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The essence of compensation administration is job evaluation. By job evaluation, we mean using the information in job analysis to systematically determine the value of each job with all jobs within the organization. Organizations consist of many jobs, and all jobs are important, but all are not equally important. The relative importance of jobs is not the same. Few jobs are more important than others in terms of relative worth. The objective of job evaluation is to price the of rather than the man. Job evaluation is concerned with assessing the value of one job to another to build a sound wage or salary structure. Meaning of Job EvaluationJob evaluation is a systematic way of determining the value/worth of a job with other jobs in an organization. Job evaluation is a method for comparing jobs to provide a basis for grading and pay structure. Job evaluation has been defined as analyzing and assessing jobs to ascertain their relative worth reliably. It is the analysis and assessment of jobs to ascertain their relative worth reliably using the assessment as a basis for a balanced wage structure. Without job evaluations, the HR department could not develop a rational approach to pay. All job evaluation systems depend heavily on job analysis. Since job evaluation is subjective, specially trained personnel or job analysts should conduct it. When a group of managers is used for this purpose, the group is called a job evaluation committee—the committee reviews job analysis information to learn about the duties, responsibilities, and working conditions. With this knowledge, jobs are put in a hierarchy according to their relative worth using a job evaluation method. The methods of job evaluation are discussed next. In job evaluation, every job in an organization is examined and ultimately priced according to a few features: the relative importance of the job, knowledge, skills, and abilities needed to perform the job, and difficulty of the job. Job evaluation needs to be differentiated from job analysis. Check out our “job analysis” article to see how job analysis is a systematic way of gathering information about a job. Every job evaluation method requires basic job analysis to provide factual information about the jobs concerned. Thus, job evaluation begins with job analysis and ends where a job’s worth is ascertained for achieving pay equity between jobs. Job Evaluation SchemesThere are two basic types of job evaluation schemes: analytical and non-analytical. Analytical SchemesAn analytical job evaluation scheme can defend against a claim of equal pay for work of equal value. Jobs are broken down into components or demands, known as factors, and scores are awarded for each factor. The final total gives the overall rank order of jobs. Non-analytical SchemesUnder this scheme, whole jobs are compared with each other. There is no attempt to break the jobs down and analyze them under their various demands or components. The rationale for non-analytical job evaluation is that it produces a hierarchy of jobs that approximate the ‘felt-fair’ ranking of these jobs in the minds of the people working in the organization. Examples of non-analytical schemes include job ranking and paired comparisons. These represent different ways of drawing up a list of jobs in rank order. A non-analytical job evaluation scheme does not provide us with a defense against a claim of equal pay for work of equal value. Features of Job EvaluationJob evaluation aims to produce a ranking of jobs on which a rational and acceptable pay structure can be built. The important features of job evaluation may be summarized as follows:
Process of Job Evaluation ProgramThe Job evaluation program is a process involving a few steps. Gaining acceptanceBefore undertaking job evaluation, top management must explain the aims and uses of the program to the employees and unions. To elaborate on the program further, oral presentations could be made. Letters and booklets could be used to classify all relevant aspects of the job evaluation program. Creating a job evaluation committeeA single person can’t evaluate all the key jobs in an organization. Usually, a job evaluation committee consisting of experienced employees, union representatives, and HR experts is created to set the ball rolling. Finding the jobs to be evaluatedEvery job need not be evaluated. This may be too taxing and costly. Certain key jobs in each department may be identified. While picking up the jobs, care must be taken to ensure that they represent the type of work performed in that department. Analyzing and preparing a job descriptionThis requires the preparation of a job description and also an analysis of job needs for successful performance. Check out our article on the job description and how the job description explains job duties, responsibilities, reporting relationships, working conditions, and supervisory responsibilities. Selecting the method of evaluationThe most important method of evaluating the jobs must be identified now, keeping the job factors and organizational demands in mind. Classifying jobsThe relative worth of various jobs in an organization may be found out after arranging jobs in order of importance using criteria such as skill requirements, experience needed under which conditions the job is performed, type of responsibilities to be shouldered, degree of supervision needed, the amount of stress caused by the job, etc. Weights can be assigned to each such factor. A job’s worth is determined when we add all the weights. The points may then be converted into monetary