Chapler

14
Job Evaluation

LEARNING OBJECTIVES

this chapter, you should be able to

Aher reading
Define job evaluation
Explain the process of job evaluation
State the differences between job evaluation and Discuss methods of
vanious
job evaluation
performance appraisal
Outine the limitations of job eveluation
 382 Human Resource Management with your
emplovan.
ees,
communicate

effectively. you
effectively,
you cant miss. 3
rules,
out the those
things
people,
lay do all
good them. If you
S t a r t with reward -Lee lacocca
and
them
motivate

Equity is th

Introduction treated fairly

in an
organisation.

experience,
cffort, tim
halance between th
ance
put in, etc.)
be skills,

Whenever empl
andoyesth
want
to etc)
and as
knowledge, appreciation,

seek justice job (such recognition,

ca."enev
mployees to a benefits, others in the
brings
Uinputs

outcomes
he
an

or
employee
she
between
obtains

inputs
from
and
it (such
o u t c o
as

m e
pay,
s

in a
either by
ditferent
comparing
o r g a n i s a
with

t i o n - t

lo strike
h
gete
frustras
y

a fine bal.
organisation or by
an

imbalances
others working employee.
nd with of an

stem:
compensation

comparing
themselves

therefore,
from the viewpoint
background
while designing
a
atons
crucial issue, in the
pay
is a things to
other jobs within the same organzati
three important when compared
generally keep rate is
How fair a jobs pay to the job's pay rate in other
rate in
Internal eqwity:
rate in one
organisation
comparcs

the ora
organzatin
How a job's pay job
Within same
Externaleguity:
same
in the
Comparisons among
employees
earning
more or less similar amoe
ants for similars p
equity: whether both
are
ndividual
to Y's pay to find oby
being compared
jobs (basicall.
or not.)
establish
internal equity
between various
ally, o see
that i
evaluation is to
who, in turn earning more than the div
The major purpose of job more than the vice
president,
Fisher)
is getting Henderson:
president of a company
on-for valid
reasons)
(Milkovich:

manager
and so

Job Evaluation: Concept

job in relation to l .
.

valuc/worth ot a
thc In an
determining
way of jobs to assess their relativ
Tob evaluation is a systematic between
systematiC comparison
organisation. It tries
to make a
evaluation needs to be differentiated from ioh anal.
structure. Job
E very job evaluation method teaui
rational pay
purpose of establishing
a
intormation about a job. lean
of gathering about the jobs concerned. Thus, ioh ev
analysis is a systematic way tactual intormation valuation
some basic job analysis
in order to provide
thc worth of a job is ascertained for achievino nau.

ends at that point where ecqun

begins with job analysis and
between jobs.

Job Evaluation vs Performance Appraisal

PA the systematic description of an
emplone
ob evaluation is ditterent trom pertormance appraisal. 1s

job-related strengths and weaknesses. The basic purpose of PA is to find out how well the employee is d

evaluation is find the relative valuclworth

the job and establish a plan tor improvement. The aim of job to
job and determine what a fair wage for such a job should be The differences berween the rwo mav b p e

thus
 Chapter 14 Job Evaluation383

TABLE
Job Evaluation vs Performance
14.1
Appralsa
Point Performance Appraisal
Job Evaluation
Define Find the relative worth of a jo. Find the worth of a job holder.
Aim Determine wage rates for different Determine incentives and rewards
jobs for superior performance.
Shows How much How well an individual is doing an
a job is worth.
assigned work.

Features

of job evaluation is to
T h ep u r p o produce a defensive ranking of iobs on which a rational and acceptable pay
can be built. The important features of
job evaluation may be summarised thus: (Henderson)
It tries to assess jobs, not people.

The cfandards of job evaluation are relative, not absolute.

The basic intormation on which job evaluations made is obtained from

are
job analys1s.
h
ob evaluations are carried out
by groups, not by individuals.
Same degree of subjectivity is always present in job evaluation.

h
ob evaluation does not fix pay scales, but
merely provides a basis for evaluating a rational wage structure.

