21 Job Evaluation: Scope, Process & Methods of Job Evaluation and Limitationof Job Evaluation
Pragya Dheer
Learning Outcomes:
Says an I.L.O Report, “The aim of the majority of systems of job evaluation is to establish, on agreed logical basis, the relative values of different jobs in a given plant or machinery, i.e; it aims at determining the relative worth of a job. The principle upon which all job evaluation schemes are based is that of describing & assessing the value of all jobs in the firms in terms of a number of factors, the relative importance of which varies from job to job.”
(i) To secure & maintain completes, accurate & impersonal descriptions of each distinct job or occupation in the entire plant;
(ii) To provide a standard procedure for determining the relative worth of each job in a plant;
(iii) To determine the rate of pay for each job which is fair & equitable with relation to other jobs in the plant, community or industry;
(iv) To ensure that like wage are paid to all qualified employees for like work;
(v) To promote a fair & accurate consideration of wage rates for similar jobs in a community & in an industry;
(vi) To promote factual consideration of all employee for advancement & transfer;
(vii) To provide information for ‘Work organisation, employees’ selection, placement, training & numerous other similar problems.
In fact, the primary purpose of job evaluation is to set Wages & Salary on the basis of the relative work or jobs in the organisation. It does this by providing a ground for the following matters:
(a) Equity & objective of Salary administration. i.e., paying the people whose work is alike the same wages & establishing appropriate wage differentials between jobs calling for different skills & responsibilities.
(b) Effective wage & salary control
(c) Union-management negotiations on wages; and;
(d) Comparison of wage & salary rates with those of other employees.
21.1. Introduction:
A sound wage & salary structure is one of the prerequisite of good employer-employee relations. In order to develop such a structure, it is essential that pay is related with the nature & worth of the job. It is also essential to maintain proper differentials between compensation for various jobs. Pay differentials need to be related with differentials in the value of different jobs. The relative worth of a job can be judged with the help of job evaluation.
Source: https://www.slideshare.net/Rahulkunwar/job-evaluation-24969242
Job evaluation is the output provided by job analysis. As Job analysis describes the duties of a job, authority relationships, skills required, condition of work & additional relevant information. Job evaluation on the other hand, uses the information in job analysis to evaluate each job-valuing its components & ascertaining relative jobs worth.
It Involve, in other words, a formal & systematic comparison of jobs in order to determine the worth of one job relative to another, so that a wage or salary hierarchy results. So it is a process by which jobs in an organisation are evaluated.
21.2. Meaning & Definition:-
Job Evaluation is an orderly process of determining the worth & wage for the job in relation to other jobs. It is the process of rewarding one job after it has been analysed. Job Evaluation is the process whereby an organisation systematically establishes its ‘compensation programme’. In this process jobs are ranked to determine each job’s appropriate worth.
According to DeCenzo & Robbins, “Job evaluation is using the information in job analysis to systematically determine the value of each job in relation to all jobs within the organisation. It seeks to rank all the jobs & place them in a hierarchy that will reflect the relative worth of each.”
According to Kimball and Kimball, “Job Evaluation represent an effort to determine the relative value of every job in a plant to determine what the fair basic wage for such a job should be.”
According to Wendell French, Job evaluation is a process of determining the relative worth of the various jobs within the organisation, so that differential wages may be paid to jobs of different worth.”
According to Micheal Armstrong, “Job Evaluation is a systematic process for defining the relative worth or size of jobs within an organisation in order to establish internal relativities. It provides the basis for designing an equitable grade & pay structure, grading jobs in the structure & managing job & pay relativities.
In the words of Gary Dessler, “Job evaluation is aimed at determining a job’s relative worth. It is a formal & systematic comparision of jobs to determine the worth of one job relative to another & eventually results in a wage or salary structure or hierarchy.
The ILO defines job evaluation as “an attempt to determine & compare demands which the normal performance of a particular job makes on normal workers without taking into account the individual abilities or performance of the workers concerned.
The Bureau of Labour statistics, U.S.A., says that “Job Evaluation is the evaluation or rating of jobs to determine their position in the job hierarchy. The evaluation may be achieved through the assignment of points or the use of some other systematic method for essential job requirements, such as skills, expertise & responsibility.”
