BANGALORE INSTITUTE OF MANAGEMENT STUDIES

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MODULE 3: JOB EVALUATION

Job evaluation is a methodical way of confirming the value of job in relation to other jobs in an
organisation. It makes a systematic comparison between jobs to come to a continuation of their relative
expectancy or worth for the purpose of making a logical pay structure.

OBJECTIVES OF JOB EVALUATION

Job Evaluation aims at fulfilling the following objectives

1. To determine equitable wage differentials between different jobs in the organisation.

2. To eliminate wage inequities.

3. To develop a consistent wage policy.

4. To establish a rational basis for incentive and bonus schemes.

5. To provide a frame work for periodic review and revision of wage rates.

6. To provide a basis for wage negotiation with Trade Uniona.

7. To minimize wage discrimination on the basis of age, sex, caste, region etc.

8. To enable management to gauge and control the pay roll costs

9. To provide a standard procedure for determining the relative worth or value of each job in a plant.

10. To determine a rate of pay for each job which is fair and equitable with relation to other jobs in the
plant, community and industry.

IMPORTANCE OR SIGNIFICANCE OF JOB EVALUATION

1. Assist in employee's selection: This is one of the major advantages provided by technique of job
evaluation. It properly analyses the job specification in line with the competencies of candidates.
Employees are chosen on the basis of their qualification required in delivering the role effectively. All
these factors enable in choosing right candidates by organization.

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2. Specialization: Job evaluation assists in specialization of labour by organization. Thers is large number
of job positions within an enterprise which requires many employees for performing them. Therefore, a
job evaluation technique does a clear division of labour by defining them their roles properly which
results in specialization of labour.

3. Develop harmonious relations among manager and employees: Every company want to develop
harmonious relations with their staff members.

4. Avoids inequalities in salary structure: Job evaluation approach focuses on avoiding inequalities in
wage and salary structure of organization. It establishes a scientific basis for fixing remuneration of
workforce by collecting all relevant information about job positions. Proper salary structure is an
important determinant of affecting the efficiency and motivation level of workers.

5. Prevents conflicts within organization: It resolves all conflicts within organization by paying peoples in
a fair manner. All inequalities in wage rate and personal prejudices are eliminated by doing a
standardization of salary and wage rate. Job evaluation collecta key information about job positions
which serve as a logical basis for collective bargaining and wage negotiations thereby avoiding any
conflicts in an organization.

6. Helps to differ job other than skills: It recognises risks and other aspects of employment rather than
expertise in order to assess the importance of employment. Jobs are also no longer distinguished from
abilities.

7. Brings harmonious relation between labour and management: It brings peace and healthy labour
relations through the reduction of pay disparities within the company.

8. Supports recruitment, career development and succession planning: Developing paths for each
position is specifically defined in the family career system. These are typically described by family/level
profiles that identify the expertise, abilities, experience and competencies required for each
family/level.

DEMERITS OF JOB EVALUATION

1. Job evaluation is not concerned with the performance, potential or personal qualities of individual
employees.

2. It is impersonal, concentrating on measuring work input rather than work output.

3. It is a time consuming process requiring specialized technical personnel to undertake it and thus too
costly.

4. It promotes increase in number of grievances concerning wages.

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5 It always creates doubt in minds of workers and trade unions because of the difficulty in
understanding its techniques.

6.It is susceptible because of human error and subjective judgment.

7.This technique is not accurate because of lack of scientific basis about efficacy of methods of job
evaluation.

DIFFERENT DIMENSIONS OF JOB EVALUATION

1. Selection of employees: The job evaluation procedure considers the skill required to perform the job,
responsibility associated with performing the job. These factors help to select the suitable person for the
job.

2. Training and development: Job evaluation proceas determines the significance and necessity of
training and development of the employees associated with a particular job.

3. Standardization of wage structure: Job evaluation performs an important function of designing a

standardised wage structure for different jobs Job evaluation helps to determine salary and wage
structure on rational basis and establishes fairness and justice.

4. Settlement of disputes: The most common factor causing industrial unrest and dispute is inequitable
wage and salary. Job evaluation helps to settle disputes and establishes industrial peace and discipline
by introducing rational and objective pay structure and removing disparity in wage payment.

