Job Evaluation Methods: A guide for HR Professionals

What is Job Evaluation

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:

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   1. According to the Bureau of Labour Statistics, job evaluation refers to the process of assessing or rating a position to determine its position within the job hierarchy.
      
   E. B. Flippo

    

   - 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.

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2. Job evaluation reflects an effort to evaluate the relative worth of every job in a plant and to estimate what the fair basic compensation for such a job should be, according to Kimball & Kimball Jr.
3. Bethel, Atwater, and Smith et al. claim that Job evaluation is a phrase that has both a genetic and a particular meaning in terms of the administration of wages and salaries in the contemporary period. Specifically, it refers to job ratings or the grading of professions according to tasks.
4. The International Labour Organization states that Job evaluation may be described as an attempt to establish and evaluate the demands that the typical performance of a specific job imposes on ordinary workers without taking into consideration their unique talents or performance.
5. According to the Bureau of Labour Statistics, job evaluation refers to the process of assessing or rating a position to determine its position within the job hierarchy.
   

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

Related: Job Rotation: Advantages and Disadvantages

History of Job Evaluation

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.

What are the four job evaluation methods?

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.

The following are the four job evaluation methods:

Quantitative Job Evaluation Methods

Job Ranking

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.

Advantages

• The approach is clear, simple to comprehend, and largely supported by labor groups. 
• It is appropriate for relatively minor organizations that might not want to engage in more strenuous activities.
• The approach is less expensive to implement and maintain than other systems.

Disadvantages

• Because the ranking technique is subjective, job evaluators' preferences might influence it.
• Using this system, different jobs are ranked according to their relative value. It makes no mention of the actual distinction between the two occupations. For instance, it is impossible to pinpoint the precise difference between the first and second-placed jobs.

Job Classification

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).

Advantages

• As the necessary information is supplied by job analysis, which also serves other functions, it is relatively easy to use and comprehend.
• Given that wages and salaries are established in terms of distinct work levels, job evaluation using the grading approach simplifies pay and compensation determination.

Disadvantages

• Because the process is not based on scientific analysis, job grade descriptions are unclear, and human biases may affect work grading.
• When new job clusters are created, there is a potential that people may oppose them. This is seen by the uproar when recommendations from a new pay panel are released.

Qualitative Job Evaluation Methods

Factor Comparison 

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.

Advantages

• Due to the comparison of several similar criteria, offers more precise information about the relative worth of a position.
• There are fewer chances of overlap because there are just a small number of characteristics that are compared that are important for good work performance.
• Labor unions and employees can embrace the evaluation's reasoning since it is more methodical and analytical.

Disadvantages

• The setup of this system is highly expensive, takes a lot of time, and is challenging for those who are unfamiliar with the job assessment process to grasp.
• The method can quickly become outdated if wage rates are used for comparison since not all jobs' earnings may grow proportionately.
• This approach only compares a small number of job-related characteristics. This could be a good thing in terms of avoiding duplication and keeping things simple, but it might overlook other aspects crucial to the work at hand.

Point Rating

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.

Advantages

• It is the most thorough and precise technique for evaluating a job.
• Subjectivity and prejudice are reduced. The process cannot be manipulated.
• Since it is a systematic approach, employees prefer it.
• The scales created using this methodology have a long shelf life.
• Jobs may be categorized into many groups.

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.