the method of evaluation: The most important method of evaluating the jobs must be identified now, keeping the job factors as well as organisational demands in mind.

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Classifying jobs: The relative worth of various jobs in an organisation may be found out after arranging jobs in order of importance using criteria such as skill requirements, experience needed, under which conditions job is performed, type of responsibilities to be shouldered, degree of supervision needed, the amount of stress caused by the job, etc. Weights can be assigned to each such factor. When we finally add all the weights, the worth of a job is determined. The points may then be converted into monetary values.

Installing the programme[edit] Once the evaluation process is over and a plan of action is ready, management must explain it to employees and put it into operation. Reviewing periodically[edit] In the light of changes in environmental conditions (technology, products, services, etc.) jobs need to be examined closely. For example, the traditional clerical functions have undergone a rapid change in sectors like banking, insurance and railways, aftercomputerisation. New job descriptions need to be written and the skill needs of new jobs need to be duly incorporated in the evaluation process. Otherwise,

employees may feel that all the relevant job factors - based on which their pay has been determined have not been evaluated properly. For job evaluation to be practicable it is necessary: •

that jobs can be easily identified

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that there are sufficient differences between different jobs; and

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that agreements know the relative importance or worth of different jobs can be negotiated between the enterprise and its employees and/or their representatives..

Benefits[edit] The pay offs from job evaluation may be stated thus: •

It tries to link pay with the requirements of the job.

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It offers a systematic procedure for determining the relative worth of jobs. Jobs are ranked on the basis of rational criteria such as skill, education, experience, responsibilities, hazards, etc., and are priced accordingly.

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An equitable wage structure is a natural outcome of job evaluation. An unbiased job evaluation tends to eliminate salary inequities by placing jobs having similar requirements in the same salary range.

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Employees as well as unions participate as members of job evaluation committee while determining rate grades for different jobs. This helps in solving wage related grievances quickly.

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Job evaluation, when conducted properly and with care, helps in the evaluation of new jobs.

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It points out possibilities of more appropriate use of the plant's labour force by indicating jobs that need more or less skilled workers than those who are manning these jobs currently.

Job evaluation methods There are three basic methods of job evaluation: (1) ranking, (2) classification, (3) factor comparison. While many variations of these methods exist in practice, the three basic approaches are described here. Ranking method Perhaps the simplest method of job evaluation is the ranking method. According to this method, jobs are arranged from highest to lowest, in order of their value or merit to the organization. Jobs can also be arranged according to the relative difficulty in performing them. The jobs are examined as a whole rather than on the basis of important factors in the job; 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. Jobs are usually ranked in each department and then the department rankings are combined to develop an organizational ranking. The variation in payment of salaries depends on the variation of the nature of the job performed by the

employees. The ranking method is simple to understand and practice and it is best suited for a small organisation. Its simplicity however works to its disadvantage in big organisations because rankings are difficult to develop in a large, complex organisation. Moreover, this kind of ranking is highly subjective in nature and may offend many employees. Therefore, a more scientific and fruitful way of job evaluation is called for. Classification method According to this method, a predetermined number of job groups or job classes are established and jobs are assigned to these classifications. This method places groups of jobs into job classes or job grades. Separate classes may include office, clerical, managerial, personnel, etc. Following is a brief description of such a classification in an office. •

Class I - Executives: Further classification under this category may be Office Manager, Deputy office manager, Office superintendent, Departmental supervisor, etc.

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Class II - Skilled workers: Under this category may come the Purchasing assistant, Cashier, Receipts clerk, etc.

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Class III - Semiskilled workers: Under this category may come Stenotypists, Machineoperators, Switchboard operator etc.

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Class IV - Unskilled workers: This category comprises Daftaris, File clerks, Office boys, etc.

The job classification method is less subjective when compared to the earlier ranking method. The system is very easy to understand and acceptable to almost all employees without hesitation. One strong point in favour of the method is that it takes into account all the factors that a job comprises. This system can be effectively used for a variety of jobs. The weaknesses of the job classification method are: •

Even when the requirements of different jobs differ, they may be combined into a single category, depending on the status a job carries.

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It is difficult to write all-inclusive descriptions of a grade.

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The method oversimplifies sharp differences between different jobs and different grades.