Process of Job Evaluation

nrocess of job evaluationinvolves the following steps: (Hall)
The
Cainine acceptance: Betore undertaking ob evaluation, top management must explain the aims and uses
af the programme to the employces and unions. To claborate the programme further, oral presentations

uld be nade. Letters, booklets could be used

all relevant aspects ofto
cdassity
the job evaluation programme.
Creating job evaluation oommitee: It is not poss1ble for a single person to evaluate all the key jobs in an
anganisation. U sualiy a job cvaluation committee consisting of experienced employees, union representatives
and HR cxperts is created to set the ball rolling.

Finding the jobs to be evaluated: Every job need not be evaluated. This may be too taxing and costly.
Certain kev jobs in cah deprarrment mav be identificd. While picking up the jobs, care nust be taken to
enure that thev represent the vpe ot work pertormed in that department.

naihsing and preparing job description: This requires the preparation oi a job description and also an
analvvis ot job needs tor successtul pertormance.

t i n g the method of evaluation: The most important method of evaluating the jobs must be identifie
w keeping the iob tators as well as organisational demands in mind.

atINwOrh ot various 1obs In an organisatton mav be tound our ater arranging pot

ing ritera suh as

sk requiremenrs, xperience neeted. under whah ondituon
shouldered depree of superion needed the amount

At Xhen we ally add all the

valurs
1nto motict afy
 HumanKesource Management

the programme. Once the evaluation process

Is over and a plan of action Is
ready manageme
nstalling
must explain it to emplovees and put it into operation
conditions (technolom
In the light of changes in environmental
en
Reviewine periodicallhy:
ctc.) jobs need be examined cosely
to

like banking.
insurance and railways,
For
after
example. the traditional clerical
computerisation
func
roducts. senvice
Prod
nave
New jobdendergo
in s e c t o r s
change
rapid need to be duly incorporated
incorpora
gone
evaluatiodenscrproces
iptions
and the skill needs of new jobs
in the
need to be wriren

feel that all the

relevant job factors based which their
on

Otherwisc. emplovees
may

derermined have nor been evaluated properly has betn

Essentials for the Success of a Job Evaluation Programme

job cvaluation programme: (Wallace; Brad1
the of a
Following are the essentuals
for success

Treiman, Wa
should represent all ot the major aspects of job content. Compensa Walker
rable: (c) be ected
factors scl
factors
Compensable duplication: (b) be definable and meas
should avoid cxcessive overlapping or

understood by
(a)

emplovees and administrators; (d) not cause excessive

stallation or administrativy
installation os

considerations in mind.
and (c) bc selected with legal
and programme of ioh
Operating managers should
be convinced about the techniques
on job evaluation.
job evaluation.
and revising the wages based
should also be in
trained fixing Thev
with complete intormation about job evaluation
on techniques
All the emplovees should be provided
programme. and
the job evaluation programme
of employees should be covered by me.
All groups and grades
evaluation should be und
The programme of -

and techniques selected for -

job easy to
understand by all tthe
emplovees.
the programme should be obtained.
Trade unions acceptance and support
to

have advanced certain guidelines for conducting the job evaluation programme in a Sirce
Experts wav
1. Rate the job -

not the person or employee on the job.

2 Strive to collect all the facts accuraiely.

Look especially for distinguishing features of jobs and for relationships to other jobs.
3
jobs independently and objectively, and then discuss views thoroughly and open-mind.n.
Study betore
reaching final decisions.

5. Job evaluation systematically, based on factual and accurate information

must be conducted

6.
The results of job evaluation must be fair and rational and unbiased to the individuals beino afs

Benefhis
The pay offs from job evaluation may be stated thus:

It tries to link pay with the requirements of the job.

It offers a systematic procedure for determining the relative worth of jobs. Jobs are ranked on the bus t
rdingi
rational criteria such as skill, education, experience, responsibilities, hazards, etc., and are priced accoru
An equitable wage structure is a natural outcome of job evaluation. An unbiased job evaluation
eliminate salary inequities by placing jobs having similar requirements in the same salary range
 Chapter 14 Job Evaluation 38S

loyees as well as
unions
This participate
rades for different jobs. "pate as
as members of job evaluation committee while determining rate

helps in solving age related grievances quickly.

wage
ion. when conducted properly and with carc, helps in the evaluation of new jobs.
with
oints out possibilities of more appropriate use of the plant's labour force by indicating Jobs that neca
more oot less skilled workers than
those who are
manning these jobs currently
Job Evaluation Methods
are four basic methods of job evaluation: (1) ranking, (2)
1 classification, (3) factor comparison
hile many variations of these methods exist in practice, the three basic approaches
Madigam:oll1ns; Belcher described here: are

