Job Evaluation


Introduction

Job evaluation is a formal process for determining the relative value of jobs based on job content, with emphasis on such factors as skill, effort, responsibility and working conditions. Job evaluation may contrast with or complement market pricing, which uses the labor market to set the worth of jobs. A key benefit of market pricing is its emphasis on external competitiveness; however, a big drawback is insufficient and/or unreliable market data for all the jobs in the organization. Accordingly, job evaluation in some form even a simple one, such as slotting is needed to supplement a market pricing approach to the valuation of work. A key benefit of job content evaluation is internal consistency. Another is utilityall jobs can be evaluated based on content. Organizations use job evaluation to:

  • Ensure compliance with legal requirements, including federal laws and regulations on equal pay and state/provincial or local ordinances on comparable worth.
  • Establish a rational, consistent job structure based on value to the organization in terms of each job's complexity, importance and/or other factors (with or without reference to market valuation).
  • Help provide a basis for pay-for-performance.
  • Assist in establishing pay rates and structures that are competitive.

Definition:

‘Compensation: 8th edition’, by Milkovitch & Newman; McGraw Hill publishers defined job evaluation as “the process of systematically determining the relative worth of jobs to create a job structure for the organisation”. A recent survey indicated that over 70% people change jobs for the reason of better salary, which means that biggest sore point with employees is their compensation package.

Challenge that faces any company and its HR people is how much should they pay for each of the jobs. The simplest logic that strikes the mind is “On the basis of its importance to the company”. How do the functions of that particular position affect the goals of that organization? Job evaluation tries to establish that. It is the process of analyzing and assessing various jobs systematically to ascertain their relative worth in an organization. Job Evaluation involves determination of relative worth of each job for the purpose of establishing wage and salary differentials. Job Evaluation helps to determine wages and salary grades for all jobs. Jobs are evaluated on the basis of content and placed in order of importance. This establishes Job Hierarchies, which becomes the basis for satisfactory wage differentials among various jobs.

But before we go any further, let us be clear on one thing. Job evaluation is not a panacea for pay package dissatisfaction problems. The fact of the matter is that in any issue involving humans, there is never an ultimate solution. The best of the solutions is only a workable solution. So, is the case in Job Evaluation too?

Another important point to keep in mind is that Job Evaluation does not rate the employee but only the job. That is so say; it does not rate Mr. X, the dispatch clerk, but the job of Dispatch Clerk vis-à-vis other jobs of peon, lift operator, receptionist and telephone attendant and so on. Relative worth is determined mainly on the basis of Job Description and Job Specification. Employees need to be compensated depending on the grades of jobs they perform. Remuneration must be based on the relative worth of each job. Ignoring this basic principle, results in inequitable compensation and attendant ill effects on employees’ morale. A perception of inequity is a sure way of de-motivating an employee.

A job-evaluation program involves answering several questions. The major ones are:

1. Which jobs are to be evaluated?

2. Who should evaluate the jobs?

3. What training does the evaluation need?

4. How much time is involved?

5. What should be the criteria for evaluation?

6. What methods of evaluation are to be employed?

Which jobs are to be evaluated in any exercise, where there are more than 30 or 40 jobs to be evaluated, it is necessary to identify and select a sample of benchmark jobs, which can be used for comparisons inside and outside the organisation. The benchmark jobs should be so selected to achieve representative sample of each of the main levels of jobs in each of the principal occupations.

The size of the sample depends on the number of different jobs to be covered. It is likely to be less than about five percent of the total number of employees in the organization and it would be difficult to produce a balanced sample unless at least 25 percent of the distinct jobs at each level of the organization were included.

Principles of Job Evaluation:

ü      Cleary defined and identifiable jobs must exist. These jobs will be accurately described in an agreed job description.

ü      All jobs in an organisation will be evaluated using an agreed job evaluation scheme. Job evaluators will need to gain a thorough understanding of the job

ü      Job evaluation is concerned with jobs, not people. It is not the person that is being evaluated.

ü      The job is assessed as if it were being carried out in a fully competent and acceptable manner.

ü      Job evaluation is based on judgement and is not scientific. However if applied correctly it can enable objective judgements to be made.

ü      It is possible to make a judgement about a job's contribution relative to other jobs in an organisation.

ü      The real test of the evaluation results is their acceptability to all participants.

ü      Job evaluation can aid organisational problem solving as it highlights duplication of tasks and gaps between jobs and functions

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