values. Methods of Job EvaluationJob evaluation seeks to determine the relative worth of each job so that salary differentials can be established. In job evaluation, only jobs are rated, unlike performance appraisal, where only job holders are rated. Four widely used job evaluation methods are; These job evaluation methods seek to rank all the jobs in the organization and place them in a hierarchy that will reflect the relative worth of each. 1. Ranking System Of Job EvaluationThe ranking method is one of the simplest methods of job evaluation. Under this system, the job raters rank one job against another without assigning point values. Jobs within the organization are arranged from the most difficult to the simplest or in the reversed order. It does not measure the value of jobs but establishes their ranks only. When this method is employed, the job rater compares two jobs, one against another, and asks which of the two is more difficult. Once that question has been settled, another job is compared against the first two, and a similar determination is made. This process is repeated until all jobs have been assigned relative positions. Jobs are usually ranked in each department, and then the department rankings are combined to develop an organizational ranking. No attempts are made to break down the jobs by specific weighted criteria. The ranking method of job evaluation is generally used in small firms where all jobs are well-known. It is useful as a first and basic step of job evaluation. The main drawback of this system is that it can tell only that one job is more difficult than another without indicating how difficult it is. This method provides no yardstick for measuring the relative worth of one job against another. Job requirements, job specifications, and employee specifications are not considered in the evaluation. Another drawback is subjectivity, as there are no definite or consistent standards to justify the rankings. Because jobs are only ranked in terms of the order, we do not know the distance between the ranks. It is neither a comprehensive nor systematic technique. 2. Job Classification or Grading Method Of Job EvaluationJob grading or classification is slightly more sophisticated than job ranking but still not very precise. It begins with an overall classification of all jobs based on common sense, skill, responsibilities, and experience. The job structure is divided into several classes. A committee will do it. For each class, a general description indicates the nature of work and responsibilities included. According to the class description, each job in the organization is put into a class or grade it matches best. Each class or grade is assigned a salary range with maximum and minimum limits. Thus, according to this system, the clerks may be put into one class, supervisors in a higher class, and higher executives in the top class. Job classification helps to determine which job falls on the top, middle and lower levels of the organizational hierarchy. Limitations of job classification or grading methods are relatively simple to operate and understand.
Limitations of job classification or grading method are;
3. Points Rating System Of Job EvaluationThe point method is more sophisticated than the ranking and classification methods. This method is analytical because it breaks down jobs into various compensable factors and places weights or points on them. A compensable factor is used to identify a job value commonly present throughout a group of jobs. This method is quantitative as each compensable factor is assigned a numerical value. It is based on the assumption that it is possible to assign points to the different factors and each degree of each factor involved in jobs and that the sum-total of the points will give an index of the relative value of jobs. The factors are determined from the job analysis and are usually implemented by a job evaluation committee or an individual analyst. Six steps of the points rating system; Step 1: Determine critical factors.The critical factors are skill, effort, responsibility, experience, and working conditions, and these factors are broken down into sub-factors. For example, Figure I shows that responsibility can be broken down into the safety of others, equipment, and materials, assisting trainees, and product quality. Step 2: Determine the levels of factors.Since the amount of responsibility or other factors may vary from job to job, the point system creates several levels associated with each factor. There may be four levels, namely, minimum, low, moderate, and high. Step 3: Allocate points to sub-factors.The job evaluation committee subjectively assigns the maximum possible points to each sub-factor. For example, if safety (100) is twice as important as assisting trainees (50), it gets many points. Step 4: Allocate points to level.Once the maximum total points for each job element are assigned under level IV, analysts allocate points across each row to reflect the importance of the different levels. Step 5: Develop the point manually.Analysts then develop a point manual that contains a written explanation of each job element. It also defines what is expected for the four levels of each sub-factor. Step 6: Apply the point system.When the point matrix and manual are ready, the relative value of each job can be determined. The points for each sub-factor are added to find the total number of points for the job. After the total points for each job are known, the jobs are ranked. Advantages of Point Rating MethodThe points rating system has many advantages over ranking and classification systems.
