Job Evaluation:

Evaluating Work
Job Evaluation

Job Evaluation
The systematic determination of the
relative worth of jobs within an
organization.
Benchmark Job
A job found in many organizations and
performed by several individuals who
have similar duties that are relatively
stable and require similar KSAs.
Job Evaluation
The process of determining how
much a job should be paid, balancing
two goals
Internal Equity: Paying different jobs
differently, based on what the job entails
External Competitiveness: Paying
satisfactory performers what the market
is paying

3
 Job Evaluation
Systematic determination of value of each job in relation
to other jobs in the organization.
Used for designing pay structure,
NOT for appraising performance of
employees.
General idea of Job Evaluation:
Enumerate requirements of a job
Job’s contribution to organization
Classify it according to its importance
Main purpose is to establish relative worth of jobs, but JE
can also serve other purposes.

13-4
 Job Evaluation

1. Gather Information on jobs being evaluated:

From current job descriptions
2. Identify Factor(s) to be used in determining worth of
different jobs to organization. Frequently used factors:
Knowledge
Responsibility
Working Conditions
3. Develop and implement plan, using chosen factors to
evaluate relative worth of different jobs:
Should place jobs requiring more of the
factors at higher level in job hierarchy.

13-5
 Job Evaluation (JE)
Done in order to determine the worth of
one job relative to another

Compensable factor
The factors that establish how the jobs
compare to each other.
What are those?
....areas such as skills, effort,
responsibility, and working conditions.
But, those factors can vary job to job.
You decide what they are……
Compensable Factors -

Compensable factors are paid-for,

measurable qualities, features, requirements,
or constructs that are common to many
different kinds of jobs.
These factors are qualities intrinsic to the job
and must be addressed in an acceptable
manner if the job is to be performed
satisfactorily.
Compensable Factors -

In addition to being quantifiable,

compensable factors should be
relatively easy to describe and
document.

Those involved in using compensable

factors to measure job worth should
consistently arrive at similar results.
 To facilitate the use of compensable
factors within a job evaluation
method it is common practice to
classify the factors into three major
categories:
1. Universal Factors
2. Sub-Factors
3. Degrees or Levels
Universal Compensable Factors
Skill: the experience, training, ability, and
education required to perform a job under
consideration - not with the skills an
employee may possess
Universal Factor - Skill
Technical Know-how
Specialized Knowledge
Organizational Awareness
Educational Levels
Specialized Training
Years of Experience Required
Interpersonal Skills
Degree of Supervisory Skills
Universal Compensable Factors

Effort: the
measurement of
the physical or
mental exertion
needed for
performance of a
job
Universal Factor - Effort

Diversity of Tasks
Complexity of Tasks
Creativity of Thinking
Analytical Problem Solving
Physical Application of Skills
Degree of Assistance Available
Universal Compensable Factors
Responsibility: the extent to which an
employer depends on the employee to
perform the job as expected, with
emphasis on the importance of job
obligation.
Universal Factor - Responsibility

Decision-making Authority
Scope of the organization under control
Scope of the organization impacted
Degree of integration of work with others
Impact of failure or risk of job
Ability to perform tasks without supervision
Universal Compensable Factors

Working
Conditions:
• hazards
• physical
surroundings
of the job.
Universal Factor - Working
Conditions
Potential Hazards Inherent in Job
Degree of Danger Which Can be
Exposed to Others
Concentration Skills
Degree of Discomfort, Exposure, or
Dirtiness in Doing Job
 Determining an Internally Aligned Job Structure

Internal alignment
Job analysis Job description Job evaluation Job structure

Work relationships within the

organization
Some Major Decisions in Job Evaluation
• Establish purpose of evaluation
• Decide whether to use single or multiple plans
• Choose among alternative approaches
• Obtain involvement of relevant stakeholders
• Evaluate plan’s usefulness
Determining an Internally Aligned Job Structure

The key product is an ordered listing of

jobs based on their value to the
organization.

The hierarchy not only provides

information about which jobs are most
and least valued, but it also provides
information about the relative amount of
difference between jobs.
Resulting Internal Structures:
Job, Skill, and Competency Based