5. Determination of an equitable wage and salary structure: it is one of the most important phases of
employer-employee relationa. For good industrial relations, each employee should (1) receive sufficient
wages or salaries to sustain himself and his dependentsand (ii) feel satisfied with the relationship
between his wages and the wages of other people performing the same type of work in some other
organisation.

JOB EVALUATION PROCESS

1. Gaining Acceptance

Before undertaking job evaluation, top management must explain the aims and uses of the programme
to the employees and unions. To elaborate the programme further, oral presentation could be made.
Letters, booklets could be used to classify all relevant aspects of the job evaluation programme.

2. Creating Job Evaluation Committee

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It is not possible for a single person to 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.

3. Finding the Jobs to be evaluated

Every 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 the department.

4. Analysing and Preparing Job Description

This requires the preparation of a job description and also an analysis of job needs for successful
performance.

5. Selecting the Method of Evaluation

The most important method of evaluating the jobs must be identified now, keeping the job factors are
well he organizational demands in mind. Job evaluation om kamping the decide on the method of job
evaluation. It is advisable for the commitee to asleel combination of methods instead of a single method
koeping in mind the job factors, organizational demands and other relevant factors

6. Classifying Jobs

The 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 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. When we finally add all the
weights, the worth of a job is determined. The points may then be converted into monetary values.

METHODS OF JOB EVALUATION

These methods are traditional and simple. They consider all the jobe available in the organisation,
compare them and then rank them. In complex organisations, they cannot be used. They can be used in
such cases where the jobs are distinctly different and not similar

A) Non-analytical methods of job evaluation are:

i. Ranking method and

ii. Grading or Job classification method.

1. Ranking Method

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Under this system different jobs are graded from the highest to the lowest ranks on some basis. The
hierarchy for each job group is thus outlined and pay scales are determined. Its greatest merit is
simplicity, which is also its great limitation that is the measurement is quite crude. Besides, there is no
pre-determined scale of values for the rates to be used. This method is useful in a small unit where jobs
are a few and are known to

ratters.

Advantages of Ranking Method

1. Simple and easy to understand.

2. Faster and inexpensive.

3. This method is used in small firms where all jobs are well-known to job raters.

Disadvantages of Ranking Method

1. Subjective and influenced by personal bias.

2. Specific job requirements are not taken into account.

3. Ranking does not give indications of actual differences between jobs; in terms of difficulties or
responsibilities

ii.Grading or Job Classification Method

In this method individual jobs are classified into a number of grades or classes, for example: skilled,
semi-skilled, unskilled, assistant foreman, foreman executives and work managers etc.

Advantages

1. This method is easy to understand and simple to operate.

2. It is more accurate and systematic than the ranking method.

3. It is economical and therefore suitable for small concerns.

4. It provides an opportunity to develop a systematic organiantion structure.

5. This method is used in government offices.

Disadvantages

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1. It is very difficult to write accurate and precise description of job grades.

2. Some job may involve tasks which overlap more than one grade. It is difficult to classify such jobs in a
particular grade.

3. The system is rigid and personal judgment is involved in deciding job classes and assigning jobs to
specific classes.

2. Analytical

Under this method, the jobs are broken down into different tasks. Different factors such as skill,
responsibility, education level and so on, are assessed for each job. The comparison of factor by factor,
sometimes, allocating points or monetary sums for each factor is made for meaningful interpretation.

There are two types of analytical methods:

i. Points rating method and

ii. Factor comparison method.

1. Point Rating

Under this method, jobs are broke down based on various identifiable factors such as skill, effort,
training, knowledge, hazards, responsibility, etc. Thereafter, points are allocated to each of these
factors. Weights are given to factors depending on their importance to perform the job. Points so
allocated to various factors of a job are then summed. Then, the jobs with similar total of points are
placed in similar pay grades. The sum of points gives an index of the relative significance of the jobs that
are rated.

2. Factor Comparison

This method, also known as key job method, was originally developed at the Philadelphia Rapid Transit
Company: USA by Eugene J. Benge in 1926 to overcome two major problems faced in point method of
job evaluation. Viz. Determining the relative importance of factors and describing their degrees. This
method is a combination of both ranking and point methods in the sense that it rates jobs by comparing
them and makes analysis by breaking jobs into compensable factors. This system is usually used to
evaluate white collar, professional and managerial positions.