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When individual job descriptions and grade descriptions do not match well, the evaluators have the tendency to classify the job using their subjective judgments.

Factor comparison method A more systematic and scientific method of job evaluation is the factor comparison method. Though it is the most complex method of all, it is consistent and appreciable. Under this method, instead of ranking complete jobs, each job is ranked according to a series of factors. These factors include mental effort, physical effort, skill needed, responsibility, supervisory responsibility, working conditions and other such factors (for instance, know-how, problem solving abilities, accountability, etc.). Pay will be

assigned in this method by comparing the weights of the factors required for each job, i.e., the present wages paid for key jobs may be divided among the factors weighted by importance (the most important factor, for instance, mental effort, receives the highest weight). In other words, wages are assigned to the job in comparison to its ranking on each job factor. The steps involved in factor comparison method may be briefly stated thus: •

Select key jobs (say 15 to 20), representing wage/salary levels across the organisation. The selected jobs must represent as many departments as possible.

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Find the factors in terms of which the jobs are evaluated (such as skill, mental effort, responsibility, physical effort, working conditions, etc.).

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Rank the selected jobs under each factor (by each and every member of the job evaluation committee) independently.

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Assign money value to each level of each factor (example: consider problem solving is one of the factor, what level of problem solving is required {basic, intermediate or advance}) and determine the wage rates for each key job.

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The wage rate for a job is apportioned along the identified factors.

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All other jobs are compared with the list of key jobs and wage rates are determined. An example of how the factor comparison method works is given below:

After the wage rate for a job is distributed along the identified and ranked factors, all other jobs in the department are compared in terms of each factor. Suppose the job of a 'painter' is found to be similar electrician in skill (15), fitter in mental effort (10), welder in physical effort (12) cleaner in responsibility! (6) and labourer in working conditions (4). The wage rate for this job would be (15+10+12+6+4) is47. Point method This method is widely used currently. Here, 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 point totals are placed in similar pay grades. The procedure involved may be explained thus: 1. Select key jobs. Identify the factors common to all the identified jobs such as skill, effort, responsibility, etc. 2. Divide each major factor into a number of sub factors. Each sub factor is defined and expressed clearly in the order of importance, preferably along a scale. The most frequent factors employed in point systems are (i) Skill (key factor); Education and training required, Breadth/depth of experience required, Social skills required, Problem-solving skills, Degree of discretion/use of judgment, Creative thinking (ii) Responsibility/Accountability: Breadth

of responsibility, Specialized responsibility, Complexity of the work, Degree of freedom to act, Number and nature of subordinate staff, Extent of accountability for equipment/plant, Extent of accountability for product/materials; (iii) Effort: Mental demands of a job, Physical demands of a job, Degree of potential stress The educational requirements (sub factor) under the skill (key factor) may be expressed thus in the order of importance. 3. Find the maximum number of points assigned to each job (after adding up the point values of all subfactors of such a job). This would help in finding the relative worth of a job. For instance, the maximum points assigned to an officer's job in a bank come to 540. The manager's job, after adding up key factors + sub factors points, may be getting a point value of say 650 from the job evaluation committee. This job is now priced at a higher level. 4, Once the worth of a job in terms of total points is expressed, the points are converted into money values keeping in view the hourly/daily wage rates. A wage survey is usually undertaken to collect wage rates of certain key jobs in the organization. Let's explain this: Market Pricing Market pricing is the process for determining the external value of jobs, allowing you to establish wage and salary structures and pay rates that are market sensitive. Job matching session is conducted. Merits and demerits The point method is a superior and widely used method of evaluating jobs. It forces raters to look into all key factors and sub-factors of a job. Point values are assigned to all factors in a systematic way, eliminating bias at every stage. It is reliable because raters using similar criteria would get more or less similar answers. The methodology underlying the approach contributes to a minimum of rating error (Robbins p. 361). It accounts for differences in wage rates for various jobs on the strength of job factors. Jobs may change over time, but the rating scales established under the point method remain unaffected. On the negative side, the point method is complex. Preparing a manual for various jobs, fixing values for key and sub-factors, establishing wage rates for different grades, etc., is a time consuming process, According to Decenzo and Robbins, "the key criteria must be carefully and clearly identified, degrees of factors have to be agreed upon in terms that mean the same to all rates, the weight of each criterion has to be established and point values must be assigned to degrees". This may be too taxing, especially while evaluating managerial jobs where the nature of work (varied, complex, novel) is such that it cannot be expressed in quantifiable numbers. Limitations of job evaluation