Ranking Method

simplest mmethod of job evaluation is the

rhans the ranking method. According to this method, jobs are
from highest to lowest, in order of their value or merit the
ra
to
organisation. Jobs can also be arranged
othe relative difficulty in performing them. The jobs are examined as awhole rather than on the
important factors in the
the job at the job;
top of the list has the highest value and obviously the job at
.artom of the list will have the lowest value.

ads a r e 1Sually ranked in each

department and then the department rankings are combined
tional ranking, The tollowing table is a hypothetical illustration of ranking of jobs.
to
develop an

TABLE
Aray of Jobs according to the Ranking Method
14.2
Rank
Monthly salaries
1. Accountant Rs 3000
2. Accounts clerk Rs 1800
3. Purchase assistant Rs 1700
4.
Machine-operator Rs 1400
5. Typist Rs 900
6. Office boy Rs 600

variation in payment of salaries depends on the variation of the nature of

the job performed by the employees.
te ranking mechod is
simple understand and practice and it is best suited for a small organisation. Its
to

mpliciry however works to its disadvantage

in big organisations because
rankings are difficult to develop ina
g.Complex organisation. Moreover, this kind of ranking is highly subjective in nature and may offend many
mployes. Therefore, a more scientific and fruitful way of
job evaluation is called for.

Clasification Method
. g t o this method, a predetermined number of job groups or job classes are established and jobs are
these
Tay ir
classifications. This method places groups of jobs into job classes or job grades. Separate classes
hs oftice, clerical, managerial, personnel, etc. Following is a brief description of such a classification in
othice.
 Resource Management be Office M.
386
Human
under this
category may
Manager, Depu.
Depmy e
classification
Further etc.
Executives: supervisor,
Class I- Departmental

Oftice
superintendent,
the Purchasing
assistant, Co er, Receips cek,,
come
manager, may
Under this category
workers: Stenotypists, Machine.
Class l1- Skilled

Clas
I11-Semi-skilled workers:
Under this category
may
come

Qperators, SwIIchbs
3. File clerks. cO
operator, ctc.

workers: This category

comprises
of Dattaris,
ffice boys, etc.
Semi-skilled the earlier ranking
4.
Class IV
method less subjective
when compared
to

without hesitation method. The systo

all employees ng
be pomfeciwey
classification
almost
job comprises. This system.
The job to This svs
understand
and acceptable factors that a can m ed
all the
very easy
method
to

is that it
takes into
account

kavoay
of the
for a variery of jobs. method are:
classification

weaknesses of the job be combined into a simt

may
jobs differ, they category, depe
The
diterent
of
requirements
Even when the
carries.
the status a job
on
descriptions
of a grade.
all-inclusive
difficult to write
jobs and different o
It is
sharp
differences
berween ditferent grades.
The method
oversimplifies
do not natch well,
match the
the .
job descriptions
and grade descriptions
evaluators
When individual their subjective
judgements. 1ave the
tendency to classify the job using

Factor Comparison Method

the factor comparison method
evaluation is Th
method of job oughi
.

and scientific Under this method, instead is the

A more systematic
method of all, it is consistent and appreciable.
factors include mental ranking comp
effort
most complex
jobs, each job is ranked according to a series of factors. These
conditions and other such faer hysical etfor, A
responsibility, working for instance
needed, responsibility, supervisory etc.). Pay will be assigned in this method
abilities, accountability, Compa
know-how, problem-solving for key jobs mav
for each job, i.e., the present wages paid
the weights of the factors required factor, for instance, mental effort
dcdam
(the most important hiehr
the factors weighted by importance to the job in comparison
to its ranking on cach i
factor.
are assigned
weight). In other words, wages
briefly stated thus:
method may be
The steps involved in factor
comparison
levels across
rganisation.
the organisation. The sol
selected i
Select key jobs (say 15 to 20), representing wage/salary
as possible.
must represent as many departments
evaluated (such as skill, mental effort resneLt
Find the factors in terms of which the jobs are

conditions, etc.).
physical etfort, working
under each factor (by each and every member of the job evaluation commie
Rank the selected jobs
independently.

