Job Evaluation

Job evaluation is a systematic process of analyzing and evaluation jobs to determine the relative worth of each job in an organization. It forms the basis for designing the compensation management system in an organization. Since the compensation management and the perceived fairness of compensation administration have a big influence on employee morale and satisfaction.

According to the Bureau of Labor Statistics (USA),

Job evaluation is the evaluation or rating of jobs to determine their positions in the job hierarchy. The evaluation may be achieved through assignment of points or use of some other systematic method for essential job requirements such as skill, experience and responsibility.

Objectives

To determine relative worth of different jobs in an organization and providing the basis for the compensation management system. To determine the position and place of a job in the organizational hierarchy. To clarify the responsibility and authority associated with each job. To manage internal and external consistency in the compensation.

To maintain complete and accurate data relating to job description and job specification of various jobs. To ensure employee satisfaction with respect to the compensation. To avoid discrimination of any kind in wage administration. To provide the basis for classification of new or changed jobs.

Principles of Job Evaluation

The job dimensions have to be properly selected and should be rated in accordance with the demands of the job. The dimensions selected for the purpose of rating should be clearly defined to ensure clear understanding by the employees. The evaluation program should be explained and illustrated to the employees at all levels. The employees as well as the supervisors should have confidence in the system of evaluation.

The employees must be actively involved in the evaluation program. This helps develop a sense of trust in the whole exercise. Market factors should be taken into consideration while evaluating jobs. For example, if there is a scarcity of statisticians in the job market, this fact has to be given due importance while evaluating the job of a statisticians.

Process of Job Evaluation

Preparation of a Job Evaluation Plan Job Analysis Job Description & Job Specification Selection of job dimensions Classification of jobs Implementation of the evaluation Maintenance

Techniques of Job Evaluation

Quantitative

Point Rating Method

Factor comparison Method

Decision Band Method

Non-Quantitative

Ranking Method

Job Classification/ Job Grading Method

Ranking Method

Ranking is the method in which the jobs in an organization are assessed based on the knowledge, skills, effort and other job dimensions associated with each job. Ranking involves preparation of brief job descriptions and assigning ranks to the jobs in accordance with their worth in the organization.

Techniques Of Ranking

Relative Ranking Paired Comparison Ranking Single Factor Ranking Once the ranking of the jobs is complete, a monetary value is attached to each job.

Job Grading

In this method of job evaluation, the jobs are classified and graded based on their significance and their worth to the organization, the jobs at various levels in an organization are placed under different grades, which are clearly defined. Grades are formulated on the basis of the nature of the tasks and responsibilities of the jobs. For e.g.:-a grade may comprise jobs like Financial Accountants, Management Accountants, Cost Accountants

Point rating method

The point method or the point rating method is one of the most widely used methods of job evaluation. In this method, a quantitative point scale is developed to evaluate the jobs. The number of scales to be used and other aspects of implementation are determined by the job evaluation analyst or the human resource function.

Steps in Point method

Determine the job factors or compensable Determine the sub factors Define the degree statements or profile statements Assign points to factors, sub factors and degrees ( For e.g. if experience is critical to a job, degree I might be 20 points, degree II might be 60 points, degree III-60 points, degree IV -80 points).

Preparation of chart Applying point system

Factor comparison method

It is based on the principles of point rating and ranking. Steps involvedDetermining & defining specific factors(4 to 7) Identify key or bench mark jobs Comparison and ranking of various factors upon their importance Assigning monetary values and adding up to pay of the bench mark job and evaluation.

Decision Band Method

It is more popular in both public & private firms for more than 25 years. It was developed by Prof.Emeritus Thomas T.Paterson in 1970s and further developed & refined by Ernst & Youngs compensation specialist in client organization. The basic premise of DBM is that the value of a job depends on its decision-making requirements. Decision-making is logical and equitable basis for comparing jobs because all jobs involved decisionmaking on all levels.

The DBM distinguishes six levels of decision making or decision-bands", ranging from the most far reaching decisions on organizational goals to the simplest decisions, such as how fast to key-enter data. The DBM job evaluation produces a decisionbased structure.

Merits of Job Evaluation

It is logical and objective method of ranking and grading jobs for the purpose of compensation management. It helps in preventing & removing discrepancies in the wage structure of an organization. It helps in maintaining higher worker satisfaction level by logical explanation of issues related to job differentials

It facilitates the entry of new jobs into the organizational wage structure and help in appropriate evaluation and pay structure fixation accordingly. It helps in comparison of organizations wage structure with that of competitors and market rates. It helps in decisions related to selection, transfer and promotion of employees

Demerits

Changes in jobs and its factors can render job evaluation techniques outdated and irrelevant. It can give rise to employee grievance if not properly formulated or implemented. It introduces rigidity into the pay system and reduces opportunities for mangers top exercise discretion. It takes long time to implement and may involve formalization of rules leading mismatch b/w financial condition of firm and established wage structure.