1. Job evaluation is not exactly scientific. 2. The most of the techniques are difficult to understand, even for the supervisors. 3. The factors taken by the programme are not exhaustive. 4. There may be wide fluctuations in compensable factors in view of changes in technology, values and aspirations of employers, etc. 5. Employees, trade union leaders, management and the programme operators may assign different weight to different factors, thus creating grounds for dispute.

Conduct a job evaluation By Susan M. Heathfield Your employees want fair pay. Your employees want regular raises. You want to attract and retain talented employees in your organization. Your employees need clarity about their roles and responsibilities as well as about what's expected from them. Job evaluation, performed effectively and used to clarify and revise job descriptions and position responsibilities, is your solution to all of these issues. As a compensation and benefits specialist, you are responsible for developing a fair compensation plan. Job evaluation is a tool used to evaluate the worth of each job in your organization and in today's labor market. A successful job evaluation system can help you make your organization's pay system equitable, understandable, legally defensible, approachable, and externally competitive. You can use job evaluations to: • • •

Clarify job descriptions so that employees understand the expectations of their roles and the relationship of their roles to other jobs within the organization. Attract desirable job candidates. Retain high-potential employees.

What is job evaluation? Job evaluation is a systematic process that you can use to determine the relative level, importance, complexity, and value of each job in your organization. With a successful job evaluation system, you can compare each job to other jobs within your organization. It is best to perform job evaluation after work analysis. Job evaluation, in conjunction with work analysis, helps you develop a job description that is broad, descriptive, and flexible so that you can adapt the description to your organization's changing needs. Assess employee contribution Job evaluation helps you establish and qualify differences in employee contribution across jobs. These differences provide a foundation for employee compensation decisions. The job evaluation process

measures the elements of a job and produces an overall score. In each case, you evaluate the job, not the employee who performs the job. Assess job content and value Typically, job evaluation assesses both the content of a job and the value of a job for your organization. • •

Job content refers to the type of work performed and the skills and knowledge necessary to perform the work. Job value refers to the job's degree of contribution in meeting your organization's goals and the degree of difficulty in filling the job. Factors in job evaluation Job evaluators often assess jobs based on these factors:

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Training level or qualifications requirements Knowledge and skills requirements Complexity of tasks Interaction with various levels of the organization Problem-solving and independent judgment Accountability and responsibility Decision-making authority Degree of supervision required Cross-training requirements Working conditions Degree of difficulty in filling job Create a team To promote widespread support, understanding, and acceptance across your organization, create a cross-functional team to work on job evaluation. The team should represent various levels and jobs within your organization. Select the job evaluation method Communicate with employees Steps in job evaluation The standard steps in job evaluation include:

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Introduce the concept of job evaluation.

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Obtain management approval for the evaluation.

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Train the job evaluation selection team.

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Review and select the job evaluation method.

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Gather information on all internal jobs.

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Use information to fully expand job descriptions.

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Use the selected job evaluation method to rank jobs hierarchically or in groups.

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Link the ranked jobs with your compensation system or develop a new system.

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Implement the job evaluation and compensation systems.

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Periodically review your job evaluation system and the resulting compensation decisions. Analyze job evaluation methods Five job evaluation systems are most commonly used:

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Ranking Classification Point evaluation Factor comparison Market comparison Ranking Ranking jobs is the easiest, fastest, and least expensive approach to job evaluation. It is also most effective in smaller organizations with few job classifications. To rank positions, order jobs from highest to lowest based on their relative value to your organization. The process of job ranking typically assigns more value to jobs that require managerial or technical competencies. More value is also assigned to jobs that supervise, exercise decision-making authority, or rely on independent judgment. For example, a job-ranking system might rank the job of CEO as the most valued job within the organization and the job of product assembler as the least valued.

