UNIT 6 JOB EVALUATION:
CONCEPT, SCOPE AND LIMITATION
6.0 Objectives
6.1 Introduction
6.2 Need for a Rational and Equitable Pay Structure
6.3 Job Evaluation and Its Objectives
6.4 Anomalies in Salaries and Theory of Relative Values
6.5 Basic Assumptions in Job Evaluation
6.6 Trigger Points
6.7 Advantages of Job Evaluation
6.8 Areas of Application and Evaluatory Phases
6.9 Problems Associated with Job Evaluation
6.10 Let Us Sum Up
6.11 Clues to Answers
6.0 OBJECTIVES
After reading this Unit you will be able to:
develop an understanding of the concept of job evaluation, its scope and limitations,
appreciate the need for a rational and equitable pay structure, and
take note of the historical developments with regard to the application of the
technique of job evaluation.
6.1 INTRODUCTION
Productivity for any organisation or enterprise depends, to a great extent, on the morale
and motivation of the employees of that organisation1 enterprise. One of the principal
factors affecting the morale and motivation is the "pay policy" and "pay structure" of the
organisation. Assuming, we have two sections or categories of employees, say Category
A and Category B. The former has a salary structure higher than that of the latter. The
latter category has a feeling (real or imaginary) that the duties and responsibilities of the
former are not more onerous than theirs. This feeling could lead to frustration and
lowering of morale, productivity and poor service. An organisation needs a system which
will attempt to prevent such situations to develop and to resolve them to the satisfaction
of all concerned where such situations discern themselves. This sort of system is
specially needed in case of hospitality sector, where many pkople are employed
according to the need and specifications of a particular service. Disgruntled employeed
in contact with customers will end-up projecting a poor image not only of the
organisation but also of the destination as a whole. This Unit is intended to identify such
a system. It starts with highlighting the need for a rational pay structure and goes on to
deal with other issues like setting the objectives for job evaluation, relationship with
wages, advantages and areas of applications, etc. It also takes into account the problems
related with job evaluatian.
6.2 NEED FOR A RATIONAL AND EQUITABLE
PAY STRUCTURE
As wages are probably the most important single element in conditions of employment,
they have naturally always raised difficult issues in negotiations between employers and
Human
B I O C ~I employees. These issues concern not just the general level of salary received by
Resource Development employees but also the differences in wages amongst them. These differences are of
many kinds. They exist as between countries and, within each country, as between
industries or groups of industries. Moreover, within any industry there are usually salary
differences as between individual, regions, firms or plants and within the latter as
between different departments. Many of these differences may reflect differences in
occupational content - quite apart from the fact that employees engaged in the same type
of work may receive quite different salary according to their length of service, working
conditions, personal performance or for a host of other reasons.
Among the many pay problems regularly confronting enterprises throughout the world,
those associated with internal pay differentials are amongst the most common. The
difficulties normally arise from the belief by certain employees that the position they
occupy in the existing jobs. But responding to such concern by means of upward pay
adjustments does not necessarily represent a solution as other employees with whom
comparisons are traditionally made, may not accept having their relative position
deteriorate in this way. Continuing ad hoc modifications to pay structures risk
undermining faith in their rationality and initiating a series of conflicting pay claims.
The way to resolve such difficulties lies in planning and developing to the extent
possible, a common understanding amongst all the employees and the management
concerned on what the pay structure shquld be. This is especially true in the case of
various segments of the hospitality industry, where, as you know, a large number of
people are employed on a seasonal or temporary basis. This employment can be only
during the peak season or for a special delegation or for a special event and so on. A pay
structure has to be followed so that no bad feeling is there between these temporarytpart
time employees and permanent -employees. A few professionals working as
specialists/consultantson a contract basis with one or more organisations would employ
them in case of a need for such professionals. A uniform pay structure is a morhl booster
for all involved.
6.3 JOB EVALUATION AND ITS OBJECTIVES
Job evaluation is thi process of establishing the value of jobs in a job hierarchy. Job
values may be determined by negotiation or fixed on the basis of broad assumptions
about market rates and internal relativities. Job evaluation is a comparative process
based on a whole series of tasks, responsibilities and obligations, including the skills,
knowledge and mental agility required, qualities of initiative, reliability of the employee
and so on. It aims at establishing pay structures that are fair and equitable in the sense of
ensuring equal pay for jobs demanding what are considered to be broadly similar
sacrifices and of rewarding appropriately the greater efforts and hardships involved is
some jobs as compared with others.
