What is Job Evaluation?

Job evaluation is a structured way of measuring a specific job’s value compared to other

positions within an organization. Job evaluation aims to create a framework to compare the value

of the various jobs so that there is some foundation to how wages are calculated for different

positions.

The factors mentioned above can affect how a specific job is carried out and what value is

attached to that job.

Advancements in technology could reduce the workload of your employees. It frees up time to

direct other responsibilities, demanding a corresponding change in pay.

Increased tenure and responsibilities demand regular job evaluations to ensure employee

satisfaction. If responsibilities and tenure continue, you’ve retained, and the person stayed for

appreciable reasons.

In some cases, the entire organization goes through some restructuring. This can mean that some

people are doing less than before while others are doing more work than before. All this calls for

job evaluation to ensure that everyone gets what they deserve and that the company is also

getting the most bang for its buck.

In some cases, employees may even request that their job be reassessed and that their pay grades

be re-evaluated. For example, one of the reasons for a pay increase could be that the employee

has taken on more duties. Another reason could be that they have been given more authority in

that position and, thus, more responsibility.

Here are the 5 Best Job Evaluation Methods

1. Ranking Method
 This job evaluation method works by ranking jobs according to their perceived value

compared to other jobs. It does not take into account the jobs’ market value. This method

works for smaller organizations.

Larger organizations, generally, have more positions and may require the jobs to be

grouped. For example, this method could be applied if all level ‘A’ staff were grouped

into one section and the same was done for level ‘B’ staff, irrespective of what their jobs

require them to carry out.

2. Grading/Classification Method

In this job evaluation method, jobs are grouped based on certain characteristics. The level

of skill required to carry out the job is one aspect. The second aspect is an employee's

responsibility while carrying out that job. This job evaluation method is relatively

straightforward and does not take as much time to carry out as others on this list.

The auditor creates a set of job characteristics. He then groups the jobs into grades or

classifications. While this seems relatively straightforward, some of the jobs in an

organization may not match the predetermined criteria.

3. Point-Factor Method

This job evaluation method uses specific factors about the job to determine how much

value they add to a job role. These factors are divided into different sectors, such as

skills, responsibilities, and required effort.

These factors are then assigned a numerical weightage. Finally, the overall factors or

points for a specific job are added up and compared against other jobs to understand the

value of the jobs.

This method clarifies a job’s internal value without considering market value.

4. Factor Comparison Method

 This job evaluation method is similar to the point-factor method. However, instead of

merely assigning a numerical weightage, a monetary value is assigned to each factor.

Many organizations don’t employ this method as it can become very complex. It can also

be challenging to communicate the job values assigned to employees as they tend to be

subjective.

5. Competitive Market Analysis Method

This job evaluation method relies on external information about a job’s value within an

organization. This means that similar jobs in the market are considered, and the
information could come via job postings. First, the job positions, roles, and duties

involved are studied and compared to the job in question. Then the monetary value, in

terms of compensation for those jobs, is researched, and the value of the specific position

is determined.

This particular job evaluation method also raises the question, “Where does our company

position itself in the job market?”.

Some companies within an industry may offer different remunerations for the same role,

which means that deciding what your company offers as remuneration dictates where the

job’s value stands. Using this method means that a company essentially measures itself

against the competition and then decides where they stand.

Question 2.

Definition of Incentive
Incentive in simple terms is something that encourages a person or organization to do
or achieve something. It is something that incites or has a tendency to incite a
determination. This is usually given in cash or in kind.

In business, the objective of incentive is to increase employee productivity, improve

industrial and interpersonal relations, and as result increase the overall profit of the
organization.
 Types of Incentives
Incentives can be generally classified as financial (monetary) incentives and non-
financial (non-monetary) incentives.

1. Financial (Monetary) Incentives

Financial incentive pertains to those incentives which are in the form of money or can
be measured in monetary terms. This is sometimes referred to as monetary benefit
offered to consumers, employees, and organizations to encourage behavior or actions
which otherwise would not take place.
These incentives can be given on an individual or group basis and satisfy the monetary
and future security needs of individuals. It lifts the eagerness and self-confidence of the
employees thus, resulting in better productivity and performance.

The most commonly used financial incentives are:

Pay and allowance salary is the basic incentive given to every employee to work
efficiently and effectively in an organization. This includes the basic pay, dearness
allowance, clothing allowances, house rent allowances, and other similar allowances. It
is paid most commonly monthly.
Typically, employees are given annual increments in their basic pay and allowances
depending on the employee’s performance during the year.

 Bonus
It is a sum of money added to the basic salary or wages on a seasonal basis, as a
reward for a good performance. Many companies offer bonuses during the festivals of
Diwali, Christmas, New Year, etc.

 Productivity linked Wage Incentives

This refers to performance-linked compensation given to increase productivity. Wage
incentives are offered to employees to make them perform beyond the accepted
standards.

