Job evaluation is a complicated but important process in achieving pay equality. In this article, we will explain what job evaluation is, discuss the four key methods of job evaluation, and we will take you through the full job evaluation process. Let’s dive in! Show Contents What is job evaluation? A definitionJob evaluation is the systematic process of determining the relative value of different jobs in an organization. The goal of job evaluation is to compare jobs with each other in order to create a pay structure that is fair, equitable, and consistent for everyone. This ensures that everyone is paid their worth and that different jobs have different entry and performance requirements. Job evaluations are developed by HR, often together with workers unions and other social partners and commercial consultancy companies. The advantage of job evaluation is that it does not take into account the qualities of the job holder. According to a report on this topic by the European Commission, the relative worth of a job is assessed irrespective of the qualities of the specific job holder. The relative worth corresponds to a ranking, which in turn corresponds to basic pay brackets or scales (called wage grids). Personal qualities of the job holder (including seniority, education level, tenure) are rewarded by an entitlement to higher steps within the applicable pay bracket.
DOWNLOADABLE CHEAT SHEET The Organization Development Process Cheat SheetWant to add Organizational Development skills to your HR toolkit? Download this concise introduction to OD. Written by HR, for HR. Job evaluation requires some basic job analysis to provide factual information about the jobs concerned. The starting point is often the job analysis and its resulting job description. Based on this, the job is evaluated. One of the key criteria in the evaluation is the added value of the job to the organization. Based on this evaluation, the job is added to the job structure. The resulting structure ensures pay transparency and equity between gender and minorities. The European Commission actively encourages the use of job evaluation. According to Cordis, which coordinates EU-supported R&D activities, 49% of European organizations in the private sector use a formal Job Evaluation scheme, with SMEs at less than 3%. This lack of evaluation leads to unstructured wage payment practices and a lack of requirement-based career and skill development for employees. Job evaluation methodsThere are different methods that can be used for job evaluation. The easiest way to split these up is to make a distinction between qualitative and quantitative methods.
Four common job evaluation methods
Each of these methods has its own advantages and disadvantages. The qualitative methods are usually faster while the quantitative methods are more objective and take into account required skills and responsibilities. The best approach is always a combination of methods. We will give a brief explanation of each of the methods.
Depending on the organizational size and complexity, different methods are chosen. The paired comparison method (as displayed below) works well for smaller organizations, while a factor-comparison or a point-factor method works better for larger organizations. A simplified paired comparison matrix by Armstrong et al., 2003 Point-factor method Of all job evaluation methods, the point-factor method is probably the best known. On a high level, the steps for this approach are as follows:
The result is a spread of points and a salary range per job, similar to the image below. Any outliers can be calculated and need to be dealt with on an individual basis. We will go into more detail in the next section. The job evaluation process involves four steps. These steps are planning and diagnosis, design & development, validation & modeling, and communication & roll-out.
Do you have the competencies needed to remain relevant? Take the 5 minute assessment to find out! Start Free Assessment Armstrong et al., 2003In this phase, the job evaluation project is started with an initial workshop. During this workshop, the evaluation is scoped and approaches for evaluation are decided on. In terms of scope, decisions need to be made on cost, time constraints, the degree of rigor applied, administration, tooling & software, how much external help is required, how to build on previous projects, and how job evaluation will be used to support equal pay. The organization also needs to decide on their job evaluation scheme. There are multiple schemes with different degrees of customization.
Next, benchmark jobs are identified, data collection is planned, and a communication plan is created. Phase 2. Design & developmentIn the next phase, the evaluation elements and levels are determined. This often happens through a workshop. In this phase, it is important to identify elements that are relatively timeless. Keep in mind: the job scheme is relevant for as long as the elements it is based on are relevant. Because of the cost and effort to create a job scheme, they could stay relevant for well over 25 years. In our article about job classification, I give the example of Russian organizations that still work with the frameworks provided by the state during the USSR. Once this is all done, data on the different roles in the organization is collected. Phase 3. Validation & modelingIn the third phase, the results from the data collection are analyzed and the weightings of the different elements are discussed. This may require some fine-tuning as initial definitions may skew the results. Next, a pay grade structure is drafted, and jobs are categorized. There will always be a set of jobs that do not match the pay grade structure. An example could be specialist roles in artificial intelligence and machine learning that are very scarce while crucial for the company’s future. These may have to be put on a different salary scale. The risk here is that these jobs may be much more abundant in say 10 years, so by then they may be overcompensated so this may have to be revised later. Phase 4. Communication & roll-outIn the final phase of the job evaluation process, the structure is implemented. Best practices are to explain everyone affected why their pay grade structure may have changed. There should also be an opportunity to appeal decisions that are perceived as unfair. Here it is important to hear and investigate what employees have to say. This phase will be easier if there is buy-in from the organization. Also note, lowering salaries for workers may not be possible as wages could be protected under national labor laws or it may prompt people to leave the organization. Taking all of this into account will be an administrative challenge. ConclusionThat is it for the job evaluation. There is of course much more that can be said about this topic but that would require us to write a book. Resources we can recommend are the Hay job evaluation manual and the book Job Evaluation by Armstrong and colleagues, which we used as one of the resources for this article. FAQWhat is job evaluation? Job evaluation is the systematic process of determining the relative value of different jobs in an organization. The goal of job evaluation is to compare jobs with each other in order to create a pay structure that is fair, equitable, and consistent for everyone. What are the four job evaluation methods? Four common job evaluation methods are the ranking method, job classification, the factor-comparison method, and the point-factor method. What is the classification method of job evaluation? The job classification method ranks job based on a pre-determined grade comparison. An example classification is a CEO, vice president, director, manager, and operator. |