Assign money value to each factor and determine the wage rates tor 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
 387
Chapter 14 Job Evaluation

ow the factor comparison method ziven below:

works is
n C h n p l eo f

gve

ABLE

AnExample of Factor
43
Comparison Method
Working
Factors Daily Physical Skill Responsibility
Factors conditions
Key Wage effort mental
Job Rate
effort
Electrician 60
11(3) 12(1) 8(2)
14(1) 15(1)
Fitter 50
14(1) 8(2) 9(1)
10(2) 9(2)
Welder 40
12(2) 7(3) 6(3)
7(3) 8(3)

Cleane 30 9(4) 6(4) 5(4)

6(4) 4(5)
Labourer 25 8(5) 4(5) 6(4) 3(5) 4(5)

rate for a Job.is distributed along the identified nd ranked factors, all other jobs in the department
wage
the
in skill
Suppose the job of a ipainter is found to be similar to electrician
er
of each factor.
an:fed in terms
r ompared in
(10), welder in physical effort (12) cleaner in responsibility (6) and labourer
in
mental ettort
thitter in
anditions (4). The wage rate for this job would be (15+10+12+6+4) is 47.

TABLE Merits and Demerits of Factor Comparison Method

14.4
Merits Demerits

Analytical and objective. Difficult to understand, explain and operate.

Relative and valid as each job is compared Its use of the same criteria to assess all jobs
is questionable as jobs differ across and within
jobs with all other jobs in terms of key factors.
Money values are assigned in a fair way organisations.
based on an agreed rank order fixed by the job Time consuming and costly.
evaluation committee.
Flexible, as there is no upper limitation on the
rating of a factor.

Point Method
I S widely used currently. Here, jobs are expressed in terms of key factors. Points are assigned to
ach
ater prioritising each factor in order of importance. The points summed up determine the are to
nltne job. Jobs with similar point totals are placed in similar pay grades. The procedure involved may
eexplained thus:
Selet key
jobs: Identify the factors common to all the identified jobs such as skill, effort, responsnsibility, etc.
Divide each
therrder of yor factor into number of sub facton's: Each sub factor is defincd and expressed clearly
in
a

importance, preferably along a scale.

 388 Human Resource Management
are:
The most frequent factors employed in point systems
Breadth/depth of experience
(1) Skill (key factor): Education and training required,
skills, Degree of
discretion/use of judgement, Creari d,S
required, Problem-solving Cal skilh
Responsibility/Accountability: Breadth
of responsibility, Specialised responsibility Co ing
(ii) mplexi
Number and nature of subordinate staff, Extent
work, Degree of freedom to act,
cquipment/plant, Extent of accountability
for product/materials;

demands of a job, Degree of potential

ountabilinthe
y fn
(ii) Effort: Mental demands of a job, Physical tress
...

(kcy factor) may be expressed

The educational requirements (sub-factor) under the skill thus in the
ot importance. order

Point Method of Joh Evaluation

BOX 141
Degree Define
1 Able to carry out simple calculations; High School
2 Does all the clerical operations; computer literate:
educated
3 Handles mail, develops contacts, takes initiative graduate
and
work independently; post graduate does

after fixing relative value for cach key factor.

Assign point values to degrees a

TABLE
Point Values to Factors along a Scale
14.5
Point values for Degrees Total
5
Factor 2
30 40 50 150
Skill 10 20
8 16 24 32 40 120
Physical effort
Mental effort 5 10 15 20 25 75

7 14 21 28 35 105
Responsibility
6 12 18 24 30 90
Working
conditions
Maximum total points of all factors depending on their importance to job 540

(Bank Officer)

Find the nmaximum number of points assigned to each job (after adding up the point values c
sub-factors ofsuch a job). This would help in finding the relative worth of a job. For instance, the maximum
points assigned to an ofticer's job in a bank come to 540. The manager's job, after adding up keytacton
sub factors points, may be getting a point value of say 650 from the job evaluation committee. 1nis

now priced at a higher level.