Under this method, certain key jobs are selected and each selected job is further analysed into:

a) Mental application

b) Physical application,

c) Skill required

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d) Responsibility

REASONS FOR CONDUCTING JOB EVALUATIONS IN THE BUSINESSES ORGANISATION

1) Job evaluation task is executed in the following cases:

2) Produce a fair pay framework

3) Reduce inefficiencies in remuneration e.g. two people on the same Level' with different salaries

4) Compare remuneration with other companies

5) Design new jobs, departments and functions

6) Rework their pay framework after a company re-organisation

7) Adopting new technology,

8) When Employees are asked to take on additional responsibilities,

9) HR downsizing and layoffs,

10) New programs, new procedures, increased authority and the team Leader or supervisory
responsibilities can cause the job classification of an employee to Change

JOB EVALUATION COMMITTEE

Job Evaluation Committee (JEC) comprises managers and staff members from various departments
across the organisation, which is responsible for conducting job evaluations. JEC members are trained on
the principles of job evaluations and are knowledgeable, experience about the organisation's job
evaluation plan.

Duties

The JEC Committee is responsible for overseeing the job evaluation processes which is designed to
provide but not limited to: Maintain a comprehensive knowledge of the selected job evaluation
methodology Ensure training is provided to key stakeholders on the job evaluation methodology
Maintain the confidentiality of information received and dealt with by the Committee Oversight that an
appropriate job evaluation processes and practices is in- place Advising and oversight on any other
matters related to job evaluation

Responsibilities

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In fulfilling its responsibilities, the Committee will: Ensure it has sufficient information for informed
decision-making; Ensure it receives regular reports from the company on recent or changes made to
jobs and related matters effecting job scope and weight; Obtain data from external sources periodically
to ensure the company's job evaluation practices are in line with market conditions; and Committee has
the authority, within the scope of its responsibilities, to seek any information it requires from any party
within the company.

Committee Members

Committee Members are appointed by the company for duration of one (1) year and it consist of:

Head of HR Department - Chairman

Various Department Representatives - Committee Members

Committee Secretary

Committee Meetings

Committee Voting

The Committee Members will use its best endeavours to reach a unanimous decision on all job
evaluation matters it considers. If a unanimous decision is not achieved, the matter will be decided by a
majority of the voting of the members present. The right to vote (1 vote per committee member) shall
be exercised by each committee members and will be counted & documented by the Committee
Secretary. The vote will be taken by "raising the right hand" for a job evaluated result. If there are equal
numbers of votes for and against, the Chairman will have a second or casting vote. There will be no
restriction on how the Chairman chooses to exercise a casting vote.

Agenda & Minutes of Meeting

Committee agendas for meetings will be set by the Committee Secretary in conjunction with the
Chairman. Minutes of meetings of the Committee shall be prepared by the Committee Secretary,
approved by the Committee Chairman and circulated to all members of the Committee within seven (7)
business days from the meeting. The minutes of meetings will be retained in hard copy or soft copy by
the Committee Secretary

Committee Evaluation

Committee Chairman will review the Committee's Charter at least annually, make amendments as and
when required and publish to the Committee Members. Committee shall perform an annual self-
assessment of its performance to determine whether it is functioning effectively and meeting the
requirements of its Charter.

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FES FACTORS

The FES factors and their sub factors are listed as follow.

Factor 1 Knowledge required by the Position Kind or nature of knowledge and skills needed. How the
knowledge and skills are used in doing the work.

Factor 2 Supervisory Controls How the work is assigned. Employee's responsibility for carrying out the
work. How the work is reviewed.

Factor 3 Guidelines Nature of guidelines for performing the work. Judgment needed to apply the
guidelines or develop new guides.

Factor 4 Complexity Nature of the assignment. Difficulty in identifying what needs to be done. Difficulty
and originality involved in performing the work.

Factor 5 Scope and Effect service. Purpose of the work. Impact of the work product or

Factor 6-Personal Contacts People and conditions/setting under which contacts are made

Factor 7-Purpose of Contacts Reasons for contacts in Factor 6. Note: In some FES standards the point
values for factors 6 and 7 are combined into a matrix chart. The levels of each factor are described
separately.

