SUBJECT CODE: EM 610

TOPIC: JOB EVALUATION

REPORTER: MS. JESSICA A. ISLETA
PROFESSOR: DR. JOCELYN C. BARRADAS

COMPENSATION AND REWARDS

INTRODUCTION:

Job Evaluation is concerned with assessing the value of one job in relation to another, for it is only
when each job has been properly evaluated that a sound wage structure can be built.
Job Evaluation is the output provided by job analysis. It uses the information in job analysis to
evaluate each job for a suitable compensation. It is a formal and systematic comparison of jobs in order
to determine the worth of one job relative to another.

Increasing complexity and rapid change in the business environment mean organizations today must
rethink their compensation and rewards strategies for any of a number of reasons-and do so more
frequently than in the past. Moreover, they can no longer look at compensation strategy in a vacuum, but
must also consider the role of other rewards in supporting their business and workforce objectives.

 Talent Management Issues: Updates in an organization’s compensation and overall reward strategy
may be called for to meet a need to attract, retain or engage talent in roles or functions that have
new or increased significance for the business (e.g., sales or R & D) at a specific organizational
level (e.g., executive) or, even more broadly, in a cross-functional category (such as the high
performer/high-potential group.)
 Changing Business Strategy: With changes in leadership or strategy, organizations may need to
realign compensation and other rewards for some or all roles to support the company’s ability to
retain/engage the right talent and focus on critical new business objectives.
 The M&A Rationalization: Most significant corporate transactions prompt a need to integrate or
revise compensation and reward strategies to ensure that the business objectives of the transaction
can be met quickly and efficiently.
 Cost: In situations where organizations need to manage compensation costs more effectively to
ensure, for example, that variable pay programs are truly aligned with performance and business
strategy the solution must also consider implications for other reward programs and how the total
rewards package can ore efficiently deliver value to the organization.

Definition of Job Evaluation:

Kimball and Kimball define job evaluation as “an effort to determine the relative value of every job
in a plant to determine what the fair basic wage for such a job should be’.
Wendell French defines job evaluation as “a process of determining the relative worth of the various
jobs within the organization, so the differential wages may be paid to jobs of different worth”.

The British Institute of Management as defined job evaluation as “the process of analysis aid
assessment of jobs to ascertain reliably their relative worth, using the assessment as a basis for a
balanced wage structure”.
The ILO define job evaluation as “an attempt to determine and compare demands which the normal
performance of a particular job makes on normal workers without taking into account the individual

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abilities or performance of the workers concerned”.

OBJECTIVES OF JOB EVALUATION

According to Knowles and Thomson job evaluation is useful in eliminating many evils to which nearly
all systems of wage and salary payments are subject. They are:

a. Payment of high wages and salaries to persons who hold jobs and positions not requiring great skill,
effort and responsibility;
b. Paying beginners less than they are entitled to receive in terms of what is required of them;
c. Giving raise to persons whose performance does not justify it;
d. Deciding rates of pay on the basis of seniority rather than ability;
e. Payment of widely varied wages and salary for the same or closely related jobs and positions; and
f. Payment of unequal wages and salaries on the basis of race, sex, religion or political differences.

PRINCIPLES OF JOB EVALUATION PROGRAMS

According to Kress, certain broad principles should be kept in mind before implementing a job
evaluation Programs. These principles are listed below:

a. Rate the job and not the man. Each element should be rated on the basis of what the job itself
requires;
b. The elements selected for rating purposes should be easily explainable in terms and as few in
terms and as few in number as will cover the necessary requisites for every job without any
overlapping;
c. The elements should be clearly defined and properly selected;
d. Any job rating plan must be sold to foremen and employees. The success in selling it will depend
on a clear-cut explanation and illustration of the plan;
e. Foremen should participate in the rating of jobs in their own departments;
f. Maximum cooperation can be obtained from employees, any discussion of money value should
be avoided. Only point values and degrees of each element should be discussed; and
g. Too many occupational wages should not be established. It would be unwise to adopt an
occupational wage for each total of point values.