Managerial Group Technical Group Manufacturing Administrative

Group Group

Assembler I
Inspector I

Head / Chief Administrative

Vice Presidents Packer
Scientist Assistant

Division General Senior Associate Materials Handler Principal Adminis-

Managers Scientist Inspector II trative Secretary

Administrative
Managers Associate Scientist Assembler II
Secretary

Drill Press Operator

Project Leaders Scientist Word Processor
Rough Grinder

Machinist I
Supervisors Technician Clerk / Messenger
Coremaker

Job Evaluation Competency- Skill– Based Job Evaluation

Based
Job Content Approach: Key Decisions

Single Vs. Multiple Plans

Which Job Evaluation Method
Which Compensable Factors
How Many Factors
Number and Definition of Degrees
How Many Points to Allow
Relative Weight of the Factors
How to Allocate Points Across Factors and Degrees
Benchmarks to Evaluate
Who Evaluates
Characteristics of Benchmark
Jobs
The contents are well-known, relatively
stable, and agreed upon by the employees
involved
The supply and demand for these jobs are
relatively stable and not subject to recent
shifts
They represent the entire job structure under
study
A majority of the work force is employed in
these jobs
Preparing for the Job Evaluation

Identifying the need for the job

evaluation
Getting the cooperation of employees
Choosing an evaluation committee.
Performing the actual evaluation.
 Job Evaluation

Ranking
Ranking Classification
Classification

Job
JobEvaluation
Evaluation
Methods
Methods

FactorComparison
FactorComparison PointMethod
PointMethod
Job Evaluation
and
Pay Structure
Establishing a Pay Structure

• Wage and salary surveys

• Wage curves
• Wage structure
Establishing Pay Rates
Price Each Pay Grade
— Wage Curve
Shows the pay rates currently paid for
jobs in each pay grade, relative to the
points or rankings assigned to each job
or grade by the job evaluation.
Shows the relationships between the
value of the job as determined by one of
the job evaluation methods and the
current average pay rates for your
grades.
Plotting a Wage Curve
A Wage Structure
Variable Pay:
Incentives for Performance

Variable pay plans can be established that

focus on individual performance, team or
group performance, and on organization-
wide performance.

Variable pay
Compensation linked to
individual,
team, and/or
organization performance.
Types of Variable pay plans
Employee benefits

A benefit is a form of indirect compensation.

An indirect reward given to an employee or
group of employees as a part of
organizational membership.

Employee benefits are available in a form of

indirect compensation. Such as pensions,
health insurance, time off with pay, and many
others.
Summary
The differences in the rates paid for different
jobs and skills affect the ability of managers
to achieve their business objectives.
Differences in pay matter.
They matter to employees, because their
willingness to take on more responsibility and
training, to focus on adding value for
customers and improving quality of products,
and to be flexible enough to adapt to change
all depend at least in part on how pay is
structured for different levels of work.
Summary (continued)

Differences in the rates paid for different

jobs and skills also influences how fairly
employees believe they are being treated.
Unfair treatment is ultimately
counterproductive.
Job evaluation has evolved into many
different forms and methods.
Consequently, wide variations exist in its
use and how it is perceived.
No matter how job evaluation is designed,
its ultimate use is to help design and
manage work-related, business-focused,
and agreed-upon pay structure.
Assignment Question

Consider your college or school.

What are the compensable factors
required for your college to evaluate
jobs? How would you go about
identifying these factors? Should the
College’s educational mission be
reflected in your factors? Or are
generic factors okay? Discuss.
Performance Management
and Appraisal
A Wage Curve
Legal Issues and Job
Evaluation
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Job
Job Evaluation
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© 2002 Southwestern
College Publishing. All rights 12–40
reserved.
 Job Evaluation Methods: Point Method & Factor Comparison

Point Method-
A quantitative technique that involves:
Identifying the degree to which each compensable factors are present
in the job.
Awarding points for each degree of each factor.
Calculating a total point value for the job by adding up the
corresponding points for each factor.
Most widely used job evaluation method.

• Factor Comparison Method-

A refinement of the ranking method that involves:
Rank each job several times, once for each compensable factor.
Combine the rankings for each job into an overall number for the job.
Also a widely used tool.

© 2005 Prentice Hall Inc. All

11–41
rights reserved.
Advantages and Disadvantages of Different Job
Evaluation Methods

13-42
 Step 3. Group Similar Jobs into Pay Grades
This is comprised of jobs of approximately equal difficulty or importance
as established by job evaluation.

Point method: the pay grade consists of jobs falling within a range
of points.
Ranking method: the grade consists of all jobs that fall within two
or three ranks.
Classification method: automatically categorizes jobs into classes
or grades.

© 2005 Prentice Hall Inc. All

11–43
rights reserved.
 Step 4. Price Each Pay Grade

Next we need to assign pay rates to the pay grades…..

Wage Curve
Shows the pay rates currently paid for jobs in each pay grade, relative to the
points or rankings assigned to each job or grade by the job evaluation.
Shows the relationships between the value of the job as determined by one
of the job evaluation methods and the current average pay rates for your
grades.

