Bangladesh University

Compensation Management
Md. Hasan Talukdar
Lecturer (Part-Time)
Department of Business Administration
Job Evaluation
Definition of Job Evaluation:
Job Evaluation means to determine the value or worth of job. Job Evaluation involves
determination of relative worth of jobs among a set of jobs to ensure establishment of
compensation system properly. Job evaluation helps to identify the values and priorities of jobs to
Management and Employees.

Process of Job Evaluation:

The process of Job Evaluation involves six steps. The steps in Job Evaluation process are shown
in a figure below and discussed:

Step-1: Determining Job Evaluation techniques

Job Evaluation techniques can be single or multiple. The very first step of job evaluation is to
choose what techniques to be used for evaluating the jobs. There are several categories of jobs and
different persons are employed to perform the jobs. Jobs of an operator differ from that of a
manager. If both the jobs can be evaluated based on same compensable factor, it is single technique
of job evaluation. But sometimes it is difficult to use single technique to evaluate the jobs as the
jobs vary from each other. In this case more than one evaluation techniques are used. So, First, it
is required to determine the single or multiple techniques of job evaluation.
Step-2: Choosing job evaluation committee
A job evaluation committee is required to oversee and evaluate the results of job evaluation. The
committee can be consisted by employees’ representatives, supervisors, managers and if necessary
union representatives. The task of the committee is to review the job description and conducting
an analysis of the job description to determine the value of the jobs.
Step-3: Training Employees to conduct Job Evaluations
Job evaluations should be complied with the strategy and objectives of the company. To make the
employees understand the objectives of the job evaluation process, they should be trained. The
evaluators should test the selected job evaluation criteria before applying to the practical jobs.
Evaluators should also consider the legal compliances in case of making decisions.
Step-4: Documenting Job Evaluation Plan
Evaluation plan properly defines the bases of evaluation. Business and job-related criteria can be
easily known from a well-documented evaluation plan. Moreover, it can help in legal and training
purposes in future. It can help employees to understand the ways of job evaluation and criteria
used to evaluate the jobs. So, in this step, Job Evaluation plan should be documented properly.
Step-5: Communicating with employees
The results of the job evaluation and the process of job evaluation must be communicated with the
employees. Job evaluation is important to the employees in the same way it is important to the
company. Employees must accept the job evaluation as it is related to their jobs. So, it is also
important to communicate the job evaluation with the employees to make them understand and
gaining their acceptance. Employees should be provided the information of job evaluation and
their feedback should also be considered.
Step-6: Setting up the appeals process
There should be opportunity to reexamine the job evaluation to avoid discrimination. An appeal
procedure must be developed so that reexamination can be held if there is any complaint of
discrimination. This task is usually performed by the committee developed in the step-2. The
committee may include compensation professionals besides representatives of employees and
supervisors. This is the last stage of the Job Evaluation process.

Methods of Job Evaluation:

The job evaluation methods can be can be categorized mainly in two types. Job content evaluation
and Market based evaluation.
Market based evaluation:
Market based evaluation is based on the labor market or includes market conditions. This method
is also known as market pricing method of job evaluation. By taking the external value of the job,
the evaluation is performed in this method.
Job content-based evaluations:
In job content-based evaluations, the jobs are evaluated based on the contents they consist of. A
hierarchy of internal job worth based on the jobs’ role in the company is developed under this
method of job evaluation. There are several content-based job evaluation methods:
Point Method:
Point method uses quantitative methodology to evaluate any job. Numerical values are assigned
to the compensable factor or content of the job that defines the job. The numerical values are then
summed up or added to find the total value. Then the jobs are categorized according to the total
value starting from highest value to lowest. The factors are compared to each other to set the value
and evaluate the jobs.
There are some other job content based evaluation methods that use qualitative methods. They are
discussed below:
Ranking Method:
In this method, jobs are categorized from highest to lowest in order of its value to the company.
This is the easiest method of job evaluation. For example: Top management jobs are categorized
as highest value job.
Paired comparisons:
This method is useful if many jobs are to be evaluated (more than twenty). First, possible job pairs
are identified and then the evaluation committee assigns point to the highest value job for each
pair. The lowest value job is not given any point by the committee. Then the total points are
calculated to rank the jobs from highest to lowest.
Alternation ranking:
Single criterion like job complexity or importance of job to the strategy of the organization is used
to determine the relative value of the jobs. The most valuable job is first identified then the next
valuable job. The process ends when there is no job left to evaluate.
Classification Method:
The jobs are evaluated based of its nature and importance in classification method. A
Predetermined number of job groups are established and jobs are assigned to these classifications.
For example: The job groups may be office, clerical or managerial.
These are the methods of Job Evaluation.
Pitfalls of job evaluation:
Job evaluation has some pitfalls. These are:
1.It is a systematic and not a scientific technique: In the rewarding job,it lacks scientific
precision because all factors cannot be measured accurately.
2.There is no standard list of factors: Too many factors are used in job evaluation and moreover
there is no standard list of factors to be considered. Definition of factors from organisation to
organisation.
3.Individual merit is ignored: There is a strong feeling among worker that individual merit
should also be rewarded. So, some kind of merit rating scheme has to be super-imposed upon the
evaluate rates. If individual abilities are not considered, some workers will always try to adjust
themselves elsewhere. Thus, it will increase rate of labour turnover.
4.To much reliance on internal standards and wage rates in industry or region are ignored:
Job evaluation tends to be inflexible is so far as it does not give right weightage to rates prevalent
in the industry or region as whole. It relies too much on internal standards and evaluation for fixing
wage rates.
5.Some of the job evaluation techniques are not understandable by workers: Some of job
evaluation techniques particularly ‘point method and factor comparison method are not easy to
understand by workers and moreover they fear that job evaluation will do away with collective
bargaining.
6.job evaluation is no answer to all wage problem: Because it says nothing about the absolute
size of wage differentials appropriate to the evaluated job structure. It presents only the
comparative worth of the job within the organization.
7.Unrealistic assumption: Job evaluation is based on the assumption that wage rate can be related
to the work of a given job. It completely ignores the fact that conditions in the labour market
exercise greater influence in the determination of wage
8.Focus on how to advance in position: It encourages employees to focus on how to advance in
position in the organisation at the time when there may be only limited opportunities for
enhancement as a result of downsizing.
9.Not suitable for forward looking organisation: It is not suitable for forward looking
organisation that has trimmed multiple job title into two or three broad jobs.