An organization is comprised of various departments containing individuals who work on specific tasks. To select these employees, the company should have a robust idea of the jobs required to undertake these tasks.
In companies, job evaluations help the HR and management to create these jobs, which ensure the smooth functioning of the daily business activities in the workplace. The job evaluation process enables the HR department to create jobs and find the right people to undertake those jobs by creating effective job descriptions and hiring the right talent.
As a result, the methods used for job evaluations are crucial for the company as it helps them hire the right talent for undertaking jobs better and leading the company towards success.
Hence, we will be discussing these ‘job evaluation methods’ in this guide. We will be covering job evaluation approaches, their relevance for an organization, the flow of the process, as well as 5 effective methods used to evaluate a job effectively.
What is Job Evaluation?
Job evaluation refers to the complete analysis of a ‘job’ or a ‘designation’ in an organization. It is undertaken by determining the relative value of a specific job within the organization with other jobs. By undertaking job evaluation, the HR team can understand the relevance of the job for the company.
As a result, it helps develop a fair compensation structure for the job under scrutiny, as well as provide the management with a robust idea of the roles required in the company to ensure smooth services.
It is essential to note that job evaluation methods evaluate the jobs to gather the relative worth of each job with respect to others and that it does not evaluate the staff working in those positions. It takes into account various factors such as wages and working conditions within an organization.
5 Best Methods of Job Evaluation
There are multiple methods of job evaluation commonly used by organizations to ensure a comprehensive evaluation of their jobs and designations. We are sharing five of the major ones to provide you with an overview of these methods and enable you to decide which would be ideal for your company.
The 5 major job evaluation methods are:
1. Ranking Method
In the Ranking Method, jobs are ranked based on their relative relevance to other jobs in an organization. To make the ranking easier, the jobs are compared against a benchmark job or are compared based on their contribution towards the actualization of organizational objectives.
➔ Advantages
- The Ranking Method is relatively simple.
- This method is endorsed by worker unions.
- It is feasible for startups.
- It is relatively easier to deploy.
➔ Disadvantages
- The ranks are subjective based on the job evaluation committee.
- Jobs are relatively ranked, which may be inaccurate.
- There is no option to understand the relative gap between job ranks in the ranking method.
2. Grading Method
In the Job Grading Method, each job is classified based on the job’s ‘grade’. A job’s ‘grade’ is established based on their description and the jobs classified under similar grades are the ones which require similar skills to undertake and have similar responsibilities.
To achieve this objective, the different characteristics of each job are matched with the description of the job class and the matching ones are placed in the same class.
➔ Advantages
- It is a relatively easy method to create and implement.
- Compensation structure creation becomes easy with this method.
- The data collated for this method can also be used for job analytics.
➔ Disadvantages
- Personal biases may result in inaccurate classifications.
- Dissimilar jobs can be classified under the same class.
- Grade inflation can make the method ineffective.
3. Point Allocation Method
In the Point Allocation Method, jobs are divided into factors and each factor is awarded with points. The sum of the points of each factor becomes the relative worth of the job for the company. Comparing these points for a specific job with the points of other jobs makes it easier to rank them and evaluate the jobs easily.
➔ Advantages
- This method is useful for designating points to a job.
- It established tangible relations between jobs.
- It helps understand the relative relevance of jobs to organizational goals.
➔ Disadvantages
- It is comparatively time-consuming.
- The listing of factors could potentially omit certain aspects of jobs.
4. Factor Comparison Method
The Factor Comparison Method is similar to the Point Allocation Method with the main difference being that instead of assigning arbitrary points, a monetary value is assigned to each factor.
As a result, this method becomes highly complex, which has resulted in reduced usage. Similarly, due to the subjective nature of the factors’ creation, it is unfair to provide monetary value to the factors and the jobs, making the factor comparison method somewhat tedious.
➔ Advantages
- This job evaluation method provides a systematic analysis of the jobs since monetary values are involved.
- Reduced chances of overlapping factors due to limited factors.
➔ Disadvantages
- The method is also costly and time-consuming.
- It becomes hard to continue with the monetary values since the wage rates keep on changing.
- This method only considers limited factors for making comparisons.
5. Market Analysis Method
The Market Analysis Method analyzes the jobs based on the job’s worth in the external market. It evaluates the jobs based on job ads, thereby evaluating the financial worth of the positions. Since this method considers the remuneration offered by competitors, it becomes easier to determine its relative worth.
➔ Advantages
- This job evaluation method provides an overall estimation of the organizational values with the market trends.
- It helps the company understand where they stand relative to the market in terms of the job under scrutiny.
➔ Disadvantages
- Since the wages of the jobs are compared with the market, it may not reflect its actual value.
Job Evaluation Approaches
There are 2 major approaches used for effective job evaluations. Both are a type of job classification method, which provides the HR teams with a robust idea of the value of the job for their organization and enables them to understand the job’s relative worth for the company when compared with other roles in the company.
The job evaluation approaches include:
➔ Analytical
In the analytical job evaluation approach, individual jobs are broken down into different components called ‘factors’ and a specific value is assigned to each factor, based on their relevance for the organization. Since each factor is analyzed thoroughly with this approach, it can be used as a defence against a claim of equal pay for work.