In the words of the Netherland Committee of expert on Job Evaluation, “Job evaluation is a method which helps to establish a justified rank order to jobs as a whole being a foundation for the setting of wages. Job evaluation is the only one of the starting points for establishing the relative differentiation of base wage rates.”
21.3. Characteristics of Job Evaluation:
1. Job evaluation is a ranking of jobs, not people.
2. It follows job analysis which provides data is respect of each job.
3. It establishes a base compensation for the job.
4. It assumes normal performance of the job by a typical worker.
5. It ignores individual abilities of the performance of the jobholder.
Source: https://esteemmotivational.wordpress.com/2014/10/18/job-evaluation-market-driven-vs-job-worth/
6. The ranking that results from job evaluation is the means to an end, not an end in itself.
7. It is used to determine the organisation’s pay structure.
8. It is a systematic, rather than a scientific, process of establishing wages & salaries(Edwin Flippo)
9. The heart of job evaluation is the determining of what criteria will be used to arrive at the ranking (DeCenzo).
10. Job evaluation should not be confused with job analysis, which is concerned with collection of data about jobs. In job evaluation, one attempts to consider & measure the inputs required of employees (skill, effort, responsibility, etc) for minimum job performance & to translate such measures into specific monetary returns (Flippo).
21.4. Difference between Job evaluation & Performance Appraisal:
21.5. Essential of successful Job Evaluation:
1. The support of top management must be won for job evaluation programme.
2. Operating managers should be convinced about the need for & programme of job evaluation. They should be given training in fixing & revising the wages on the basis of job evaluation.
3. All the employees should be provided with complete information about the objectives, programme & techniques of job evaluation.
4. Clear & accurate job descriptions should be prepared and jobs should be standardised before starting the evaluation process.
5. All groups & grades of jobs should be covered in the programme. Similar jobs should be grouped together for this purpose.
6. The techniques used should be simple to understand for employees.
7. The acceptance & support of the trade unions should be obtained.
8. The factors selected for evaluation should be measurable & should represent the job content. These factors should be clearly defined,
9. The job evaluation programme should not involve unreasonably high costs of installation & administration.
10. In the evaluation process, the knowledge, judgement & experience of human resource department, line managers & outside experts should be pooled together.
11. The focus should be on rating the job not the jobholder.
12. Job evaluation should be undertaken as an adjunct to collective bargaining.
13. Job evaluation should not adversely affect the terms & conditions of existing employees.
21.6. Scope / Importance of Job Evaluation:
21.6.1. Essence of Compensation Administration:
De Cenzo & Robbins write, “The essence of pay structure & compensation administration is job evaluation.”
21.6.2. Provides an objective standard:
Decenzo & Robbins state, “External labour market conditions, collective bargaining & individual differences may requires a compromise between the job evaluation ranking & the actual pay structure. Yet even when such compromises are necessary. Job evaluation can provide a standard from which modifications can be made.”
21.6.3. Nucleus for Pay structure:
Once the job evaluation is complete, its data become the nucleus for the development of the organisation’s pay structure.
21.6.4. Pursuit of equity:
Edwin Flippo writes, “As a first step in the pursuit of equity, there should be established a consistent & systematic relationship among base compensation rates for all jobs within the organisation. This is done by job evaluation.”
21.6.5. Reduce Income Disparities:
According to Bryan Luiy, “Job evaluation seeks to highlight significant disparities between units of work on a comparative basis & so produce a more equitable distribution of income within an organisation that might be obtained by more arbitrary methods.”
21.6.6. Compatible with Collective Bargaining:
Edwin B. Flippo writes that “Job evaluation & collective bargaining are not incompatible, they can & do exist within the same organisation. Job evaluation would reduce the area of collective bargaining by systematizing the determination of internal consistency, which is concerned with proper wage differentials. Collective bargaining must still work to attain the objective of external consistency, the raising or lowering of the entire wage structure. Job evaluation should determine the shape of the wage structure & collective bargaining the location of the entire structure as a unit.”
21.6.7. Widespread Adoption:
The growing size & complexity of modern organisation has made it necessary to adopt job evaluation for justification of pay differentials. It is generally felt in every industry that in case of difficulty job or jobs involving skill, working hazards, initiative etc., higher wages should be paid.
