Job Evaluation Systems
David Wilson, Manager, Canada, Premium Member
In order to determine the compensation for their positions, organizations use a range of simple (i.e. market comparison) to complex job evaluation systems (i.e. point factor).
In one organization I worked for, 1% was added to payroll every 5 years as a result of upward job evaluation changes.
I found that the added costs as a result of job evaluation decisions were not as closely monitored by elected officials or senior executives, when compared to their interest in negotiated economic increases.
What type of job evaluations systems does your organization use? Are your job evaluation systems considered to part of your total compensation function? Do your systems support the concept of equal pay for equal work or internal equity?
Job Evaluation Systems
Jaap de Jonge, Editor, Netherlands
The process of evaluating a job involves determining the value of a position within an organization in a systematical way. A job evaluation is a systematic way of determining the value/worth of a job in relation to other jobs in an organization. It tries to make a systematic comparison between jobs to assess their relative worth for the purpose of establishing a rational pay structure.
It is different from performance evaluation and assessment processes in that the main goal of a job evaluation is to rate the job itself, rather than the person that is performing the job.
Job evaluation determines the value of one job in relation to other jobs in the organization to ensure a fair job hierarchy and/or salary system exists. There are many different types of job evaluation systems to choose from. Some common job evaluation methods (more or less in order of complexity/sophistication) are:
- JOB RANKING METHOD- Jobs are simply ranked in order from highest to lowest in regards to their relative value/importance/merit them to the organization or the difficulty in performing them. The jobs are examined as a whole rather than on the basis of the elements or factors it is comprised of.
- MARKET PRICING METHOD - Works by determining the external value of jobs, allowing one to establish wage and salary structures and pay rates that are market sensitive/competitive. Job matching sessions are conducted.
- JOB CLASSIFICATION (JOB GRADING) METHOD - A number of job groups (classes) are established and jobs are assigned to these classes (and subclasses). A typical example:
Class I - Executives
Class II - Managers
Class III - Professionals
Class IV - Semiskilled workers
Class V - Unskilled workers
- POINT METHOD (FACTOR COMPARISON METHOD) - Jobs are expressed in terms of key factors needed to perform them. Points are assigned to each factor after prioritizing each factor in order of importance. The points are added up to determine the wage rate for the job. Jobs with similar point totals are placed in similar pay grades. The process involved has following approximate steps:
1. Select key jobs. Identify the factors common to all the identified jobs such as skill, effort, responsibility, etc.
2. Divide each major factor into a number of sub factors. Each sub factor is defined and expressed clearly in the order of importance, preferably along a scale. Typical factors employed in a point system are:
- Skill: education and training required, breadth/depth of experience required, social skills required, problem-solving skills, degree of discretion/use of judgment, creative thinking required.
- Responsibility/Accountability: breadth of responsibility, specialized responsibility, complexity of the work, degree of freedom to act, number and nature of subordinate staff, extent of accountability for equipment/plant, extent of accountability for product/materials;
- Effort: mental demands of a job, physical demands of a job, degree of potential stress.
3. Find the maximum number of points assigned to each job (after adding up the point values of all sub-factors of such a job).
4. Once the worth of a job in terms of total points is expressed, the points are converted into money values keeping in view the hourly/daily wage rates. A wage survey is usually undertaken to collect wage rates of certain key jobs in the organization.