For example, a manufacturing worker is paid 50 dollars per item if he produces 50 items
a day but if he produces more than 50 items a day, he is paid 5 dollars extra per item.
Thus, on the 51st item, he will receive 55 dollars.

 Profit-Sharing
It is an incentivized compensation program in which an employee receives a direct
share of the company’s profits. The amount granted is normally based on the
company’s positive earnings over a set period. This motivates them to perform
efficiently and give their best to increase the company’s profits.
 Retirement benefits
Retirement benefits like gratuity, pension, provident fund, leave encashment, etc.
provide financial security to the employees upon retiring from the company Hence, they
work properly during their term of service.

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investor.
 Commission
Some companies offer a commission on top of the employee’s salary for successfully
hitting targets over a set period. This incentive motivates the employees to increase the
client base of the organization.

 Perquisites
Several organizations offer perquisites and fringe benefits such as free accommodation,
medical, educational, and recreational facilities, car allowances, etc. in addition to the
salary and allowances to their employees. Sometimes, this incidental payment, benefit,
or privilege is enjoyed as a result of one’s position.

 Co-partnership/Stock Option
Under this incentive system, employees are offered shares at a price that is lower than
the market price. This practice helps in creating a feeling of ownership among
employees and motivates them to give their all-out contribution towards organizational
growth and success.

2. Non-Financial (Non-Monetary) Incentives

These are types of rewards that do not form part of an employee’s pay or cannot be
measured in terms of money.

While the monetary and future security needs are important, the fulfillment of an
individual’s social, psychological, and emotional needs also plays an important role.

 Status
It is one’s social or professional position. In an organization, this refers to the position in
the hierarchy of the organizational chart. Management-level employees have more
authority, responsibility, recognition, salary, etc., than those of the rank-and-file
employees.

The level of authority and responsibility determine the status of an employee in an

organization. Status increases the self-esteem, confidence, and psychological needs of
an individual resulting in a motivated attitude at work.

 Organizational Climate
 Organizational climate refers to the environmental characteristics of an organization as
perceived by its employees. It conveys the impression that people have towards the
internal environment of the company within which they work and have a key influence
on their performance.

This differs from one organization to another. Several factors may influence the
organizational climate of a company, such as organizational structure, individual
responsibility, risk and risk-taking, warmth, and support within the company, its
tolerance and conflict, and more. A positive organizational climate tends to increase the
efficiency of employees at work.

 Career Advancement Opportunity

Organizations have to establish the appropriate skill and career development programs,
and even a sound promotion policy for their employees, that serves as a booster for
them to perform well and get promoted. Upward progress in one’s career, such as
promotion, shows recognition and appreciation of an employee’s work, motivating him
to do better.
 Job Enrichment
It refers to the designing of jobs in such a way that it involves challenging and variety of
tasks, requiring a higher level of knowledge and skill, more autonomy and responsibility,
and more growth opportunities and thus, could also increase employees’ pay.
Sometimes, when the job itself is interesting, it already serves as a good source of
motivation.

 Job Security
Job security offers future stability and a sense of security among the employees in an
organization. Not having to worry about the future gives a sense of enthusiasm at work.
While there is an undesirable aspect of this incentive, like employees taking their jobs
for granted, the increasing rate of unemployment in our country makes this a great work
incentive.

 Employee Recognition Programs

The organization adopts this to raise employee morale, attract and retain key
employees, elevate productivity within an organization, and increase competitiveness.
This pertains to employers’ initiatives to reward their employees for achievements, new
behaviors, anniversaries, and milestones unlocked during their stay in the company.

For example, rewarding the best performer of the month, and announcing and
displaying their names on the notice boards, are programs for employee recognition.

 Employee Participation and Empowerment

This refers to the employee’s involvement in decision making on the matters related to
them (participation) inducing a sense of belongingness and giving them more autonomy
and powers to subordinates (empowerment) to make them feel the importance of their
presence and service to the organization.
 In a 2009 survey conducted by McKinsey & Company, non-financial incentives were
valued as more influential motivators than financial incentives.

The top three financial rewards were performance-based cash bonuses, an increase in
base pay, and stock or stock options. The top three non-financial incentives were praise
and commendation from an immediate manager, attention from leaders, and
opportunities to lead projects or task forces.

 The most popular incentive – praise from the boss

 The second most popular – attention from leaders
 The least popular – stock or stock options
 All three of the non-financial incentives were more popular than the leading financial incentive

According to the survey, the top two incentives are based on getting praise and
validation from their immediate supervisors or management. These two elements are
considered vital to all dealings, including employee-employer. Commendation and
validation should be the focus of non-financial incentives for employees.

Effective Non-financial Incentives

An effective non-monetary incentive for employees directly touches emotions to make
the employee feel good, appreciated, and valued.

Investing in the workforce by showing appreciation and recognition in imaginative ways

is one of the best ways for companies to retain talented employees and create a
sustainable culture of success.