Chapter 3 - Class Notes

Job evaluation
- systematic and objective process of comparing one job to another within an organisation to
arrive at a different job levels or a ‘pecking order’
- it does so without looking at individual characteristics, personality or performance
- individual abilities and efforts may be taken into account and reflected in the employees
earnings
- this is entirely different from grading a job
- job evaluation grades the job, not the person
- neither individual effort nor labour market conditions are taken into account when conducting
the grading

Why do we need job evaluation?

- when an organisation is first formed, the owner or manager knows exactly what tasks are
performed in every job, what person is required to fill that post, and how much ot pay
- if necessary, this ‘pay policy’ can be justified to employees
- employee usually has one-on-one relationship with the manager and negotiation around the
remuneration issue is informal and frequent
- as the organisation grows, it becomes more structured to enable the owner, manager or
management team to control it
- various sections are created
- sectional managers become responsible for the hiring, firing and remuneration levels of staff
- the changing perception of management and the varied priorities between section managers
lead to discrepancies in pay rates between divisions even between jobs with similar skills
- pay them correctly based on job evaluations
- justify grading and pay through job evaluation
- differences in pay that cannot be justified - conduct job evaluation
- agreements between unions may demand job evaluation

Pay rates

Reasons for variety of pay rates existing

- little coordination for pay rates
- no logical basis for the pay structure
- constant demands for parity and general dissatisfaction

- some countries have legislation around pay equity or equal ay for work of equal value
- having a job evaluation system goes a long way to comply with this type of legislation because
one can more easily explain why certain categories of employees earn commensurate amounts
of pay
Points to note about job evaluation
- no such thing as a scientific method of job evaluation
- although scientific principles and process may have been used in the development of certain
methods, in practice they are all systematic approaches to the establishment of the hierarchy of
jobs in an organisation
- all job evaluation methods used worldwide do the same thing
- they rank the relative worth of one job to another, and produce almost identical hierarchies
- all job evaluation systems do the same thing
- comparing and ranking jobs depending on relative work
- organisations should select the best according to their requirements but realise that good
implementation and ongoing management as well as technical support from suppliers of the
system are more important than the system chosen

When should job evaluation be used?

- variety of pay rates exist for a variety of reasons
- similar jobs are rewarded on different levels
- demands for parity
- little coordination of pay rates
- no logical basis for pay rates
- “job values” are confused with “person values”
- organisational structure reviews are required
- development of career paths is required
- job evaluation should be applied in situations where discrepancies are seen in
interdepartmental hierarchies regarding job values. it should also be applied where salaries and
wages are not equitably distributed

Definition of job evaluation

- systematic and objective process of comparing one job to another within an organisation
without looking as individual characteristics, personality or performance
- depends on understanding, acceptability and objectivity
- to aid understanding, it is necessary to define the terms commonly used
- eg. accountant and finance manager - overlap in what they do but one is more important than
the other
- explain workforce why you are conducting evaluations
- committee must involve all kinds of representatives
- all representatives have the same authority
Why do we need job evaluation
- to facilitate the evolution of the organisation
- helps management and employees see how different jobs relate to each other
- can put people in same division
- plot career paths through the hierarchy
- assists with skills development within the workplace
- conduct a detailed analysis of wage and skills gaps for providing a common language and
defined point of reference for negotiation and collective bargaining
- eg. start as an intern, officer, then senior officer then HR manager and director
- job evaluation will assist in how we manage this

Evolution of remuneration systems

- as companies grow from being owner managed, more formal systems need ot be implemented
that explain why employees earn what they do
- job evaluation and salary structures provide the cornerstone for the explanation
- minimum wage - not enough to make a living
- living wage - the amount of money that can help a family live comfortably and survive
- using the consumer price index
Job evaluation and organisational design
- during the process of job evaluation, we ask questions about the tasks being performed in a
particular job, the relationship of jobs to each other, overlapping job content, and responsibility
- content provided in the job descriptions can be effectively used for job design and job
enrichment programmes
- job evaluation systems have to be flexible to accommodate the changing, dynamic
environments within the market as well as in the organisation

Job evaluation and organisational development

- can be a logical follow through in organisational design
- many of the problem that inhibit the effectiveness of organisations have to do with the job or
role perceptions
- sorting out problems of job definition and relativities can often dispose of the root cause
- it is often easier to see career paths which facilitate skills development, especially under the
job family modelling or career path approach
- when we want to improve or change structures of organisations

Detailed analysis of actual salary structure

- job evaluation and salary structures provide useful data for analysing an organisation’s pay
slope, pay ratios, pay ranges and overlap
- legislative requirements asking companies for this type of data
- some kind of job evaluation system is needed in order to fulfil submission requirements
- does not necessarily lead to a salary increment
- in terms of law, we cannot reduce salaries
- personal to holder - when that person leaves, the new employee will be placed in the correct
pay grade
- unless in a disciplinary hearing through demotion

Popular misconceptions
- everyone will get a big increase
- new hierarchy will be very different and difficult to recognise
- there will be many changes in status
- some people will have their pay reduced
- job evaluation solves all problems
- we don’t need job descriptions