21.7. Process of Job Evaluation:
It is essential for an organisation to develop a systematic & objective evaluation process to gain the confidence of the employees in the process. This is necessary because the results of job evaluation would form the basis for the sensitive exercise of pay determination. An organisation can have its own process of conducting job evaluation. However, the following process can find acceptance in any form of organisation with necessary organisation-specific modification. The Steps in a job evaluation process are (i) Identification of jobs to be evaluated; (ii) gathering relevant information about the jobs; (iii) determination of job ranking: (iv) Selection of benchmark jobs; (v) Wage & salary surveys; and; (vi) periodic review & feedback.
21.7.1. Identification of Jobs to be evaluated:
The first step in a job evaluation process is the determination of jobs to be covered under the evaluation process. It is usually difficult for an organisation to evaluate all the jobs of the organisation. It, therefore, chooses a few key jobs which can represent a group of similar jobs for job evaluation purpose. Once the jobs are identified for evaluation, the next step is the determination of the factors to be evaluated in a job. Factors like physical efforts, mental efforts, concentration, communication & leadership skills, education & experience, job complexity & pressure.
Source: https://www.slideshare.net/manumelwin/job-evaluation-compensation-management-manu-melwin-joy
21.7.2. Gathering Relevant Information about the Jobs:
The next phase of the job evaluation process is the collection of necessary information about the job being evaluated. For this, the evaluators may adopt data collection techniques like interviews, questionnaires & observation, besides job description statement, for gathering relevant information. At this stage, the evaluator should completely satisfy himself about the adequacy of information available for assessing the worth of the job.
21.7.3. Determination of Job Ranking:
After analysing all the information relating to the jobs; the evaluation assesses the extent of the presence of the chosen factors in the jobs. Based on the result of such an assessment, the evaluator determines the ratings for each job. Similar factors are assessed in an evaluation process, the ratings reflect the relative worth of a job in comparison to the other jobs in the organisation.
21.7.4. Selection of Benchmark Jobs:
The primary purpose of job evaluation is the development of pay grades for each category of jobs. In this regard, it is necessary for an organisation to know what the other organizations are paying for similar jobs. However, it may not be feasible for an organization to ascertain the comparative pay scale of all the jobs in the organization. Due to this reason, the evaluation may select a few jobs which are normally found in every organization & are comparable in nature. These jobs are usually called benchmark jobs & serve as yardstick for determining the pay scale of all other jobs in the organization.
21.7.5. Wage & Salary surveys:-
In this stage, an organisation conducts a survey of pay scales of the benchmark jobs in other organizations in the industry. Salary surveys may be conducted by an organisation in a formal or informal way. Similarly, an organisation may either conduct a direct survey to gather relevant information or use the published reports of professional agencies or magazines. Based on such survey, the monetary value of each job is determined. Many organisations often use informal sources like telephone, newspapers & the internet for conducting salary surveys.
21.7.6. Periodic Review & Feedback:
Development in the external environment influence the organisation continuously & also caused changes in the internal factor. For instance, technological changes influence the job characteristics & requirements profoundly. Consequently, organisations are forced to review the jobs at periodic intervals to determine their worth in the changed context. Feedback should also be collected from different stake holder like jobholders, supervisors, managers & unions about the various aspects of job evaluation to constantly improve the job evaluation process.
Fig. 21.1. Process of Job Evaluation
21.8. Methods of Job Evaluation:
There are four basic methods of job evaluation currently in use. These are:
1. Ranking Method
2. Job Grading Method
3. Point Rating
4. Factor Comparision Method
These are discussed below:
21.8.1. Ranking Method:
Under this method, all job are arranged according to their worth. Jobs are arranged in a simple rank order, from highest to lowest. No attempt is made to break the jobs down by specific weighted criteria. Each job is judged as a whole to understand its relative worth by ranking one whole job against another job.
Ranking involves preparation of brief job description, starting with duties, responsibilities & qualifications required for the job. Jobs are then ranked in order of relative difficulty or value to the company. Grade levels are then defined & wage levels are finalised. This work is done by a committee of judges.
A few techniques of ranking are as follows:
1. The top & bottom jobs should be selected as benchmarks for the remainder of the ranking process. They provide a point of departure.
2. Paired-comparision method is used where each jobs is compared with every other job, one at a time.
3. A third technique is using a committee for the judging.
4. The last is using the organisation chart. It says that job evaluation ranks should not violate the organisational ranking of jobs depicted on the chart.
