UNIT 2

JO B EVA LU A T IO N

Job evaluation is the process of analyzing and assessing various jobs

systematically to ascertain their relative worth in an organization. Job evaluation is
an assessment of the relative worth of various jobs on the basis of a consistent set of
job and personal factors, such as qualifications and skills required.

The objective of job evaluation is to determine which jobs should get more pay than
others. Several methods such as job ranking, job grading, and factor comparison are
employed in job evaluation. Research indicates, however, that each method is nearly
as accurate and reliable as the other in ranking and pricing different jobs. Job
evaluation forms the basis for wage and salary negotiations.

▪ According to International Labour Organisation, "Job evaluation may be

defined as an attempt to determine and compare the demands which the

normal performance of particular job makes on normal workers without taking
account of the individual abilities or performance of the workers concerned."
▪ In the words of Dale Yoder, "Job evaluation is a practice which seeks to

provide a degree of objectivity in measuring the comparative value of jobs

within an organisation and among similar organisations."

Objectives of Job Evaluation

▪ To establish an orderly, rational, systematic structure of jobs based on their
worth to the organization.
▪ To justify an existing pay rate structure or to develop one that provides for
internal equity.
▪ To assist in setting pay rates that are comparable to those of in similar jobs in
other organizations to compete in market place for best talent.
▪ To provide a rational basis for negotiating pay rates when bargaining
collectively with a recognized union.
▪ To ensure the fair and equitable compensation of employees in relation to their
duties.
 ▪ To ensure equity in pay for jobs of similar skill, effort, responsibility and working
conditions by using a system that consistently and accurately assesses
differences in relative value among jobs and
▪ To establish a framework of procedures to determine the grade levels and the
consequent salary range for new jobs or jobs which have evolved and changed.
▪ To identify a ladder of progression for future movement to all employees
interested in improving their compensation.
▪ To comply with equal pay legislation and regulations determining pay
differences according to job content.
▪ To develop a base for merit or pay-for-performance.

Job Evaluation Process

Job analysis describes a job. Job evaluation develops a plan for comparing jobs in
terms of those things the organization considers important determinants of job worth.
This process involves a number of steps that will be briefly stated here and then
discussed more fully.

a) Job Analysis.

The first step is a study of the jobs in the organization. Through job analysis,
information on job content is obtained, together with an appreciation of worker
requirements for successful performance of the job. This information is recorded in the
precise, consistent language of a job description.

b) Compensable Factors.

The next step is deciding what the organization "is paying for" -- that is, what factor or
factors place one job at a higher level in the job hierarchy than another. These
compensable factors are the yardsticks used to determine the relative position of jobs.
In a sense, choosing compensable factors is the heart of job evaluation. Not only do
these factors place jobs in the organization's job hierarchy, but they also serve to
inform job incumbents which contributions are rewarded.
What are Compensable factors?

1. Experience level- How much work experience is needed to perform a job or the
prior experience of the employee, whether he has worked in similar industry previously
or some other.

2. Educational qualifications- what are all the educational qualifications that are
required for the job.

3. Working Condition- the working condition of the job in which the employee would
be working (overall environmental factors such as location, hazards and any extreme
factors).

4. Confidential Data- the extent to which the employee is exposed to the confidential
data.

5. Consequences of mistakes and errors- consequences of the mistake or error

occurrence by the employees, effects of those errors or mistake.

6. Complexity of duties- the difficulty level of the duties and task, whether too much
decision making is involved in job or not and judgement skills are required or not.

7. Responsibility- the extent of the responsibility the employee entitled to.

8. Mental and physical demands- the degree of concentration and the environment
accordingly and level and frequency of physical effort.

c) Developing the Method.

The third step in job evaluation is to select a method of appraising the organization's
jobs according to the factor(s) chosen. The method should permit consistent
placement of the organization's jobs containing more of the factors higher in the job
hierarchy, than those jobs lower in the hierarchy.

d) Job Structure.

The fourth step is comparing jobs to develop a job structure. This involves choosing
and assigning decision makers, job category, level, and setting up the job hierarchy.
e) Wage Structure.