Through the process of job evaluation one will be able to compare jobs by using a
common criteria to define the relationship of one job to another. This gives us the basis
for grading jobs and developing a pay structure. In this way, it seeks to minimise the
dissatisfaction associated with pay differentials and thus to contribute to more
harmonious human relations at the work place.
In short, job evaluation concerns itself with pricing a job in relation to other jobs on
the basis of a consistent, fair, logical and equitable criteria and not on the basis of
arbitrary; variable judgements dictated by short-term expediency or arrived at
through rule of thumb methods. While one may get the impression that as a technique,
job evaluation is invariable and inviolate and it also possesses first-degree precision of
scientific variety, it is not so in practice; for, in the ultimate analysis, it is essentially a
way of applying judgement, and since no evaluatory process can eliminate the need for
exercising judgement, howsoever systematic it is or may be, it will always remain
captive to human traffics; additionally so because the technique is to be administered by
people and for people in the live-organisation world of work. We must remember that ~ o Evaluation:
b Concept.
job evaluation is about relationships, and not absolutes. Therefore, job evaluation cannot Scope and Limitation
be the sole-determining factor for deciding pay structures. Jobs have intrinsic value -
such as, whether the tourist guide is worthy of his or her services being hired. Still, it is
not possible for us to determine what that value is in monetary terms unless we take into
account the pressure of supply and demand, internal differentials and feelings about
equity, in that order. Job evaluation is, therefore, an attempt to find a measure by which
the relative payments made to different jobs are internally consistent.
Therefore, the primary objective of job evaluation is also to find out the value of work.
But this is a value which varies from time to time and from place to place under the
influence of certain economic pressures, not least of which is the worth of money itself.
Nevertheless, the value of work at a specific time and place is absolute, governed by
supply and demand, and related to the value of all other work. The aim of job
evaluation is not to create a rate, but to discover what that rate is at that time and
in that place.
6.4 ANOMALIES IN SALARIES AND THEORY OF
RELATIVE VALUES
You have been told earlier that the most common anomaly is related to irregularity
between salary paid and work done by an employee. While this may be a source of
dissatisfaction and may appear to be anomalous, it is in fact only anomalous if
transference from one job to another is excluded from the criteria. For instance, the case
of the old employee who is retained at a salary i" excess of the value of the work he or
she does is not anomalous unless we expressly exclude 'length of service' from the
criteria. This goes to prove how important it is that the criteria should be properly
defined and understood lest every difference should be thought to be anomalous.
The concept of job evaluation is based on the theory of relative values, a theory which
broadly implies that the value of anything depends on and is influenced by the values
of other things. Thus, the value of work is relative to the value of other work, and so
can be determined only by comparisons between different kinds of work. The effect of
this is seen when, if the salary for a job is raised, then the value of the salary paid to
another job not so treated, is lowered. To restore the status quo ante it is necessary to
raise the wage of the second job proportionately. Another part of this theory is that
because of the internal and external economic pressures, the salaries that are to be used
as indicators for finding out what work is worth should not by themselves be anomalous,
otherwise, the evaluation will be affected by the anomalies themselves and so would
become unreliable.
6.5 BASIC ASSUMPTIONS IN JOB EVALUATION
. Job evaluation is based on certain basic postulates, i.e., claims/assumptions:
The work must have some intrinsic worth when judged against certain criteria,
but that whatever this worth may be it will not necessarily be the same as the dalary.
Implicit in this assumption is that these criteria can be identified, specified and
quantified. These criteria are in terms of the human characteristics or qualities that
are required to do the work satisfactorily. Further, these characteristics are supposed
to be in short supply in relation to the demand placed on them. The usual
characteristics or factors are skill, responsibility, physical effort, mental effort and
working conditions.
It is logical to pay the most for jobs which contribute most to attain the
organisational objective(s).