© 2005 Prentice Hall Inc. All

11–44
rights reserved.
Computerized Job Evaluations
A computerized system that uses a
structured questionnaire and statistical
models to streamline the job evaluation
process.
Advantages of computer-aided job evaluation
(CAJE)
Simplify job analysis
Help keep job descriptions up to date
Increase evaluation objectivity
Reduce the time spent in committee meetings
Ease the burden of system maintenance

© 2005 Prentice Hall Inc. All

11–45
rights reserved.
Establishing Pay Rates (cont’d)
Step 3. Group Similar Jobs into Pay
Grades
A pay grade is comprised of jobs of
approximately equal difficulty or importance
as established by job evaluation.
Point method: the pay grade consists of jobs
falling within a range of points.
Ranking method: the grade consists of all jobs
that fall within two or three ranks.
Classification method: automatically categorizes
jobs into classes or grades.

© 2005 Prentice Hall Inc. All

11–46
rights reserved.
Many Ways to Create Internal Structure
Business and Work-Related
Internal Structure

Person-based

Job-based Skill Competencies

(Chapter 6) (Chapter 6)
PURPOSE

Collect, summarize Job analysis

work information Job descriptions

Determine what to Job evaluation:

value classes or
compensable factors

Assess value Factor degrees and

weighting

Translate into Job-based structure

structure
Job Evaluation
Process of systematically determining the
relative worth of jobs to create a job structure
for the organization.
The evaluation is based on a combination of
job content, skills required, value to the
organization, organizational culture, and the
external market.
This potential to blend internal forces and
external market forces is both a strength and
a challenge to job evaluation.
Job Evaluation Methods
Job Ranking
Raters examine job description and arrange jobs
according to value to company
Job Classification
Classes or grades are defined to describe a
group of jobs.
Point Method
Numerical values are assigned to specific job
components; sum of values provides quantitative
assessment of job’s worth (Hay Guide Chart-
Profile Method)
 Comparison of Job Evaluation Methods
Advantage Disadvantage
Ranking Fast, simple, easy to Cumbersome as number
explain. of jobs increases. Basis
for comparisons is not
called out.
Classification Can group a wide range Descriptions may leave
of work together in one too much room for
system. manipulation.
Point Compensable factors call Can become
out basis for bureaucratic and rule-
comparisons. bound.
Compensable factors
communicate what is
valued.
The Point Plan Process (1 of 2)
Step One: Conduct Job Analysis
• A representative sample of benchmark jobs
• The content of these jobs is basis for
compensable factors
Step Two: Determine Compensable Factors
• Based on the work performed (what is done)
• Based on strategy and values of the
organization (what is valued)
• Acceptable to those affected by resulting pay
structure (what is acceptable)
The Point Plan Process (2 of 2)
Step Three: Scale the Factors
• Use examples to anchor
Step Four: Weight the Factors
• Can reflect judgment of organization
leaders, committee
• Can reflect a negotiated structure
• Can reflect a market-based structure
Step Five: Apply to Non-benchmark Jobs
Example: The Hay System

Accountability
Freedom to Act
Magnitude
Impact
a) Remote
b) Contributory
c) Shared
d) Primary
How Many Points to Allow?

• Relative Weight of the

Factors

• How to Allocate Points

Across Factors and
Degrees
Who Should Be Involved?
• The Design Process
Matters

• Appeals / Review
Procedures

• “I Know I Speak for All of

Us When I Say I Speak for
All of Us”
Review Questions
1. How does job evaluation translate internal
alignment policies in practice? What does (a) flow
of work, (b) fairness, and (c) directing people’s
behaviors toward organization objectives have to
do with job evaluation?
2. Why are there different approaches to job
evaluation? Think of several employers in your
area. What approach would you expect them to
use? Why?
3. What are the advantages and disadvantages of
using more than one job evaluation plan in any
single organization?
Review Questions (continued)

4. Why bother with job evaluation? Why not

simply market price? How can job
evaluation link internal alignment and
external market pressure?
5. As the manager of a 10 person
workgroup, how do you reassure the
group when they learn their jobs are
going to be evaluated?
Monetary Scale for Responsibility
Requirements in Banking Jobs

13-58
Comparison of Job Evaluation Methods

Point and Factor Comparison methods:

Commonly referred to as quantitative plans.
Number or dollar value is assigned to each
job evaluated, on basis of degree to which
job contains predetermined compensable
factors.

Job Classification and Ranking methods:

Called qualitative or non-quantitative techniques,
compare whole jobs.
13-59
Comparison of Job Evaluation Methods

Point and Job Classification systems:

Evaluate jobs against predetermined
scale or class.

Factor Comparison and Job Ranking

methods evaluate jobs only in comparison
to other positions in the organization.

13-60