The final step is pricing the job structure to arrive at a wage structure. It is also known
as a salary structure, a system that determines how much an employee is to be paid
as a salary or wage, based on one or more compensable factors such as the
employee's experience level, rank or level within the organization, the length of time
that the employee has stayed in organisation (total service), complexity of duties and
the difficulty of the specific work. performed.

Q ualitative M ethods of Job Evaluation

1. Job Ranking Method

This is the oldest and simplest method of job evaluation. This is generally used in
smaller units where the job raters know all the jobs quite well. In this method no
effort is made to break a job down into its elements or factors, but the aim is to rather
judge the job as a whole and determine the relative value by ranking one whole job
against another whole job. In this technique ranking is done according to 'whole job'
rather than a number of compensable efforts.

In it a committee constituted of several executives’ studies job descriptions. Then

jobs are arranged from highest to lowest, in order of their value or merit to the
organisation. Jobs also can be arranged according to the relative difficulty in
performing them. So jobs are ranked in order of importance beginning with the most
important to the least important jobs in the organisation. Job at the top of the list has
the highest value and obviously the job at the bottom of the list will have the lowest
value.

This procedure is followed for jobs in each department and an attempt is then made
to equate or compare jobs at various levels among the several departments. When
this is completed, grade levels are defined and salary groups are formed. Jobs are
placed into different salary ranges more or less on a predominated basis in their rank
order. An expert committee consisting of well-informed executives may, in relatively
short time, rank several hundred jobs in various departments. In most of the
instances, the ranking are not only based on job descriptions but on the raters
general knowledge of the position.

2. Job Classification or Grading method

This method is one step further in the first method. This is similar to ranking method
because in both methods neither points nor money values are assigned to classify
the jobs. No complicated procedures are followed. It was evolved as an improvement
over the ranking method. Job descriptions and job specifications are widely used in
it. The committee of executives goes through each job description and carefully
weights it in the light of certain factors like skill, responsibilities, experience and type
of work etc.

The Classification Job Evaluation System is based on pre-established general

definitions of the kind of work that would be found at each level, grade or class in an
organization. Each job is reviewed, evaluated and placed into a class or grade. The
Classification Job Evaluation System is most commonly found in the public sector
and heavily unionized industries.
 Q uantitative M ethods of Job Evaluation
1. The Factor Comparison Method

This method is a combination of the ranking and point system. Thomas E. Hitten
was the first to originate factor comparison method of job evaluation. As originally
developed this method involves ranking of jobs in respect of certain factors and
usually involves the assigning of money wages to the job depending upon the
ranking.

This is more systematic and scientific method. Under this method, jobs are evaluated
by some standards. In this method, instead of ranking complete jobs, each job is
ranked according to series of factors. All jobs are compared to each other for the
purpose of determining their relative importance by selecting four or five major job
elements which are more common or less common to all jobs. These elements are
not pre-determined. These are chosen on the basis of job analysis.

The five factors which are commonly used are

(i) mental requirement
(ii) skill
(iii) physical requirement
(iv) responsibilities and
(v) working conditions.
The number of factors may be more than five. Pay will be assigned in this method by
comparing the weights of the factor required for each job, i.e., the present wages
paid for key jobs may be divided among the factors weighted by importance. So the
wages are assigned to the job in comparison to its ranking on each job factor.

The major steps in this system consist of the following:

1. Selection of factors:

2. They may be skill, mental and educational requirements, physical

requirements and responsibility, working conditions. The persons writing job
specifications are generally provided with a set of dimensions within which
they have to perform this important work.

3. Selection of key jobs:

4. Key jobs serve as a standard against which all other jobs are compared.
Generally a key job is one whose contents has become stabilized over a
period of time and whose wage rate is considered to satisfactory and
acceptable by the management and union. The key jobs should be a good
sample representing the entire range. It is suggested that 15 to 20 jobs should
be picked. All of these should be clearly describable and capable of analysis
in terms of factors.
5. Ranking of Key jobs:

6. Rank the selected jobs under each factor (by each and every member of the
job evaluation committee) independently. Ranking is made individually and
then a meeting is held to develop a consensus.

