JOB EVALUATION

Job Evaluation is the Process of analyzing and describing positions, grouping them and
determining their relative value by comparing the duties of different positions in terms of
their different responsibilities and other requirements.

Job evaluation is a formal and systematic approach to analyzing jobs and categorizing
them in regard to their worth relative to each other in an organization, so that a wage or
salary hierarchy results. Job evaluations are usually based on compensation factors
(skill set needed to perform the job, working conditions and job duties) rather than on
the employee.

Job evaluations are not the same as performance evaluations. Performance

evaluations are directly for evaluating the performance of an employee for incentive
purposes, whereas job evaluation determines the pay rate for a job. These two terms
are easily mistaken to mean the same; however, they have two different names
because they have two different purposes.

Job Evaluation is the output provided by job analysis. Job analysis describes the
duties of a job, authority relationships, skills required, conditions of work and other
relevant information. Job Evaluation uses the information provided by job analysis to
evaluate each job.

Conducting a job evaluation is critical as it aids in determining the worth of each job in
an organization. In addition, it helps to ensure internal equity is being maintained. A
successful evaluation is conducted by a job evaluation committee, which typically
includes several employees whose task is to evaluate the worth of each job using
compensation factors. Once completed, the evaluation will result in a wage or salary
structure.

Job evaluation is a practical technique, designed to enable trained and experienced

staff to judge the size of one job relative to others. It does not directly determine pay
levels, but will establish the basis for an internal ranking of jobs.
Objectives of Job Evaluation

 Maintain complete, accurate and impersonal description of each distinct job for
the entire organization
 Provide standard procedure for determining the relative worth of each job in the
organisation
 Determine a fair and equitable rate of pay for each job in relation to similar jobs
in the industry
 Ensure fair and equitable wages or salary for each position in relation to similar
positions in the industry

Some Principles of Job Evaluation

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

 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

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

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

 Job evaluation is based on judgment which may not be scientific. However if

applied correctly it can enable objective judgments to be made.

 It is possible to make a judgment about a job's contribution relative to other jobs

in an organisation.

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

 Job evaluation can aid organisational problem solving as it highlights duplication

of tasks and gaps between jobs and functions.
 Advantages of Job Evaluation

 It helps in removing inequalities in existing wage structures as well as

maintaining a consistent wage differential in an organization thereby
simplifying wage administration
 It facilitates fitting new jobs into the existing wage structure.
 It helps in explaining and justifying wage structure and thus removes wage
related grievances, improves labour management relations and workers
morale.
 It establishes a basis for wage bargaining and negotiations.

Steps to install Job Evaluation programme

 Job Analysis – This leads to preparation of Job Description and provides

information about job duties, responsibilities and employee requirements
for successful performance of the job.

 Selecting compensable factors – Job has to be broken down into

component parts to determine the factors required for performance as well
as evaluation of the job for which money is paid. As these factors are like
yardsticks used to measure the relative importance of the jobs they are
known as compensable factors and the value of these are to be
determined. The factors chosen should
o Represent all major aspects of job content for which organization is
willing to pay – skill, effort, responsibility, working conditions etc
o Avoid overlapping or duplication
o They should be definable and measurable
o Should be easily understood by employees
o Should not cause excessive installation or administrative costs

To determine the compensable factors for each job the jobs may be
grouped in a sequence in terms of value to the firm like operations
employees, sales employees, administrative, technical & supervisory
employees, professional employees, management employees,
executives etc.

 Selecting a system- for evaluating jobs according to the selected

compensable factors. The method used for evaluation of the job maybe
adapted according to the organization needs.
 Methods of Job Evaluation

(A) Non quantitative methods

o Job Ranking
o Job Classification

(B) Quantified Methods

o Point Rating
o Factor Comparison

Ranking Method
Perhaps the simplest method of job evaluation is the ranking method. According to this
method, jobs are arranged from highest to lowest, in order of their value or merit to the
organization. Jobs also can be arranged according to the relative difficulty in performing
them. The jobs are examined as a whole rather than on the basis of important factors in
the job; and the job at the top of the list has the highest value and obviously the job at
the bottom of the list will have the lowest value.
Jobs are usually ranked in each department and then the department rankings are
combined to develop an organizational ranking. The following table is a hypothetical
illustration of ranking of jobs.
Table: Array of Jobs according to the Ranking Method
Rank Monthly salaries
1. Accountant Rs 3,000
2. Accounts clerk Rs 1,800
3. Purchase assistant Rs 1,700
4. Machine-operator Rs 1,400
5. Typist Rs 900
6. Office boy Rs 600
The variation in payment of salaries depends on the variation of the nature of the job
performed by the employees.
Merits : The ranking method is simple to understand and practice and it is best suited
for a small organization.

