TOPIC 10: JOB EVALUATION

Introduction

Job evaluation is a systematic process of defining the relative worth or size of jobs or roles

within an organization in order to establish internal relativities and provide the basis for

designing an equitable grade structure, grading jobs in the structure and managing relativities.

Job evaluation provides a standard procedure for determining the relative worth of each job in

the organization and if communicated to the employees high levels of loyalty, motivation and

commitment will be achieved.

Job evaluation has the following broad goals:

~ To provide a strategic framework with the view of making rationale decisions on pay

~ To promote equal pay for equal work

Job evaluation has the following specific objectives:

~ To provide a standard procedure for determining the relative worth of each job in the

organization

~ To provide a factual basis for consideration of wage rates

~ To provide a fair and equitable pay for each job

~ To secure and maintain a complete, accurate and impersonal description of each distinct

job

~ To promote fair and accurate consideration of all employees for advancement, transfer

and promotions

~ To provide information for recruitment

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

The purpose of job evaluation is to produce a defensive ranking of jobs on which a rational and

acceptable pay structure can be built. The important features of job evaluation may be

summarized thus:

~ It tries to assess jobs, not people.

~ The standards of job evaluation are relative, not absolute.

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

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

~ Some degree of subjectivity is always present in job evaluation.

~ Job evaluation does not fix pay scales, but merely provides a basis for evaluating a

rational wage structure.

Process of Job Evaluation

The process of job evaluation involves the following steps:

i) 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 programme further, oral presentations

could be made. Letters, booklets could be used to classify all relevant aspects of the job

evaluation programme.

ii) 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.

iii) Finding the jobs to be evaluated: Every job need 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.

iv) Analyzing and preparing job description

This requires the preparation of a job description and also an analysis of job needs for successful

performance .

v) Selecting the method of evaluation

The most important method of evaluating the jobs must be identified now, keeping the job

factors as well as organizational demands in mind.

vi) Classifying jobs

The relative worth of various jobs in an organization 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.

vii) Installing the programme

Once the evaluation process is over and a plan of action is ready, management must explain it to

employees and put it into operation.

viii) Reviewing periodically

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, after computerization. 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.

Job Evaluation Methods

Non- Analytical Schemes

Ranking Method

Job ranking, which involves comparison of whole jobs with reference to the benchmark jobs.

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.

Paired comparisons

Paired comparisons are forced comparisons which introduces an element of scoring to give an

indication of degree of importance between jobs.

Job matching

Job matching that is ranking jobs around jobs with no predetermined scale of value.

Job classification

Job classification is based on an initial definition of number and grade descriptions

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.

Analytical Schemes

There are three analytical schemes of job evaluation: Points rating, factor comparison and Hay

Points all involve the allocation of point values to various job compensable factors and joining

them together to form a whole job.

Points Rating Schemes

Points rating scheme is an analytical method of job evaluation, which breaks jobs down into their

component tasks, responsibilities and other factors and asses the job factor by factor, allocating

points for each factor and allocating monetary sums to them.

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.

Procedures for points rating method

i) Selection of Job compensable factors

ii) Selection of Job compensable factors

iii) Divide factors into degrees or levels

iv) Description of the degrees/ factor levels

v) Assign points to degree levels

vi) Rate jobs on each factor

vii) Total the point values

viii) Rearrange jobs in a ranking order

ix) Allocate pay ranges to the ranked jobs

x) Choose a relevant pay structure for the ranked jobs

Advantages

~ 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.

Disadvantages

~ 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.

Factor comparison

The 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.

~ Find the factors in terms of which the jobs are evaluated (such as skill, mental effort,

responsibility, physical effort, working conditions, etc.).

~ Rank the selected jobs under each factor (by each and every member of the job

evaluation committee) independently.

~ Assign money value to each factor and determine the wage rates for each key job.

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

~ All other jobs are compared with the list of key jobs and wage rates are determined.

Hay Points

Hay Job Evaluation is a methodology used by many corporates and organizations to map out

their job roles in the context of the organizational structure. The general purpose for carrying out

job evaluations using this or similar methods is to enable organizations to map all their roles in a

manner that delivers the following key benefits

~ Recognizing equivalent levels for the purposes of salary and benefit grading/banding

~ Improved succession planning

~ Creation of more useful and focused job descriptions

Basis of the Method

~ The method divides the job into separate elements.

~ Objective measures are applied to the different elements, and the separate scores are

combined to give an overall score for the job.

~ Having an overall score allows the jobs in the organization to be placed in rank order,

according to their ‘size’, providing a basis for fair pay.

~ In job evaluation terminology, the word ‘size’ is used to indicate the relative significance

or importance of a job to the organization. It is not an absolute term.

Components of the method

The method has three main factors and eight dimensions as follows:

Know-how

The sum of every kind of knowledge, skill and experience, however acquired, needed for

acceptable job performance. Its three dimensions are requirements for:

~ Practical procedures, specialized techniques and knowledge within occupational fields,

commercial functions, and professional or scientific disciplines.

~ Integrating and harmonizing the diverse elements involved in managerial situations. This

involves, in some combination, skills in planning, organizing, executing, controlling and

evaluating and may be exercised consultatively as well as executively.

~ Active, practicing person-to-person skills in work with other people, within or outside the

organization.

Problem Solving

The original, self-starting use of Know-how required by the job to identify, define, and resolve

problems. ‘You think with what you know’. This is true of even the most creative work. The raw

material of any thinking is knowledge of facts, principles and means. For that reason, Problem

Solving is treated as a percentage of Know-how.

Problem Solving has two dimensions:

~ the environment in which thinking takes place;

~ the challenge presented by the thinking to be done.

Accountability

The answerability for action and for the consequences of that action. It is the measured effect of

the job on end results of the organization. It has three dimensions in the following order of

importance:

~ Freedom to act: the extent of the personal, procedural, or systematic guidance or control of

actions in relation to the primary emphasis of the job.

~ Job impact on end results: the extent to which the job can directly affect actions necessary to

produce results within its primary emphasis.

~ Magnitude: the portion of the total organization encompassed by the primary emphasis of the

job. Where possible, magnitude is expressed in annual financial figures representing the area

of primary emphasis of the job.

Beyond these three factors of job content, additional scales can be used to assess factors

relating to the context in which the job operates; for example, unpleasant working

environment, hazards, physical demands, sensory attention, etc. When such factors are

important for the jobs under consideration, scales are generated to enable their assessment

within the context of the organization.

The Hay Guide Chart itself comprises point system, so that after job evaluation in terms of

factors, dimensions and gradation, job scores can simply be read from the chart.

The point system uses geometric progression and not linear. This preserves the integrity of the

system at all ends of the grading spectrum.

A criticism leveled against the Hay Guide Chart is that the choice of factors is skewed towards

traditional management values:

Limitations of Job Evaluation

~ Job evaluation is not exactly scientific.

~ 'The modus operand^ of most of the techniques is difficult to understand, even for the

supervisors.

~ The factors taken by the programme are not exhaustive.

~ There may be wide fluctuations in compensable factors in view of changes in technology,

values and aspirations of employers, etc.

~ Employees, trade union leaders, management and the programme operators may assign

different weight to different factors, thus creating grounds for dispute.