ADVATAGES OF JOB EVALUATION

Job evaluation enjoys the following advantages:

a. Job evaluation is a logical and, to some extent, an objective method of ranking jobs relative to
one another. It may help in removing inequalities in existing wage structures and in maintaining
sound and consistent wage differentials in a plant or industry.
b. In the case of new jobs, the method often facilitates fitting them into the existing wage structure.
c. The method helps in removing grievances arising out of relative wages; and it improves labor-
management relations and workers morale. In providing a yardstick, by which workers’
complaints or claims can be judged, the method simplifies discussions of wage demands and
enables differences in wage to be explained and justified.

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 d. The method replaces the many accidental factors, occurring in less systematic procedures, of
wage bargaining by more impersonal and objective standards, thus establishing a clear basis for
negotiations;
e. The method may lead to greater uniformity in wage rates, thus simplifying wage administrations;
f. The information collected in the process of job description and analysis may also be used for the
improvement of selection, transfer and promotion procedures on the basis of comparative job
requirements; and
g. Such information also reveals that workers are engaged in jobs requiring less skill and other
qualities than they possess, thereby pointing to the possibility of making more efficient use of the
plants labor.

LIMITATION OF JOB EVALUATION

A. Exactness or precision is missing in the job-evaluation. There is no standard table for all the
activities. All jobs cannot be measured and compared accurately.

B. It does not account for many inter-related economic factors. For example, the law of demand
and supply of labor is a prime factor in determining wage rate in industry. Due to high demand of
software engineers in handling special problems (say, Y2K problem), the temporary wage
structure was quite high. This remains unattended to in a generalized approach of job-evaluation.

C. No special attention is paid for exceptional merit, needed in the performance of the job. Many
a times, workers feel frustrated due to this. For example, many highly talented scientists and
professors feel frustrated in R & D activities, as their counterparts in field and civil services are
better compensated in terms of promotion, power, perks and salary.

D. The basic assumption in job-evaluation is that a work of equal worth should be equally paid
as these are both equally attractive and equally demanding. In real life, this contention is
challengeable. In real life, there are numerous examples when the job of same worth (say, a
lecturer and an I.A.S.) are not equally attractive to the job seekers.

E. The change in production technology (for example, conventional lathe to CNC lathe),
information system, subordination, etc., severely affect the job content. Therefore, a job-
evaluation conducted few days back may not be valid today. The job content of an operation is a
dynamic process and so should be the job-evaluation also. However, generally job-evaluation is
not a regular affair in industry. Therefore, the wage-structure on the basis of obsolete job-
evaluation is a source of great irritant in industrial relation.

Methods of Job Evaluation:

Determining the relative worth of all jobs in the enterprise is difficult. This is so because jobs differ
with respect to the demands made on the employees as well as the value of the job to the enterprise. The
comparison and evaluation may be made on two bases:

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 a. Non- analytical or non- quantitative-system
b. Analytical or quantitative system.

NON- ANALYTICAL OR QUANTITATIVE SYSTEM- this system utilizes non-quantitative methods

of listing jobs in order of difficulty. The comparison and evaluation made on a quantitative basis is made
by ranking or classifying the jobs from the lowest to the highest.

TWO TYPES OF ANALYTICAL SYSTEM

i. Ranking System
ii. Job Classifications or Grading System

i. RANKING SYSTEM
This is a very simple method of job evaluation. Under this system the job raters simply rank
one job against another without assigning point values. It consists of ranking the jobs in the organization
from the lowest to the highest.

MERITS OF RANKING SYSTEM

 It is simple, quick and inexpensive

 It is particularly suitable for small organizations which cannot afford to employ outside
consultants.
 It is for the organization to explain to the employees or trade union for it is simple and easy to
understand.

DEMERITS OF RANKING SYSTEM

 The ranking method is somewhat crude as specific job requirements are not normally analysed
separately.
 It merely produces a job order but it does not indicate how much one differs from one another.
 As the size and complexity of an organization increases, it becomes difficult to find raters
acquainted with all jobs to be ranked.

ii. JOB CLASSIFICATION OR GRADING SYSTEM

Under this system a number of predetermined grades or classifications are first established and then
the various jobs are assigned within each grade or class.
MERITS OF JOB CLASSIFICATION OR GRADING SYSTEM

 This is best suited for small organizations as it is easy to understand and inexpensive to
administer.
 Since employees think of jobs in clusters or groups, this method makes it easier for them to
understand in ranking.
 Job ranking is considered to be an improvement over ranking because a predetermined yardstick
consisting of job classes is provided.
 Job grading makes pay determination problems administratively easier to handle.

