A definition of job evaluation
The term “job evaluation” may sound daunting. It doesn’t need to be. Job evaluation is a system or an activity, conducted by HR teams together with leaders, which aims to determine the value of a role in the business. The method compares jobs and analyses them to ascertain their worth. Often, job evaluation results in ratings based on set criterion. The outcome should bring awareness on the reliability of the job for the organisation as well as a balanced pay structure.
Job evaluation is critical to ensure that a coherent approach to pay and pay structure is in place. The challenge some organisations face is that it may be subjective. For this reason, job analysis is critical for a clear job evaluation process. The grading forms a hierarchy of job importance. Through the process, the job will be analysed considering the knowledge required for it, the skill set needed and the necessary abilities for the job. Conducting job evaluations entails expertise and neutrality. It is not a simple process and teams leading it should have the relevant experience and not be biased by personal views.
Ultimately, the objective of the exercise is to compare jobs and create a pay structure that is consistent for everyone in the business. Although the process is led by human resources, unions are often involved. For unbiased results and due to the complexity of the task, it is common for businesses to hire a consultancy firm to deliver this assessment.
The pros and cons of job evaluation
Job evaluation is not a straightforward process and requires strong due diligence. We highlight in the section below some pros and cons of this method. By doing so, employers should be able to gauge how to conduct this process considering their business’ specificities.
Pros of job evaluation
- It forms a framework with strong basis for pay justification.
- It ensures pay equity throughout the business.
- It creates a fair pay structure.
- It benchmarks the market salaries.
- It provides clarity on existing roles and functions in the business.
- It should provide a fair roadmap for promotions.
- It creates a fair grading structure that will define salary brackets.
- It increases pay transparency .
- It may form the basis of a benefits structure.
- It positively impacts cost management.
Cons of job evaluation
- To comply with current fast-paced market changes, it needs to be delivered regularly, which can be resource and cost heavy for businesses.
- It can be subjective and too generalist.
- It must focus on the job itself rather than its people so that it is not emotionally biased.
- It needs to be followed by actions to ensure equity in pay throughout.
- It is a heavy process that requires expertise and knowledge.
- There might be pushback from unions.
- Managing results and people’s emotions might be a difficult task, particularly when downgrading applies.
- Internal teams conducting the exercise might be challenged by their peers or deliver biased results.
Job evaluation can bring many benefits to organisations who conduct this process on a regular basis. It ensures job equity and fair pay for all. However, this process is not an exact science and businesses conducting it should ensure that they apply expertise and due diligence to the process to ensure results are fair and effective.
Job evaluation techniques
The complexity of job evaluation can be tackled through the use of different techniques. The choice of method used should fit within the organisation’s culture and means to conduct the activity. The objective of the evaluation should also be considered. For example, internal comparison aims at structuring pay within the business. External comparison will look at market salaries for similar positions and create a benchmark to understand if the organisation provides competitive pay. Both should blend quantitative and qualitative data for a well-rounded analysis. We explore below some methods that businesses can use to conduct job evaluation effectively and depending on their business needs.
The classification method
This method looks at pay from within. It is also called the internal method. It focusses on qualitative insight and analysis into job characteristics, seniority levels, responsibilities and skill set required. Through these KPIs, it creates a grading system that frames the hierarchical levels in the business. This method is straightforward but may be subjective.
The competitive method
The competitive method uses external market analysis. It looks at salaries from within the business versus equivalent industry salaries. It is also called the external method as it focusses on market analysis. Unlike the internal method, it is based on quantitative data insight that aims at measuring the competitiveness of salaries that the business offers versus its competition. This method requires access to market data and therefore is often conducted by specialised consultancy firms. For more information on competitive pay, check our content here.
The point factor method
As its name suggests, this method uses a point system to evaluate jobs and determine compensation. It is a quantitative method that regroups different points or KPIs that are tallied together. The total number of points allocated to a role forms the framework of the compensation package.
The ranking method
This method is qualitative and ranks jobs per hierarchy levels. The importance of jobs in the business is based on the hierarchy that forms the ranking. This method is highly subjective and often criticised when conducted in isolation.
The factor comparison method
This method is complex as it combines the point factor method and the ranking method seen above. As such, it considers quantitative and qualitative data combined, making for a well-rounded analysis. It involves the clear definition of factors and their weight in the evaluation that will influence the compensation.
The above techniques require different levels of involvement and time investment. Businesses should balance their desired outcome versus the investment value they want to apply to the job evaluation process.
Our advice to conduct effective job evaluation
As seen above, job evaluation can take different forms and sizes. To conduct this complex process, we recommend businesses follow some key steps presented below.
Step 1: Clearly define the purpose of the job evaluation process
As with any analysis, it should start with a clear definition of the scope of work. Businesses and their human resources teams should have a clear purpose and desired outcome for this somewhat painstaking task. The scope of the analysis should define the departments involved, the collaborators, if the process is a job evaluation or re-evaluation and much more.
Step 2: Choose a method that fits the purpose and works for your business
The method chosen should match the desired outcome as well as the means of the business in terms of available resources or budget. Be thorough in this choice as the outcome will have an impact on your people and their mindset. Defining if you are looking for an internal or competitive analysis is the first step. You should then define your budget, timelines and consider the company size and the size of the scope for the evaluation. Access to data should also be accounted for as it will have an impact on the budget and timeline, particularly for external evaluation.
Step 3: Kick off the data collection process
For this analysis, data is key. This data can be qualitative, quantitative or both. Gathering it and consolidating it is a large part of the job and is crucial to ensure the accuracy of the analysis. The data collected can be current salaries, existing hierarchical structure, job grouping, levels of responsibility, market insight, location of the workforce, demography of the workforce and much more depending on the purpose of the job evaluation. For more on data, check our article on the use of data for performance management here.
Step 4: Conduct a pilot phase to troubleshoot the method
With most large or complex projects, it is recommended to launch an initial pilot phase. This allows for adjustments ahead of the big launch. It ensures nothing goes unnoticed and that hurdles are tackled prior to rollout. Through this phase, flexibility should be kept in mind. Some factors might be re-evaluated, or the use of additional data might be deemed relevant. This step serves as a test on a small group of jobs.
Step 5: Communicate with those involved
Job evaluation brings emotions. Communicating about the process with transparency and humility will make things smoother. The manager’s input will be required, and their time involvement should be communicated ahead of the launch. In some cases, job security is at stake and therefore, communicating with transparency will lead to collaborator buy-in. For more insight on communication in the workplace, check our article here.
Job evaluation may be complex and present itself with heavy workload, but it is nonetheless essential for a fair pay structure and equity in pay. We highly recommend businesses conduct this activity on a regular basis and keep an open mind throughout the process.
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