Job evaluation is the name given to any activity, which sets out to make a systematic comparison between jobs to asses their relative worth, for the purpose of establishing a rational pay structure.
Job evaluation is the process of placing jobs in order of their relative worth so that employees may be paid fairly. It is concerned with the demands and conditions of the job, and not the personal qualities of the individual who is occupying the job. It refers to the methods and practices of ordering jobs or positions with respect to their value or worth to the organization.
Job evaluation is a systematic determination of the value of each job in relations to other jobs in the organisation. The process is used for designing a pay structure and not for appraising the performance of employees holding the jobs. The general idea of job evaluation is to enumerate the requirements of a job and the jobs contribution to the organization and then classify it according to its importance.
- To provide a rational basis for the design and maintenance of an equitable and defensible pay structure
- To make pay administration easier by reducing the number of separate rates of pay
- To help in management of the relatives existing between jobs in the organizations
- To enable consistent decisions to be made on grading and rates of pay
- To harmonize internal rates of pay with those found in other companies
- To provide means by which a responsible rate of pay can be fixed for new or changed jobs within the company
- To protect employees from arbitrary decisions by management
- To justify wage differentials and hence avoid frequent invocation of grievance procedures
- To determine and recognize the need to link pay with requirements of the job. It helps to establish the extent to which there is comparable worth between jobs so that equal pay can be provided for work of equal value
Uses of Job Evaluation
- To provide a basis for a simpler, more rational wage structure
- To provide an agreed on means of classifying new or changed jobs
- To provide means of comparing jobs and pay rates with those of other organizations
- To provide basis for employee performance measurements.
- To reduce pay grievances by reducing their scope and providing an agreed on means of resolving disputes
- To provide incentives for employees to strive for higher – level pay
- To provide information for wage negotiations
- To provide data on job relationships for use in internal and external selection, HR planning, career management and other personnel functions
A new altered job evaluation system is a change, which must be very carefully introduced by management because it affects the vital subject of pay. The method of evaluation must be clearly explained to employees and their representatives.
Prerequisites for Effective Evaluation
- Well defined system of job analysis, job design, job description and job evaluation provide the basis
- Participation of a recognized union, where one exists, it is an imperative
- The system should be simple and easy to understand rather than being too technical and complex
- Labour market survey to ascertain prevailing wage rates/salary levels. This should be done before the job evaluation
- The job evaluation exercise should not be viewed as an exercise to cut wages or retrench employees
- There could be a system of steering, implementation and evaluation committees with due representation to recognized unions
- Employees and union should be aware about the objectives and implications of job evaluation. Communication is essential here.
The first step in a job evaluation program is to gather information on the jobs being evaluated. Such information is obtained from the current job descriptions. The job evaluation process then identifies the factor or factors to be used in determining the worth of different jobs to the organization.
Job evaluation methods can be divided broadly into: –
- Non – analytical methods
- Analytical methods
The non – analytical methods take whole jobs and rank them. They compare whole jobs that may differentiate them. Non-analytical methods include; job ranking, paired comparisons, job classification, decision banding and internal benchmarking.
The analytical methods break jobs down into their component parts and then compare them factor-by-factor such as the number of subordinates, financial responsibility, qualifications and experience. They provide a more refined means of measurement than the non-analytical methods. The most widely used analytical methods are the Points Rates Method, Factor Comparison and the Hay –Guide Chart Scheme.