7. Assign money value:

8. Money value is assigned to each factor so as to determine the wage rate for
each key job. The basic pay for each 'key' job is allocated to each factor. This
should reflect a range from the lowest to the highest.

9. Comparing all jobs with key jobs:

 10. All other jobs are compared with the list of key jobs. This is done to know their
relative importance and position in the scale of jobs.

An illustration of how the factor comparison method works is given below:

Table: Allocation of Money Value to the different factors and Ranking of Jobs
under the Factor Comparison Method

For example, if toolmaker is a benchmark job and its wage rate is 20 money units; it
may be decided to assign nine of these to skill, five to mental requirements, two to
physical requirements, three to responsibility and one to working conditions.
Similarly, if the wage rate for another benchmark job. for example that of a machinist,
amounts to 18 money units, eight of these may be allotted to skill, three to working
conditions and so on.
2. Point Rating Method

This is the most widely used method for job evaluation. It along with factor
comparison method, involves a more detailed, quantitative and analytical approach
to the measurement of job worth. This method is widely used currently. In this
method jobs are expressed in terms of key factors. Then various points are assigned
to each factor in order of their importance. Then points are summed up to determine
the wage rate for the job. Jobs with similar point totals are placed in similar pay
grades. The point rating procedure has to clearly define from very start. By and
large, its steps fall into two distinct stages, namely preparing and evaluation plan and
schedule (by defining and weighting factors) and grading jobs by reference to this
schedule.

This involves the following steps:

1. Listing of Jobs: The jobs have to be determined first which are to be
evaluated. They are usually clustered. This should cover all the categories of
jobs: skilled, unskilled, semi-skilled, professional, executives etc.
2. Selecting and defining factors: Identify the factors common to all the
identified jobs such as skill, effort, responsibility, job conditions etc. There
should be sufficient number of factors to evaluate all aspects of the jobs. The
number of factors will depend upon the nature of the jobs.
3. Dividing the factors into degree: Once the factors are selected they must
be divided into degrees to make them operational. The point method generally
uses from four to six degrees for each factor. It is advisable to an even
number of degrees in the development of point method and the same number
of degrees should be used for each factor in order to maintain consistency in
the job evaluation plan.
4. Weighting the factors: The relative importance of each factor selected has to
be determined. In other words, the factors must be weighted. There is no
scientific or readymade method for weighting factors. It is generally done
pragmatically and will depend upon the knowledge of the work of the
enterprise. Weighting will also depend on the firm's objectives and policies.
5. Allocations points to each degree: Once the relative importance of the
factors has been determined in a preliminary way and the factors suitably
 divided into degrees, each degree must be assigned a numerical value. These
are the values that will be used in determining the total point values of jobs.
6. Evaluation of Jobs: Once the factor plan is adopted, it is usual to prepare an
evaluation handbook explaining the procedure to be followed and
summarising all the elements required for evaluation.
7. Assign money value points: For this purpose points are added to give the
total value of a job: its value of a job; its value is then translated into terms of
money with a pre-determined formula.

Advantages of Job evaluation

Job evaluation is a process of determining the relative worth of a job. It is a process

which is helpful even for framing compensation plans by the personnel manager. Job
evaluation as a process is advantageous to a company in many ways:
• Reduction in inequalities in salary structure - It is found that people and
their motivation is dependent upon how well they are being paid. Therefore
the main objective of job evaluation is to have external and internal
consistency in salary structure so that inequalities in salaries are reduced.
• Specialization - Because of division of labour and thereby specialization, a
large number of enterprises have got hundred jobs and many employees to
perform them. Therefore, an attempt should be made to define a job and
thereby fix salaries for it. This is possible only through job evaluation.
• Helps in selection of employees - The job evaluation information can be
helpful at the time of selection of candidates. The factors that are determined
for job evaluation can be taken into account while selecting the employees.
• Harmonious relationship between employees and manager - Through job
evaluation, harmonious and congenial relations can be maintained between
employees and management, so that all kinds of salaries controversies can
be minimized.
• Standardization - The process of determining the salary differentials for
different jobs become standardized through job evaluation. This helps in
bringing uniformity into salary structure.