Arbitrary weights are attached to various degrees and factors by specifying maximum and minimum limits. The point rating system is not without limitations. The listing of factors may omit some elements that are important in certain jobs. This method is difficult because it is costly and somewhat difficult to operate compared to conventional non-quantitative techniques. This technique does not consider all the sub-factors as the system’s operation would be difficult if it considered all the factors. The point method is complex. Preparing a manual for various jobs, fixing values for key and sub-factors, establishing wage rates for different grades, etc., is time-consuming. 4. Factor Comparison System Of Job EvaluationThomas E. Hitten was the first to originate the factor comparison method of job evaluation. The factor comparison system determines the relative rank of the jobs and is evaluated with the monetary scale. It is often used in evaluating managing administrative and white-collared jobs. It is essentially a combination of the ranking and point systems. Six Steps of Factor Comparison SystemIt is a sophisticated and quantitative ranking method. This method is analytical as jobs are broken into sub-factors and components. Werther, B.W and Davis, K (1998) point out that the factor comparison method involves the following steps: Six steps of the factor comparison system are; Preparing clear-cut job descriptions and job specifications.Job specifications are developed regarding the compensable factors the committee decides to use. Selecting several keys- jobs in the organization as standards.Key jobs are commonly found throughout the organization and in the labor market. Usually, the committee selects ten to fifteen key jobs. Common jobs are selected because it is easier to discover their market rate. Identifying the critical factors of key jobs.These factors are the job elements common to all the jobs being evaluated. The factors are mental, skill, physical, responsibility, and working conditions. For example, mental requirements include mental traits, intelligence, memory, reasoning, imagination, general education, specialized knowledge, etc. Ranking the key jobs on the criteria by a committee.The sub-factors of each key job must be given relative ranks based on their contribution to the total job. This ranking procedure is based on job descriptions and job specifications. Each committee member usually makes this ranking individually, and then a meeting is held to develop a consensus on each job. Valuing the factors of each key job.The committee members have to divide up the present wage now being paid for each key job, distributing it among the five compensable factors. This step is also called factor evaluation. The committee agrees upon the base rate (usually expressed hourly) for each key job and then allocates this base rate among the five criteria. To illustrate, in one organization, the maintenance electrician job was chosen as a key job and had an hourly rate of Dollar 1300.00. The committee then allocated Dollar 350 for mental effort, Dollar 450 for skill, Dollar 100 for physical effort, Dollar 250 for responsibility, and 150 for working conditions. These amounts then became the standards by which other organizational jobs could be evaluated. All other jobs with similar responsibilities were assigned Dollar 250 for that criterion. Ranking key jobs according to wages assigned to each factor.For example, the welder job ranks first for the mental requirements factor, while the security guard ranks last. The committee appraises all other jobs and assigns a value to each factor by comparing them with key jobs. Once a job’s worth in terms of total points is expressed, the points are converted into money values keeping the hourly/daily wage rates in view. A wage survey is usually undertaken to collect the wage rates of certain organizational jobs. Let’s explain this. Market pricing is determining the external value of jobs, allowing the manager to establish wage and salary structures and pay rates that are market sensitive. Advantages of Factor Comparison MethodThe factor comparison method permits a more systematic comparison of jobs than the non-analytical methods.
Disadvantages of Factor Comparison MethodLawler (1991) identified the demerits of the factor comparison method of job evaluation. The main demerits are discussed below:
Limitations of Job EvaluationThe main limitations of Job evaluation are;
It can be concluded that job evaluation is not an exact science. It is a technique that can help avoid several anomalies in wages that cause so many heartburns and disgust today, provided it is used sensibly and is not pressed beyond its proper limits. Which one of the following is not a method of job evaluation?Personal observation method is not a method of job evaluation.
What is the point method of job evaluation?The point method evaluates jobs by comparing compensable factors - elements of job content like skill, effort or responsibility that can be used to assess a job's value to the organization. Each factor is defined and assigned a range of points based on the factor's relative importance to the organization.
What are the components involved in job evaluation process?Thus, the components of job evaluation are – Job analysis, job description, job specification, job rating, money allocation, and employee classification. Management's method to achieve equity in pay is job evaluation.
Which of the following are the four compensable factors for the point system of job evaluation that are required by the pay equity Act?To implement pay equity, you must evaluate the four key factors of a job class: required qualifications, required effort, responsibilities, and working conditions under which the job is performed.
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