Job evaluation is a process used to determine the relative worth of jobs so that employees can be fairly compensated for their work. It is a systematic method for assessing the value of different jobs. There are several methods for evaluating jobs. The traditional method is a points-based system, in which jobs are broken into levels and the criteria for each level are listed out. The points system is based on the idea that the higher the value of the criteria the higher the value of the job.
Job evaluation was described by the following thought leaders as follows:
- a job's value in relation to other jobs is determined through a methodical, organized procedure called job evaluation.
In order to assess essential job requirements such as skills, experience, and level of responsibility, a point-based system or another structured scoring mechanism may be employed. This practice ensures equitable compensation and establishes consistent standards for entry and performance across different job roles.
In order to assess essential job requirements such as skills, experience, and level of responsibility, a point-based system or another structured scoring mechanism may be employed. This practice ensures equitable compensation and establishes consistent standards for entry and performance across different job roles.
Job Evaluation answers these frequently asked questions: How do you determine the compensation for a certain position? What effect does a position have on the company's success? What price do other businesses pay for this roster of duties? These are common concerns when determining how much to pay for a position in your company. Different job evaluation methods are used to make these decisions
Frederick Winslow Taylor effectively put the theoretical evolution of job assessment on the map, according to the literature on management functions and practices. The American self-taught engineer developed the idea of scientific management for improving job productivity and cutting costs through his work on analyzing time, motion, and effort. His efforts to increase the efficiency of the Midvale Steel Company, in particular, resulted in a rigorous and organized examination of how to compensate employees.
According to contemporary researcher Richard I. Henderson, Author of Compensation Management, Taylor's study's findings later became known as job evaluation. H. John Bernardin later repeated this, writing in 2007 that Taylor's technique of tying compensation to work came to be dubbed job evaluation.
Although F. W. Taylor is often regarded as the founder of job evaluation, research indicates that the first job evaluation methods dated back to the U.S. Civil Service Commission in 1871, barely 6 years after Taylor's birth. The Civil Services Commission of Chicago, followed by the Commonwealth Edison Company of Chicago, are likely the two organizations that gave rise to Modern job evaluation in 1912. (Figart et al., 2002)
The British Institute of Management (1961) places this date a bit earlier at 1909. . For instance, utilizing data from Analytical/Quantitative job assessment techniques during 1924–1926, four formal job evaluation methods were created between 1900 and 1926.
Although there are many different methods of job evaluations, the two main components are comparison and data. In other words, any form of job evaluation will either assist you in understanding how a given position compares to other jobs inside the company (internal comparison) or how a position is valued on the job market (external comparison). All evaluation techniques either compare positions using qualitative data, which assesses a position's traits and features, or quantitative data, which compares positions by assigning numerical values.
Jobs are ranked according to their importance to the firm in a hierarchy. Although it is the easiest approach, not every business should use it. Smaller firms that can limit the number of roles to be examined to no more than 100 unique occupations are best suited for this method. Larger organizations ought to choose a different system.
Instead of producing the precise hierarchy seen in the point-factor approach, job ranking has an approximation of the proper job hierarchy. A qualified pay specialist who can handle management bias and assess other subjective information should assist in job ranking.
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This approach ranks jobs based on a predetermined grade comparison. A CEO, vice president, director, manager, and operator are a few examples of classifications. Many US-based organizations employ this predetermined rating. Within job families, grades are formed (e.g., marketing, HR, sales).
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Eugene J. Benge created this technique, sometimes known as the key job approach, at the Philadelphia Rapid Transit Company in the United States in 1926 to address two significant issues with the point method of job evaluation. Specifically identifying the components' relative importance and specifying their degrees.
The essential job, which may be defined or already exist, or other occupations that share the same factor are compared in this procedure. The final rating is calculated by summing the values obtained at each comparison after all criteria have been evaluated. Benge outlined this goal's five elements—mental effort, skill, physical effort, responsibility, and working conditions.
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The major component for each job is determined using this approach, and the subfactors are subsequently established. The points are then awarded to these sub-factors based on their significance.
For instance, the primary need for doing a job is skills, which may be further broken down into sub-factors like the necessary training, communication, social, and persuasive abilities.
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An additional less common job evaluation method is the market pricing technique. By comparing pay rates to market rates for similar professions, you may determine the job's worth and set the compensation accordingly. Market pricing may reinforce existing market disparities, which would be contrary to the goal of the job evaluation. It does not consider internal equity or the possibility that a job's internal worth may be different from its market value.
Different approaches are used based on the complexity and size of the organization. Some organizations even choose to combine these methods. This is why it is important for you as an HR professional to be able to distinguish them and make an informed decision.