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Advantages Simplicity is the main advantage in using a ranking system. It is also easy to communicate the results to employees, and it is easy to understand. Disadvantages Ranking jobs is subjective. Jobs are evaluated, and their value and complexity are often assessed on the basis of opinion. Also, when creating a new job, existing jobs must be reranked to accommodate the the new position. Classification The general purpose of job classification is to create and maintain pay grades for comparable work across your organization. To conduct a job classification: First, write descriptions for a category of jobs; next, develop standards for each job category by describing the key characteristics of those jobs in the category; finally, match all jobs to the categories based on the similarity of tasks, the decision-making exercised, and the job's contribution to the organization's overall goals. Universities, government employers and agencies, and other large organizations with limited resources typically use job classification systems. These types of organizations have many types of jobs at diverse locations and must maintain equitable and fair standards across all work settings.

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Advantage Job classification is simple once you establish your categories. You can assign new jobs and jobs with changing responsibilities within the existing system. Disadvantages Job classification is subjective, so jobs mightfall into several categories. Decisions rely on the judgment of the job evaluator. Job evaluators must evaluate jobs carefully because similar titles might describe different jobs from different work sites. Point evaluation Point evaluation is the most widely used job evaluation method. In a point evaluation system, you express the value of a particular job in monetary terms. You first identify compensable factors that a group of jobs possess. Based on these factors, you assign points that numerically represent the description and range of the job. Examples of compensable factors are skills required, level of decision-making authority, number of reporting staff members, and working conditions.

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Advantage This method is often viewed as less biased than other methods because the job evaluator assigns each job's total points before the compensable factors become part of the equation. Disadvantages Subjective decisions about compensable factors and the associated points assigned might be dominate. The job evaluator must be aware of biases and ensure that they are not represented in points assigned to jobs that are traditionally held by minority and female employees. Factor comparison Job evaluators rank jobs that have similar responsibilities and tasks according to points assigned to compensable factors. The evaluators then analyze jobs in the external labor market to establish the market rate for such factors. Jobs across the organization are then compared to the benchmark jobs according to the market rate of each job's compensable factors to determine job salaries.

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Advantage This method results in customized job-ranking. Disadvantage Compensable factor comparison is a time-consuming and subjective process. Market comparison Job evaluators compare compensation for your organization's jobs to the market rate for similar jobs. This method requires accurate market-pricing surveys. The value of job evaluation Job evaluation is a powerful tool in the compensation and benefits specialist's repertoire. Effective job evaluation helps you gather information to develop job descriptions that meet the changing needs of your organization. By implementing a successful job evaluation, you can develop an equitable compensation plan and attract and retain high-performing and talented employees.

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More information Conduct an effective pay study Use market pay data to develop appropriate pay scales Develop a pay structure that reflects your company values

What is job evaluation? There are two basic types of job evaluation schemes, 'analytical' and 'non-analytical': Analytical schemes Jobs are broken down into components or demands, known as factors, and scores are awarded for each factor. The final total gives the overall rank order of jobs. An analytical job evaluation scheme can provide a defence against a claim of equal pay for work of equal value, but only if you can demonstrate that the scheme is free of sex bias. You need to ensure that you can do this. The checklists will help you to do so. Non-analytical schemes Whole jobs are compared with each other. There is no attempt to break the jobs down and analyse them under their various demands or components. Non-analytical schemes are particularly prone to sex discrimination because comparative judgements about jobs made by the evaluators will have little objective basis, other than the traditional value of the job. Examples of non-analytical schemes include job ranking and paired comparisons. These represent different ways of drawing up a list of jobs in rank order. The rationale for non-analytical job evaluation is that it produces a hierarchy of jobs that approximates to the 'felt-fair' ranking of these jobs in the minds of the people working in the organisation. But, in many cases,whether the jobholders are predominantly male or predominantly female influences the placing of that job within the overall rank order. Non-analytical job evaluation can thus perpetuate a situation in which the jobs most frequently performed by women are regarded as being of less value than the jobs mostly performed by men. A non-analytical job evaluation scheme does not provide you with a defence against a claim of equal pay for work of equal value.

job evaluation Definition 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.

Is a job evaluation system is used to determine the relative value of one job to another?

Is job analysis still relevant?

What does job evaluation determine the relative worth of jobs within a firm?

What is job evaluation How does it help determine the worth of an individual job?