Once the worth of a job in terms of total points is expressed, the points are converted into monc
keeping in view the hourly daily wage rates. A wage survev is usually undertaken to collect wage
certain kev jobs in the organisation. Lets explain this
 Chapter 14 Job Evaluation 389

TABLE

14.6 Converslon of Job Grade Points into

Money Value
Point range
Daily Wage rate (Rs) Job grades of key bank officials
500-600
300-400 1 Officer
600-700
400-500 2 Accountant
700-800
500-600 3 Manager I Scale
800-900
600-700 4 Manager II Scale
900-10000
700-800 5 Manager II Scale

Merits and Demerits

The pount m e t h o d
superior and widely used method of
a
evaluating jobs. It forces raters to look into all Key
and sub-factors of a job. Point values are
h T o s

It is reliable because raters

assigned to all factors in a systematic ay, eliminating bias at
stage. using similar criteria would get more or less similar answers. n e
dology underlying the approach contributes to a minimum of rating error (Robbins
methodo
p.361). It
iferences in wage rates ror various jobs on the strength of job factors. Jobs may change over time, but the accounts
or duf
ales established under the point method
remain unaffected.
On the.
nccative side, the point method is complex. Preparing a manual for various jobs, fixing values for key and
OS, establishing wage rates for difterent grades, etc., is a time consuming process. According to Decenzo
and Robbins,
"the key criteria must be carefully and
clearly identified, degrees of factors have to be agreed upon
ms that mean the same to all rates, the weight of each criterion has to be established and point values must
signed to degrees. This may be too taxing, especially while evaluating managerial jobs where the nature of
ark (varied, complex, novel) 1s such that it cannot be expressed in quantifiable numbers.

comparative picrure of various job evaluation methods is presented on Table 14.7.

TABLE
14.7 Major Job Evaluation Methods

Method What facet of How is job Type of Major Major

job is evaluated? evaluated? method advantage(s) disadvantage(s)
Ranking Whole job Jobs are subjectively Non-quantitative Relatively quick Entirely subjective
(compensable ordered according and in expensive
factors are to relative worth
implicit)
Classification Whole job Compare job to Non-quantitative Readily available Cumbersome
descriptions of job and inexpensive system
grades
Factor Compensable Compare job to key Quantitative Easy to use Hard to construct;
Comparison factors of job jobs on scales of inaccurate over time
compensable factors
Point method
Compensable Compare job to Quantitative Accurate and May be costly
factors of job standardised stable overtime
descriptions of
degrees of universal
compensable factors
and subfactors
S90 Human Resource Manasement

Computerised Job Evaluation

Quantitative iob evaluation methods such as the point or factor comparison plans - consu
Striking balance between compensable factors and the jobs relative worth is also a tedious proc consume lot
ot ime
each job's point values also would prove to be quite taxing. To overcome these ditticulcies, compa
use structrured questionnaires (such as position analysis questionnaire or a task-oriented quest panies Dowa3
containing intormation on time spent, importance of various tasks, number of people reportiunaire) das
further statistical to a positio
hoider, pries of benchmark jobs, etc-that are amenable
for
rogiammes ensure a fair pricing-taking all relevant factors that
analysis.
analy
have an impact on the job
Standa Td computer
hanner. (Fredric Crandall) mechanica
Limitations of Job Evaluation
1. Job evaluation is not exactly scientific.

2. The modus operandi' of most of the techniques is difficult to understand, even for the supervis
sors.
3. The factors taken by the programme are not exhaustive.

4. There may be wide fluctuations in compensable factors in view of changes in technology, va

values and
aspirations of employers, etc.

Employees, trade union leaders, management and the programme operators may assign different
5.
to different factors, thus creating grounds for dispure.
ifferent weightage

SummaryY
Job evaluation is the systematic process of determining the relative worth of jobs in order to eatablish which jobs should epid
more than others within the organisation. Job evaluation helps to establish internal equity berween various jobs.
The four basic approaches to job evaluation are: the ranking method, the classitication method, the factor comparison method
and the point method.
The job ranking method arranges jobs in numerical order on the basis of the importance of the job's duties and responsiblitis
to the organisation.
The job classification system slots jobs into preestablished grades. Higher-rated grades demand more responsibilities, tougher
working conditions and varied job duties.
The point system of job evaluation uses a point scheme based upon the compensable job factors of skill, effort, responsibilinyand
working conditions. The more compensable factors a job possesses, the more points are assigned to it. Jobs with higher
accumulated points are considered more valuable to the organisation.
The factor comparison system evaluates jobs on a factor-by-factor basis against important jobs within an organisation.