Demerits : Its simplicity, however, works to its disadvantage in big organizations

because rankings are difficult to develop in a large, complex organization. Moreover,
this kind of ranking is highly subjective in nature and may offend many employees.
Therefore, a more scientific and fruitful way of job evaluation is called for.
 Classification Method

According to this method, a predetermined number of job groups or job classes are
established and jobs are assigned to these classifications. This method places groups
of jobs into job classes or job grades. Separate classes may include office, clerical,
managerial, personnel, etc. Following is a brief description of such a classification in an
office.

(a)             Class I - Executives: Further classification under this category may

be Office manager, Deputy office manager, Office superintendent,
Departmental supervisor, etc.
(b)             Class II - Skilled workers: Under this category may come the
Purchasing assistant, Cashier, Receipts clerk, etc.
(c)             Class III - Semiskilled workers: Under this category may come
Steno typists, Machine-operators, Switchboard operators, etc.
(d)             Class IV - Semiskilled workers: This category comprises Daftaris,
File clerks, Office boys, etc.

Merits : The job classification method is less subjective when compared to the earlier
ranking method. The system is very easy to understand and acceptable to almost all
employees without hesitation. One strong point in favor of the method is that it takes
into account all the factors that a job comprises. This system can be effectively used for
a variety of jobs. Since the grade/category structure exists independent of the jobs.
Therefore, new jobs can be classified more easily than the Ranking Method

Demerits : Even when the requirements of different jobs differ, they may be combined
into a single category, depending on the status a job carries. Classification judgments
are subjective. It is difficult to write all-inclusive descriptions of a grade. The method
oversimplifies sharp differences between different jobs and different grades. When
individual job descriptions and grade descriptions do not match well, the evaluators
have the tendency to classify the job using their subjective judgments.

Point Method

This method is widely used currently.A set of compensable factors are identified as
determining the worth of jobs. Points are assigned to each factor after prioritizing each
factor in the order of importance. The points are summed up to determine the wage rate
for the job. Jobs with similar point totals are placed in similar pay grades.

Typically the compensable factors include the major categories of:

1. Skill
 2. Responsibilities
3. Effort
4. Working Conditions

These factors can then be further defined.

1.Skill -

 Experience,
 Education,
 Ability

2.Responsibilities

 Fiscal,
 Supervisory

3.Effort

 Mental,
 Physical

4Working Conditions

 Location,
 Hazards,
 Extremes in Environment

Each factor is then divided into levels or degrees which are then assigned points. Each
job is rated using the job evaluation instrument. The points for each factor are summed
to form a total point score for the job.

Jobs are then grouped by total point score and assigned to wage/salary grades so that
similarly rated jobs would be placed in the same wage/salary grade.

Advantages

 The value of the job is expressed in monetary terms.

 Can be applied to a wide range of jobs.
 Can be applied to newly created jobs.

Disadvantages

 The pay for each factor is based on judgments that are subjective.
  The standard used for determining the pay for each factor may have built in bias
that would affect certain group of employees (females or minorities)

Factor Comparison Method

A more systematic and scientific method of job evaluation is the factor comparison
method. Though it is the most complex method of all, it is consistent and appreciable.
Under this method, instead of ranking complete jobs, each job is ranked according to a
series of factors. These factors include mental effort, physical effort, skill needed,
supervisory responsibility, working conditions and other relevant factors (for instance,
know-how, problem solving abilities, accountability, etc.). Pay will be assigned in this
method by comparing the weights of the factors required for each job, i.e., the present
wages paid for key jobs may be divided among the factors weighed by importance (the
most important factor, for instance, mental effort, receives the highest weight). In other
words, wages are assigned to the job in comparison to its ranking on each job factor.
The steps involved in factor comparison method may be briefly stated thus:
 Select key jobs (say 15 to 20), representing wage/salary levels across the
organization. The selected jobs must represent as many departments as
possible.
 Find the factors in terms of which the jobs are evaluated (such as skill, mental
effort, responsibility, physical effort, working conditions, etc.).
 Rank the selected jobs under each factor (by each and every member of the job
evaluation committee) independently.
 Assign money value to each factor and determine the wage rates for each
key job.
 The wage rate for a job is apportioned along the identified factors.
 All other jobs are compared with the list of key jobs and wage rates are
determined.
Merits
 Analytical and objective.
 Reliable and valid as each job is compared with all other jobs in terms of key
factors.
 Money values are assigned in a fair way based on an agreed rank order fixed by
the job evaluation committee.
 Flexible as there is no upper limitation on the rating of a factor.
Demerits
 Difficult to understand, explain and operate.
 Its use of the same criteria to assess all jobs is questionable as jobs differ across
and within organizations.
 Time consuming and costly.