Benefits of job evaluation

- benefits of job evaluation systems include the provision of a logical graded hierarchy and pay
structure
- easily explain why some grades are getting some salaries
- in this way, inequalities are reduced, and management and employees are able to see how
different jobs relate to one another
- job evaluation provides a way to regain control over salary and wage administration, ensuring
a consistent rationale for pay structures
- wage and salary administration are seen to be fair, and a detailed analysis of wage and skills
gaps becomes possible.
- negotiation and collective bargaining are made easier by using a common language or defined
point of reference
- compliance with legislation for those countries that have pay equity legislation is a
considerable advantage
- if you work well it should be rewarded, but grade should never be increased due to good work

Understanding organisation structure

- benefits which accrue from job descriptions and the process of writing them provide an
opportunity to study the organisational structure and to identify anomalies, since the job analyst
has to understand fully how each job is structured

Notes to be taken by the job analyst

- key areas of responsibility
- levels of authority and accountability
- reporting relationships
- spans of control
- lines of communication
- job design
- resourcing levels

Information for recruitment

- benefits which accrue from job descriptions and the process of writing them are detailed
information for recruitment
- specifically for developing job specification, planning the interview, meaningful advertising,
providing prospective employees with the details of what is required in the job, meaningful
induction training

Further benefits
- accrue from job descriptions and the process of writing them are that they supply:
- basis for job procedures and performance standards
- framework for performance and progress review
- detailed information for career pathing and resource planning
- detailed information for the development of training programmes
- assist the organisation to comply with legislation that requires organisations to justify
differences in pay

Process of job evaluation

- committee must be developed
- employee and management representatives
Stage 1
- the job, not the individual
- job description and job grading
- job or role description and a grade

Stage 2
- the individual in the job
- development of salary structures
- a salary structure
- this is why it is important for both parties to be to represented so they can explain a change in
grades

Evaluation of person vs job

- it is important that everyone understands that it is the job itself that is to be evaluated and not
the person in the job
- job evaluation is an impersonal process in stage 1
- takes no account of the quality, performance or effort that a person brings to the job
- it is only in the development of the salary or remuneration structure at stage 2 that one can
take personal qualities, characteristics of the person in the job, performance and effort into
account
- current wage or salary structure in an organisation is often another source of bias in stage 1
- consciously or unconsciously, we tend to construct a hierarchy o jobs in our own minds based
on what we know of the existing wages or salary structure
- the grading committee must continually be reminded that it is ‘the job and not the person’
which is important and that current wage or salary levels are irrelevant to the grading process
- results are objective - about responsibilities not person

Internal vs external factors

- assessment and comparison concern job content, not the value of a job to the organisation
- although job evaluation is used to determine relative pay levels, pay levels for particular jobs
and individual earnings remain organisational policy decisions based upon internal and external
factors
- internal equity and external equity features are used to compile the salary structure.

Job descriptions and job grading

- stage 1
- job evaluation system that is easy to understand
- job grading is inflexible but salary structures are inflexible
Salary structure process
- stage 2
Comparison of two stages

Points to note
- management should pay special attention to the following in order to succeed
- be committed to the programme and the motives for carrying it out
- state belief in justice and fairness
- state that no one will have their basic pay reduced
- reiterate that it is the job that is to be evaluated and not the person
- explain the method simply
- ensure appropriate participation

Why job evaluation systems fail?

- test or exam
- weak initial implementation
- weak top management support
- lack of employee participation and support
- upgrading of jobs without a corresponding change of job content
- inadequate administrative support
- lack of communication
- system is not managed
- job descriptions are not reviewed and re-graded as jobs change
- new employees and managers are not educated to the system
- no cross-correlation of other similar jobs in the organisation leading to inconsistency
- lack of transparency
Regrading
- a job should be re-graded only if appropriate or noticeable change in job responsibility or
organisational structure
- resist the temptation to upgrade the job so the person can be paid more
- greater flexibility must be built into the salary structure
- upgrading without a corresponding change in job content is the major cause of the collapse of
job evaluation systems
- not allowed to change grades based on good or bad work but rather how much responsibility
someone has and how many people their decisions will affect

Choice of job evaluation systems

- committees may recommend system that matches the organisation
- patterson job evaluation system is an example
- must be easy to understand
- updating it should not be a burden
- flexible system that can accommodate all kinds of jobs
- eg. hospital - difficult jobs

Criteria for choice of a system

- Chief Executive understands the system and is committed to it
- everyone, including the people at the lowest level in the organisation, understands and
accepts the system
- system is defensible
- updating and maintaining the system is not an administrative burden
- system is flexible and can accommodate all types of grading systems, including broad-banding
- system is user-friendly and supports the culture of the organisation
- remember that there is no such thing as a good or bad job evaluation system
- they all do the same thing - rank job descriptions relative to one another

Patterson job evaluation system

- don’t need to know in detail
- used in South Africa
- example - don’t need to know
- put person in correct band
- each band has a upper and lower depending on if there is anyone reporting to you or not
- 6 bands from A to F
- F - policy makers, top management
- E - senior management
- D - middle management, department managers
- C - professionals
- 6 factors that need to be taken into account
Consistency
- because there is no such thing as a scientific system of job evaluation and because all
systems are systematic approaches to grading jobs, the grading committee should be a
standing committee, as there are often ongoing appeals to re-evaluate when job content
changes and to evaluate new jobs
- job evaluation (je) system must be flexible and grow with organisation needs
- if it is perceived to be a dynamic, living system, it can even become a motivational influence
- there should be procedures for updating job descriptions and subsequent re-evaluation
- need to have a standing committee that always grades and updates grades
- must be flexible and able to accommodate changes