➔ Non-analytical
The non-analytical job evaluation approach analyses jobs by evaluating their perceived value for the organization as well as with respect to other jobs. The jobs are not broken down into ‘factors’, and hence, it cannot provide the same defence as an analytical job evaluation approach for claims of equal pay for work.
Relevance of Job Evaluation
Job evaluation is extremely important for an organization since it enables the comparative analysis of the individual designations in the company. Due to job evaluation, companies can also set a fair compensation structure, which is essential to maintain harmony in the workplace.
Let us discuss the relevance of job evaluation concerning the following factors:
1. Compensation Structure
The individual job roles in an organization should have fair and just compensation for all employees working in the company. It helps them feel respected and valued in the organization, and provide them with a purpose to undertake their job with dedication.
The method of job evaluation provides the management with the right tools for developing comparable compensation structures for comparable jobs.
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2. Career Development
Since job evaluation methods enable the HR and management to analyze the jobs, it helps them understand the requirements for the position, the skills required to undertake the daily activities, and the responsibilities handled by the staff.
This data can be used to develop robust competency blueprints for the jobs, making it easier for the management to develop career paths utilizing training programs. It will also enable skill gap identification as well as succession planning, helping in the professional development of the employees.
3. Engagement
Keeping the employees engaged with their company is one of the major responsibilities of the HR team. By evaluating jobs effectively, companies can ensure fair pay as well as help bridge the skill gap in the organization.
It leads to a positive impact on the staff, leading to improved engagement and retention. Since employee retention is a challenge for HR, job evaluation enables them to effectively retain staff, making it essential for the organization.
4. Overall Efficiency
Job evaluation enables HR to understand the proficiency required by the staff to undertake their daily tasks well, leading to effective hiring and retention.
It will enable them to craft the right job descriptions to attract the right talent. It will also improve the overall efficiency of the tasks, as the employees will be qualified and trained well to perform their tasks efficiently.
5. Data-backed Decisions
Job evaluations also help in classifying the jobs based on their requirements, as well as understanding the relative value of the roles in the organization.
As a result, it becomes easy for HR and management to develop a robust framework for enabling internal equity. It enables fair and just job comparisons, making it easier for them to make effective decisions regarding promotions, rewards, and more.
6. Compliance
By deploying effective methods of job evaluation, companies can also ensure legal compliance related to equity of compensation, non-discrimination, and more. Since the company has the job analytics data with them, they can defend their pay parity in case of any legal troubles arising within the organization.
The company can easily demonstrate the systemic approach used in deploying the compensation structure within the organization, making it easier to deal with compliances.
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Process of Job Evaluation
The process of job evaluation is undertaken with slight variations depending on the individual needs of the organization. However, the overall framework of the method of job evaluation remains the same in every company.
The typical process of job evaluation in companies includes the following steps:
➔ Get Approvals
The first step in a job evaluation process is to gain acceptance of the methods used by consulting with the management, the employee union and other stakeholders who are well-wishers of the company and the staff.
The HR management can develop presentations, booklets, and related materials to prove the relevance of job evaluation methods to the senior management and other stakeholders.
➔ Establish a Committee
Since job evaluation is a key aspect of employee management, a committee is set up to undertake the evaluations in a fair and just manner. This committee is usually comprised of experienced staff members, HR managers, union representatives, and other experts who can evaluate jobs without bias.
Creating a committee also enables faster evaluations since they can work as a team to complete the task within the provided timeframe.
➔ Find Relevant Jobs
There are multiple jobs required for the proper functioning of companies and evaluating every one of them will be taxing for a job evaluation committee. Hence, key jobs from each department in the organization are taken into consideration for evaluation.
These key positions should accurately reflect the kind of duties the designation entails and help the management analyze the quality and quantity of work undertaken by the profile.
➔ Analyze Job Descriptions
Once the key jobs are identified, their descriptions should be created to accurately reflect the nature of the work and the associated responsibilities. It should also be developed to attract the best talent with the right keywords as it will result in hiring the right individuals for the job.
Developing the job descriptions with the right terms will also result in understanding the experience required to undertake the job with utmost efficiency.
➔ Choose an Evaluation Method
Once the job descriptions are finalized, a suitable job evaluation method should be chosen based on the organizational requirements and other elements related to the jobs under consideration.
The method should be chosen considering the work culture, the benefits of the method, as well as other relevant parameters to ensure a complete evaluation process.
➔ Classify Jobs
Once the evaluation is completed, you need to classify jobs based on the observations. Since you will have a robust idea of the relative relevance of the jobs, you can classify them based on various factors such as the required qualifications to perform the job, the experience required, the risk factor involved in undertaking the responsibilities of the job, as well as the amount of pressure the employee will have to face while undertaking it.
Conclusion
To conclude, job evaluation methods provide the company, the HR and the management with multiple in-depth analytics related to jobs that enable them to better tailor their offerings to stay competitive. It also helps them better understand their standing in the job market and make the necessary adjustments.
Additionally, the job evaluation process also provides the company with a robust idea of the relative value of jobs, making it easier to create a compensation structure. Hence, job evaluation and its methods are extremely valuable for a company.
