Meaning of Job Evaluation
Job evaluation is a formal and systematic approach to analysing jobs and categorising them regarding their relative worth in an organization. This process is also valuable in the formulation of compensation plans by the personnel manager. Job evaluations are usually based on compensation factors such as the required skill set, working conditions, and job duties, rather than focusing on the employee.
For example, a junior-level engineer’s compensable factors might include a bachelor’s degree in electrical engineering, two years of industry-related experience, and two years of experience testing products for quality and reliability. The factors used to determine wage and pay rates may vary, with some factors being specific to hourly wage evaluation, some for setting salaries, and others for compensation based on individual tasks. For effective HRP in an organisation, job evaluation is an important prerequisite.
Definition of Job Evaluation
According to Edwin B. Flippo, “The systematic and orderly process of measuring the worth of a job within an organisation is called job evaluation”.
According to Dale Yoder, “Job evaluation is a practice which seeks to provide a degree of objectivity in measuring the comparative value of jobs within an organisation and among similar organisations. It is essentially a job rating process, not unlike the rating of employers”.
According to Kimball and Kimball, “Job evaluation represents an effort to determine the relative value of every job in a plant and to determine what the fair basic wages for such a job should be”.
Objectives of Job Evaluation
Objectives of job evaluation are as follows:
1) To relate jobs to each other in terms of their intrinsic worth, and hence to determine the relative complexities of different jobs and a rational job structure within an organisation,
2) To assess the inherent value of jobs, job evaluation relies on a systematic analysis of the complexity of job content and requirements. Job evaluation experts perform this process without relying on predefined compensation standards.
3) To rank the jobs in the order of importance based on the job duties, responsibilities and other relevant factors.
4) To provide a rational basis for equitable remuneration (pay and benefits) within an organisation, so that defensible rates of remuneration may be assigned to jobs themselves and to the individuals who perform these jobs (equal pay for an equal value of the jobs).
5) To help employers determine which jobs are expendable and, as a result, which jobs they can eliminate if needed. Changing technologies frequently lead to the elimination of jobs. When technology advances, some of the jobs that individuals previously had to complete, like typing or manual adding, are no longer as time-consuming and at times aren’t even necessary.
6) To secure and maintain complete, accurate and impersonal descriptions of each distinct job or occupation in the entire plant.
7) To provide a framework for periodic review and revision of wage rates.
8) To provide a benchmark for making career planning for the employees in the organisation.
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Process of Job Evaluation
The steps involved in the job evaluation process are shown in the image:
Step 1: Identification of Jobs for Evaluation
The initial stage involves determining the jobs that are subject to evaluation. It is usually difficult for an organisation to evaluate all the jobs of the organisation. It, therefore, chooses a few key jobs which can represent a group of similar jobs for job evaluation purposes. Once the selection of jobs for evaluation is complete, the next stage involves determining the specific factors to assess within those jobs. The evaluator may evaluate one or more of the job factors like physical efforts, concentration, mental efforts, communication and education, leadership skills, experience, job complexity, and pressure.
Step 2: Gathering the Relevant Data
In the job evaluation process, the next step involves gathering essential information about the jobs under evaluation. For this, the evaluators may adopt data collection techniques like interview, questionnaire, observations etc.
Step 3: Determination of Job Ranking
After analysing all the information relating to the jobs, the evaluator assesses the extent of the presence of the chosen factors in the jobs. Based on the result of such an assessment, the evaluator determines the ratings for each job. The evaluation process examines similar factors, and the ratings illustrate the job’s relative worth in relation to other positions within the organization.
Step 4: Selection of Benchmark Jobs
The primary purpose of job evaluation is the development of pay grades for each category of jobs. In this regard, an organisation must know what the other organisations are paying for similar jobs. However, it may not be feasible for an organisation to establish comparative pay scales for all the positions within the organization. For this reason, evaluators may choose a few jobs commonly present in every organization, making them easy to compare. Organizations commonly refer to these jobs as benchmark jobs, using them as standards for setting the pay scale for all other jobs in the organization.
Step 5: Wage and Salary Surveys
In this stage, an organisation surveys the pay scales of the benchmark jobs in other organisations in the industry. An organization may formally conduct salary surveys to gather compensation data. In the same way, an organization can gather pertinent information through either direct surveys or by utilizing published reports from professional agencies or magazines. Based on such a survey, the monetary value of each job is determined. Many organisations often use informal sources like telephones, newspapers, and the Internet for conducting salary surveys.
Step 6: Review and Feedback
Developments in the external environment influence the organisations continuously and also cause changes in the internal factors. For example, technological changes influence job characteristics and requirements profoundly. As a result, organizations are compelled to periodically reassess job roles to determine their value in the evolving context. It’s essential to gather feedback from various stakeholders, including employees, supervisors, managers, and unions, on different aspects of job evaluation to continually enhance the job evaluation process.