The essence of compensation administration is job evaluation.
By job evaluation, we mean using the information in job analysis to systematically determine the value of each job in relation to all jobs within the organization.
Organizations consist of many jobs and all jobs are important, but all are not equally important. The relative importance of jobs is not the same.
Few jobs are more important than others in terms of relative worth. The objective of job evaluation is to price the ob rather than the man.
Job evaluation is concerned with assessing the value of one jot in relation to another in order to build a sound wage or salary structure.
Definition of Job Evaluation
Job evaluation is a systematic way of determining the value/worth of a job in relation to other jobs in an organization.
Job evaluation is a method for comparing different jobs to provide a basis for grading and pay structure. Job evaluation has been defined as a process of analysis and assessment of jobs to ascertain reliably the relative worth.
It is the process of analysis and assessment of jobs to ascertain reliably their relative worth using the assessment as a basis for a balanced wage structure.
Without job evaluations, the HR department would be unable to develop a rational approach to pay. All job evaluation systems depend heavily on job analysis.
Since job evaluation is subjective, specially trained personnel or job analysts should conduct it.
When a group of managers is used for this purpose, the group is called a job evaluation committee. The committee reviews job analysis information to learn about the duties, responsibilities and working conditions.
With this knowledge, jobs are put in a hierarchy according to their relative worth through the use of a job evaluation method. The methods of job evaluation are discussed next.
In job evaluation, every job in an organization is examined and ultimately priced according to the few features such as the relative importance of the job, knowledge, skills, and abilities needed to perform the job, and difficulty of the job.
Job evaluation needs to be differentiated from the job analysis. Job analysis is a systematic way of gathering information about a job. Every job evaluation method requires at least some basic job analysis in order to provide factual information about the jobs concerned.
Thus, job evaluation begins with job analysis and ends at that point where the worth of a job is ascertained for achieving pay equity between jobs.
Job Evaluation Schemes
There are two basic types of job evaluation schemes: analytical and non-analytical.
Jobs are broken down into components or demands, known as factors, and scores are awarded for each factor. The final total gives the overall rank order of jobs. An analytical job evaluation scheme can provide a defense against a claim of equal pay for work of equal value.
Under this scheme, whole jobs are compared with each other. There is no attempt to break the jobs down and analyze them under their various demands or components.
Examples of non-analytical schemes include job ranking and paired comparisons. These represent different ways of drawing up a list of jobs in rank order. The rationale for non-analytical job evaluation is that it produces a hierarchy of jobs that approximate to the ‘felt-fair’ ranking of these jobs in the minds of the people working in the organization.
A non-analytical job evaluation scheme does not provide us with a defense against a claim of equal pay for work of equal value.
Features of Job Evaluation
The purpose of job evaluation is to produce a ranking of jobs on which a rational and acceptable pay structure can be built.
The important features of job evaluation may be summarized as follows:
- It tries to assess jobs, not people.
- The standards of job evaluation are relative, not absolute.
- The basic information on which job evaluations are made is obtained from the job analysis.
- Job evaluations are carried out by groups, not by individuals.
- Some degree of subjectivity is always present in job evaluation.
- Job evaluation does not fix pay scales, but merely provides a basis for evaluating a rational wage structure.
Process of Job Evaluation Program
The Job evaluation program is a process involving a few steps.
These are listed below;
- Gaining acceptance
- Creating a job evaluation committee
- Finding the jobs to be evaluated
- Analyzing and preparing a job description
- Selecting the method of evaluation
- Classifying jobs.
Before undertaking job evaluation, top management must explain the aims and uses of the program to the employees and unions.
To elaborate on the program further, oral presentations could be made. Letters, booklets could be used to classify all relevant aspects of the job evaluation program.
Creating a job evaluation committee
It is not possible for a single person to evaluate all the key jobs in an organization.
Usually, a job evaluation committee consisting of experienced employees, union representatives, and HR experts 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 key jobs in each department may be identified. While picking up the jobs, care must be taken to ensure that they represent the type of work performed in that department.
Analyzing and preparing a job description
This requires the preparation of a job description and also an analysis of job needs for successful performance.
Selecting the method of evaluation
The most important method of evaluating the jobs must be identified now, keeping the job factors as well as organizational demands in mind.
The relative worth of various jobs in an organization may be found out after arranging jobs in order of importance using criteria such as skill requirements, experience needed- under which conditions job is performed, type of responsibilities to be shouldered.. degree of supervision needed, the amount of stress caused by the job, etc. Weights can be assigned to each such factor.
When we finally add all the weights, the worth of a job is determined. The points may then be converted into monetary values.
Limitations of Job Evaluation
Job evaluation is not without limitations. The main limitations are as follows:
- Job evaluation is not exactly scientific. Job evaluation is a systematic technique and not the scientific technique of rewarding the job. Job evaluation lacks scientific precision because all factors cannot be measured accurately.
- Most of the techniques are difficult to understand, even for the supervisors.
- The factors taken by the program are not exhaustive.
- There may be wide fluctuations in compensable factors in view of changes in technology, values, and aspirations of employers, etc.
- Employees, trade union leaders, management and the program operators may assign different weight to different factors, thus creating grounds for dispute.
- Job evaluation is regarded by the trade unions with suspicion because it is made on certain principles and the results are generally ignored. Some of the methods of job evaluation are not easily understood by workers. Workers fear that job evaluation will do away with collective bargaining.
- A job evaluation scheme takes a long time to install. It requires specialized personnel and it is costly.
- Too many factors are used in job evaluation and moreover, there is no standard list of factors to be considered. Definitions of factors vary from organization to organization. Many types of research show that the factors used are not independently be valued at all. It gives more reliance on internal standards and evaluation for fixing wage rates.
It can be concluded that job evaluation is not an exact science. It is a technique which can help avoid several anomalies in wages that causes so much heart burns and disgust today-provided it is used sensibly and is not pressed beyond its proper limits.
While using this technique, its limitations should also be considered.