Terminology
Job evaluation: A systematic way of assessing the relative worth of a job.
Performance appraisal: A formal process in an organisation whereby each employee is evaluated to find how he s p

Job analysis: The systematic collection, evaluation and organisation of information about jobs.
Ranking mehod: A method of job evaluation which ranks employes from highest to lowest.
based on
kalls
skls.

Classification method: A method ot job evaluation that concentrates on creating certain common job grades
non job gradcs v
knowledge and abilities.
b
Factor comparison method: A methodof job evaluation where job factors are compared to determine the wor
 Chapter 14 Job Evaluation39
methc
of job evalua tion where jobs are classified on
tA

the
jjob.
ot identification criteria and ethe degree to which these
e x t
on
factor:Afunda Lamental compensable element of job, sucha
tnd

iionship berween the value of the

as skills, effort, responsibility and
gr hoOWst h e

job and the working condiuons.

All forms of pay or rewards average wage paid for this job.
spirr
oemation:
aceruing to employees and
employer's pay scale and aroundarising
used to
that is used to anchor the
anchor the from their
employment.
which other jobs
arranged in order of
are

h designing jobsaand cquipment to fit the

z o m o m uD
x : c a l k

physical abilities of individuals.

TeNces
"Compensation", Taata McGraw Hill, New Delhi, 2006.
vich ct al.
Henderson. "CompensationMana. nManagement in a Knowledge-based World',
Pearson, New Delhi, 2006.
Human Resource Management', Biztantra, New Delhi, 2009.
Resoue
"Human
al,
DFisheret
er
Compensation Decisiom-making, Fort Worth, TX, Dryden, 1994.
al, "Co
FHils

nd J.J.NNewman, "Compensatinn, Chicago, Irwin, 1996.

vich and
Comparable Worth: Issues and Alternatives, Washington, Equal Employment Advisory Counci, 1980.
Nernasn

an."Compensation Management in a Knowedge-based World", Englewood Clifs, NJ., Prentice Hall, 1998.
Bereman,
Hall,
M. Lengnick Hal "Compensation Decision-making', Fort Worth: TX: Derider, 1994.
N
MWalace, C.Fay Compensation Theory and Practice', Boston, PWS-Kent, 1988.
Bradley. "Job evatuation',
BIM, Collingham Road, Northants, 1979.
Teiman,"Job Evaluation: Analytic Review', National Academy of Sciences, US, 1980.
uI Nalker, "Principles and Practices of Job Evaluation, Heinemann, Halley Court, Oxford, London, 1973.
Madigan, D. Hoover, "Effects of Alternative Job Evaluation Methods on Decisions Involving Pay equity', Academy of
MarnagementJournal, 1986.

1Colins, P. Muchinsky, "An Assessment of Construct Validity of three Job Evaluation Methods", Academy of Management
jumal, 36, 1993.
D.W.Belcher,"Compensarion Administration', Englewood Clifs, N.J.; Prentice Hall, 1974.
NFrdincCrandall."Computerizing obEvaluationfor Greater Etficiengy and Efictivenes", Topics in Toul Compensation, Vl. 3.
1989 p 241-250.

eview uestions
h s b sraluation? Explain the ojectivesof job evaluation. How do you prepare the ground for evaluating jobs?

are the conventional and non-conventional techniques ofjob evaluation? What rype of technique would you adopt to
C the jobs of Engineer (Maintenance), Engineer (Marketing) and Chief Engineer in a large machine tools industry?
the quanitative and non-quantitative techniques of job evaluation? Which rype of technique do you adopt to evaluate
r Cticer (Agriculture), Officer (Large Industry), Officer (Small Scale Industry), Economic Oficer and General Officer
nalarge commercial bank?
JoD evaluation
does not usually price
jobs." Discuss.
dantages and limitationsof job evaluation as a basis for fixing and revising wages and salaries.
ain different techniqueses of job evaluation. What are the advantages and disadvantages of each technique?
How can a job
evaluation progt
ogramme be made more effective?
Discus the
uriliry tjob
of jy evaluation. Briefly explain the various methods ofjob evaluation.
Define and differentiat
when you would undertake
One or the othe.
th Derween job analysis and job evaluation. Explain the organisational context

the
procedure olved in the evaluation of a job.