Block 1 Human a The enterprise goals are better served and furthered by installing and maintaining a
Resource Development job-cum-pay structure based on relative job worth.
worth of job. -
.There is a broad, if not critical, consistency between pay structures in an
organisation evolved on the basis of job evaluation and that in the outer community
The relative worth of jobs is not easy to gauge. By far, the most important element in
job price is the content factor. The content consists of duties and responsibilities of the
post, the difficulty level(s) encountered by the incumbents, demands that are made by the
post on job holder in terms of mental, intellectual, physical and environmental
. requirements for the due discharge of the duties attached to the post. These obviously are
central points related to the post and, hence, are basic to the determination of the base
rate for the job. Pay or salary structure may thus be seen to consist of the following:
The job rate which is relatable to the importance of the job, the responsibilities
involved in it, skill levels and pattern of experience needed for adequate job
performance, and the mental and physical demands made on the job incumbent.
Special or personal allowances connected with long service, skill scarcity,
recompense for personal or social inconvenience.
Fringe benefits like holidays with pay, pensions, life insurance, car, etc.
Payments associated with reward according to performance (payment by result
scheme, merit rating or profit sharing schemes, such as, sharing of commission in the
hospitality sector, share of production plan, etc.)
The economic pressures affect the salaries and they have to be altered accordingly.
The basic evaluations of the work are not affected by such pressures. Once the
differential has been determined between job and job, it remains unchanged as long
as the system itself endures. The evaluation depends upon the criteria and so long as
the criteria do not change, the evaluation should remain as it were.
Like everything job evaluation decays. It might begin to decay even before-pit is
completed and implemented, and can be kept in good order only by carefit1 maintenance.
But once a system has begun to collapse the best maintenance possible will not restore it
and it will need to be replaced by another system.
6.6 TRIGGER POINTS
The trigger points for initiating job evaluation exercises in an organisation are basically
disillusion with the existing remuneration patterns, and
a realisation that prevalent salary structure will soon lose validity or situational
conditions of growth or shrinkage.
Besides these two the:
a technology-change brings about variation in job nature, and difficulty levels, and .
organisations face difficulty in attracting potential recruits or retaining the existing Job Evaluation: Concept,
ones because of a feeling that the remuneration system is too complex, inadequate or '
Scope and Limitation
unfair leading often to management-employee bickering about pay. In short, the need
for job evaluation arises because of technology change and organisational growth.
The job evaluation~processthus initiated has to take care of the factors affecting the jdb
value in the organisation concerned. The main factors affecting job values or pay
structures are market rates, negotiated pay scales and internal relativities and feelings
In general terms job evaluation is used to create two dimensions of relationships. The
first is the vertical relationship within a sector of an organisation where the basic skill is
similar. Here the order of seniority may be obvious, but the spacing of the rungs on the
seniority ladder needs to be established. How much more, for example, should the Senior
Tour Executive be paid than Tour Executive? The second dimension is the lateral
relationship between jobs of a different nature. For example, how should one relate the
values of similar jobs between the tours and travel departments? and so on.
6.7 ADVANTAGES OF JOB EVALUATION
The management-employee relationships are improved and strengthened by increasing
the appreciation of each side's aspirations and viewpoints. When there is a pervasive
goodwill in the organisation based on mutual understanding of management-and-
employee over the principle irritant, that is, the pattern of payment and overall
compensation structure, the organisational goals are more effectively realised, personnel
growth and development stimulated, and mutually profitable partnership programmes are
Job evaluation deals with actual facts, and not what is thought of (by management or
employees) as facts regarding jobs; it centres around commonality of previously
determined criteria so as to enhance objectivity and consistency in factor analysis and
value assessment. Further, it seeks to avoid all ad hocism, arbitrariness and expediency
in dealing with pay matters, not only to provide a disciplined framework for all
organisational pay decisions, but to also promote positive acceptance of such decisions.