Factor 8-Physical Demands Nature, frequency and intensity of physical activity.

Factor 9 Work Environment Risks and discomforts caused by physical surroundings and the safety
precautions necessary to avoid accidents or discomfort.

POSITION EVALUATION STATEMENTS

Position Evaluation Statements gives a detail description about the various factors used to evaluate the
job and different criteria's used to evaluate the job in the organisation.

1- Knowledge & Skills

This factor evaluates the nature and extent of specific mental or physical performance competencies
and the practical, commercial, or scientific knowledge and skills required for satisfactory job
performance.

These skills and knowledge may be obtained through formal education or training. through experience,
or through a combination of education, training and experience

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Level 1

Ability to comprehend and follow simple Skills instructieme. And

Skills necessary to perform simple manual tasks or operate sisigile types of erpipment or tools in
repetitive operation

Level 2

Ability to comprehend and carry out simple instructions within a standardized work routine. And Skills
necessary to operate simple machinery requiring less than these days of indoctrination. And Basic
literacy reading, some writing.

Level 3

Ability to read, write, perform simple arithmetic and carry out simple functions independently. And
Either,

Knowledge of body of rules, regulations, policies or operations requiring moderate training (e.g., less
than eight weeks) and experience to apply to standard situations.

OR

Level 4

Ability to comprehend multiple instructions, And Either,

Skills in operating moderately complex equipment requiring significant on-the-joh training (e.g. greater
than eight weeks) to develop proficiency of operation.

Ability to read, write originally and use correct grammar, knowledge of a body of rules, regulations
policies or operations requiring considerable training and experience to apply to a variety of standard
situations. OR

Level 5

Skills in operating and/or maintaining complex equipment involving a trade or craft, or technical
methods and procedures for which considerable training or experience is necessary.

Ability to comprehend complex instructions or information; ability to apply knowledge variety of

situations.

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2. Responsibility for Assets, People, Programs

This factor measures the degree to which the job requires the employee to be the person responsible
for materiala, equipment and the financial resources of the institution; the degree to which the
employee is responsible for the well-being of the people whom the institution serves, or the
responsibility for the programs of the institution.

This factor also evaluates the effect of the work products or services within as well as outside the
institution. Measures such things as whether the work output facilitates the work of others provides
timely services, or impacta wither programs or the social, physical and/or economic well-being of
people.

Level 1

Work product or service facilitates the work of others with little impact beyond the timely provision of
service to others within the same work unit. There is minimum responsibility for equipment or
materials. There is little impact beyond own work product ur Murvices.

Level 2

The work affects the accuracy, reliability, or acceptability of work of others. Responsibility for the
processing and safekeeping of confidential information or materials such as student or personnel
records, invoices, or arcounts. OR

Responsibility for managing a project or minor service with the school district. OR Responsibility for the
maintenance of school property such as equipment, furniture, or food supplies, or other school assets
such as computer data or software

Level 3

Work product or service affects the design or operation of a system or program. Responsibility for the
social, physical and/or economic well-being of others outside own work unit which involves timeliness
and quality of services, but does not involve in-depth and long-term services such as individual
assessment of needs and development of a program.

OR

Responsibility for managing a small function, program, or service, or a portion of a larger program within
the school district.

OR

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Responsibility for materials, equipment or financial resources that have a direct impact on a large body
of individuals.

Level 4

Work product or service affects a wide range of school district activities or the development of major
aspects of school programs, such as the school curricula, admissions, or budget.

3. Complexity

Complexity is evaluated in terms of the kind of information and activities the job requires an employee
to utilize and how much information is obtained.

Level 1

The work consists of tasks that are clear cut and directly related; actions required are obvious and may
be determined by routine observation.

Level 2

The work consists of related procedures and information that is obtained by close examination or by
referring to readily available sources. Choices involve recognizing apparent differences in situations,
data, or factual information and learned or well-defined solutions to problems within clearly
recognizable patterns.

Level 3

The work consists of varied activities within a technical or paraprofessional field. Information is obtained
through investigation, or research and tests, which require initiative and judgment. Work involves
analysis to decide what needs to be done and planning to organize the work; and it involves assessment
of a variety of concrete or abstract matters or situations.

Sushma P, Asst. Professor, BIMS