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DEMERITS OF JOB CLASSIFICATION OR GRADING SYSTEM

 It is difficult to write comprehensive and unambiguous class descriptions.

 The rater can be easily influenced by title, personality and existing pay rate of a job. Thus, the
judgement in respect of a whole range of jobs may produce an incorrect classification.
 Lack of substantiating data makes it difficult for the management to defend ratings to their
employees.
 This method leaves much to be desired because personal evaluations by raters establish the major
classes and determine into which classes each job should be placed.
 This system is unsuitable for large organizations as it is a very rigid system.
ANALYTICAL OR QUANTITATIVE SYSTEM

In this system, various factors of a job are considered and points; assigned to their relative worth.

The analytical or quantitative systems of job evaluation are:

i. The Point Rating System

ii. The Factor Comparison Method

i. THE POINT RATING SYSTEM

It is based on the assumption that it possible to assign points to the different factors as well as to
each degree of each factor involved in jobs and that the sum-total of the points will give an index of the
relative value of jobs.

MERITS OF POINT RATING SYSTEM

The use of fixed and predetermined factors forces the evaluator to consider the job elements
when rating jobs.
 The method forces job raters to consider individual factors rather than the job as a whole.
 Prejudice and human judgement are minimized. A clear record of the judgements of the evaluator
is later available for explaining the results of the evaluation.
 The assignment of point values indicates not only which job is worth more than another but how
much more it is worth.
 As the system is more systematic and objective than any other job evaluation method, the
worker’s acceptance can be assured.
DEMERITS OF POINT RATING SYSTEM

 It is very difficult to give fair evaluation of the relative worth of each job in the organization.
 The listing of factors may omit some elements that are important in certain jobs.
 Workers find it difficult to fully comprehend the point rating system.
 The task of defining job factors and assigning value to each degree is a time consuming and
difficult task.
 The point rating system entails considerable clerical work like recording and summarizing the
rating scale.
 The system is inflexible as the same point systems cannot generally be used for production and

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 office jobs.

ii. The Factor Comparison System

This system is similar to the point system. This was developed by Eugine J. Benge at te
Philadelphia Rapid Transit Company in 1926. He developed this system in order to solve problems
faced by the point rating system- a. determining the relative importance of factors and describing
their degrees.
MERITS OF FACTOR COMPARISON METHOD

 It is a systematic, quantifiable method for which detailed step-by-step instruction are

available.
 This method can be used to evaluate a combination of unlike jobs such as clerical, manual
and supervisory jobs.
 It uses the job-by-job comparison technique which is far more accurate method of
measurement.
 It is a fairly easy system to explain to employees because the weights selected are not
entirely arbitrary but reflect existing wage and salary practice.
 The reliability and validity of the system are greater than the other methods of job
evaluation.

DEMERITS OF FACTOR COMPARISON METHOD

 The difficulty of the system is that it is very expensive and complicated and cannot be
readily explained to the workers.
 The method is somewhat difficult to operate.
 Money rates, when used as a basis of rating, tend to influence the rater.

Use of Job Evaluation

According to Sibson, job evaluation process plays a key role in wage and salary administration in
the following ways:

a. Job evaluation is the most effective means of determining internal pay relationships for
most types of jobs.
b. It can be used as an instrument for implementing the company’s basic pay policies.
c. Equitable base-pay relationships set by job evaluation serve as a foundation for incentive
or bonus plans.
d. Job evaluation provides a reasonable basis for personnel moves.
e. Useful controls over wage and salary costs can be greatly aided by job evaluation.
f. Job evaluation provides a realistic foundation for gearing company pay scales to pay scales
of competing companies.
g. It assists mangers in meeting day-to-day problems.