The advantages flowing from it benefit all in the organisation - management, employees,
1) Management has the advantage of greater order in its pay arrangements h d more
stable pay structure, and benefits from looking at its pay problems in a more ,
disciplined way;
2) Employees benefit because job evaluation provides an agreed framework for settling
questions affecting jobs and so helps to prevent arbitrary, i.e., random decisions. It
also helps to ensure that differences in skills and responsibilities are properly
recognised and that when people increase their skills or take on more
responsibilities, they are rewarded suitably;
3) Everyone benefits from a system which enables the pay for new and revised jobs to
be settled in the same way as pay for existing jobs, because it helps to prevent
An additional rationale for reforming the payment systems through this technique stems
from the important fact that it, thus, leads to reduction of lost time, reduction in salary
anomalies and a number of salary disputes, and improves morale. Several other by-
product benefits also accrue from the data gathered (for job evaluation) through job
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Block 1 Human AREAS OF APPLICATION AND EVALUATORY
Resource Development
6.8
PHASES
It is now an established fact that job evaluation can be used to developgay structures for
hourly or weekly paid clerical employees as much as for managers, executives,
technicians and professionals. Areas of application can be summarised as:
Phase I : Preparatory
a) Preparatory work concerned with policy, programme, planning and communications,
b) Selection of the job evaluation method most appropriate to the circumstances of an
organisation and tailoring it to fit the requirements of that organisation,
c) Establishment of the necessary procedures and training of those applying the
scheme.
Phase I1 : Analysis and Assessment
a) Indication to the employees concerned what the objectives of the job evaluation
exercise are and how the exercise will be carried out,
b) Description analysis, and evaluation of jobs to define job relationships.
Phase I11 : Building and Pricing the Structure
a) Positioning ofjobs into a number of grades,
b) Financial evaluation of grades.
Phase IV : Negotiation, Implementation and Control
a) Where applicable, negotiation of the new pay structure;
b) Implementation of the new pay structure, perhaps on phased basis;
c) Establishment of procedures to evaluate new and revised jobs and for maintenance
of the system.
6.9 PROBLEMS ASSOCIATED WITH JOB EVALUATION
At the inception of a job evaluation application, many problems will arise - human,
technical and economic. Experience shows that most of the human problems are based
on or stem from the economic and technical ones. If people are ignorant as to what job
evaluation holds for them it must be because the technique of communication has failed.
If as a result of the application people are worse off than they expected to be, or not so
well off as they hoped to be, something could not have been made clear in the first place.
Nevertheless, there are bound to be some human problems which are not entirely
technical in their origin. A lot of the problems will depend on the history of employee-
management relationships in the establishment, so that difficulties encountered in one
organisation will not necessarily be found in another.
Sometimes job evaluation forms part of a productivity deal, though it is hard to see just
what the two things have in common. There are many instances where employees have
literally been bribed to accept job evaluation in return for an increase in wages. This is
typical of the confusion that exists between salary and job values.
Another important problem confronts the employees who cannot resolve whether to
cooperate in an application ornot. Quite understandably they feel that once they accept
the idea they will find themselves constrained by the system, unable to'argue objectively
against 'the book'. What is essential here is that everyone should regard the evaluation
simply as a basis for negotiation rather than the actual salary?
The technical problems will mainly concern the management, although nf course if ~ o Evaluation:
b Concept,
employees' representatives are to be included they too will need to understand the Scope and Limitation
technique that is to be used. Such questions as: which is the best system?; who is going
..to install it?; who is going to operate it?; do we have employee participation and if so
how do we go about it?; when shall we start and how long will it take?; what problem
are we likely to find in running and maintaining the scheme?; will all require to be
resolved. The sooner they are answered the better and certainly before the concern
become too much involved. Not least of the technical problems will be to design the
system's0 that it fits the complex shape of the organisation in which it is to be used.
Seldom is it possible to find a readymade system which does not require some moulding
and reshaping if it is to work satisfactorily. Tailoring a particular system to suit
individual circumstances is often the most difficult part of the introduction.
The economic problems will be of concern to all, though for different reasons.
Management will be anxious about the cost of the application (for obviously the amount
of work involved is quite considerable) and about the proceeds, tangible and intangible,
that are likely to accrue. Apart from the cost of introducing and running the scheme there
may be wage adjustments, based on the evaluation, which can be quite expensive.
So far as the employees are concerned they will want to know what happens to the jobs
that are underpaid compared to their evaluation. If their rates are raised then the others
will by comparison be automatically lowered. Will job evaluations cause redundancy? It
, is difficult to see why it should, yet it would be extremely foolish to guarantee that it will
not (or indeed that the use of any management technique will not).
Check Your Progress
1 ) What do you understand by Job Evaluation? What is its objective?
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2) What is the "Theory of Relative Values"?
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3) When do most organisations take a fresh look at their wage structure?
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