Advantages:
(a) It is simplest to understand
(b) It is most inexpensive. It requires less finance then other methods.
(c) It is expedient & feasible
(d) It requires lesser time to use.
(e) It is adequate for the easily defined jobs.
Disadvantages:
(a) It is hard to measure ‘Whole jobs’. Flippo says. “Its greatest virtue, simplicity, is also a disadvantage, in that the measurement is somewhat crude.”
(b) There is no predetermined scale of value, or yardstick, for the judges to use. Each judge has his own set of criteria & it is difficult to explain results. There are no definite or consistent standards by which to justify ranking
(c) Jobs are only ranked in terms of order, we have no knowledge of the distance between the ranks.
(d) This is unmanageable when there are a large number of jobs. It is difficult to rank hundreds or thousands of jobs.
(e) The arbitrary ranking of jobs will be resented by employees.
21.8.2. Job Grading or Classification Method:
In the job grading method, yard stick is provided in the form of jobs classes or grades. Jobs are measured as whole jobs. A scale of value is created with which jobs & their job description can be compared. This scale consists of grades & grade description.
This method involves the following steps:
(i) Preparing job descriptions.
(iii) Reading the job descriptions & the grade description
(iv) Allocating the job to one particular job
(v) All jobs are classified by the pre-determined grades.
(vi) All jobs within one goods are treated alike in the matter of base salary.
Merits:
(a) It is an improvement over ranking because it provides a predetermined scale of values.
(b) It arrives at a series of classes or grades
(c) Evaluation under this method is supported by the evidence of job descriptions & job grade descriptions.
(d) It is also a relatively simple & inexpensive system to operate.
(e) It yields satisfactory results where number of jobs is small.
(e) It has proved itself successful & viable in classifying millions of jobs in the civil services.
Demerits:
(a) It has broad generalities & vague statements used in defining grades. These often laid to heated arguments between the jobholders & management (Edwin Flippo)
(b) It has difficulty of writing various grade description.
(c) It also has difficulty to judge which jobs go where, & of dealing with jobs that appear to fall into more than one classification.
21.8.3. Point System:
The most widely used job evaluation method is the point system. It breaks jobs down based on various identifiable criteria such as skill, effort & responsibility. Then it allocates points to each of these criteria. Depending on the importance of each criterion to performing the jobs, appropriate weights are given, & the points are summed. Then, jobs with similar point totals are placed in similar pay grades. A suggested procedures for the design & installation of this procedures is as follows:
21.8.3.1. Selection of the Job Factors: This method deals with job components or factors rather than whole jobs. A job factor is a specific requirement for the jobholders. In general, the following factors are considered:
(a) Skill, education, experience, initiative & ingenuity
(b) Responsibility towards machines, materials, safety of others & work of others.
(c) Mental & physical efforts
(d) Working conditions
These are the values for which an employer pays money.
The number of factors used in any one system varies with the organisation.
21.8.3.2. Construction of the Factor Scales: For each factor selected, a yardstick or scale of values must be constructed to permit measuring the factor in each job. Now two important decisions should be: (a) To decide about the total number of points that will be utilized in the entire system; and (b) to determine the percentage of these points that will be allocated to skill, effort, responsibility & working conditions.
21.8.3.3. Evaluation of the jobs: If reliable scales for each factor have been constructed, and if detailed job specifications are available, the evaluation process has been greatly simplified. It consists of reading the job specifications carefully, comparing that information with degree of definitions on factor scales, & deciding at which degree the job falls on each factor. A totaling of the points for all factors will give the evaluation of the job in the terms of points.
21.8.3.4. Conducting the Wage survey: After jobs have been evaluated & differentials established in terms of points, we must translate these point values into monetary values. For this purpose, a wage survey is conducted. Through the survey, we discover the going wage rate for various jobs. The data obtained from the survey are analyzed & averaged.
21.8.3.5. Design the Wage structure: The design of the wage structure removes around the establishment of job classes & rate ranges. Generally, jobs are not treated separately but are grouped to form a job class. All jobs within a class are treated in the same way. Almost all firms group jobs into classes for purposes of economical wage administration.
21.8.3.6. Adjust & operate the Wage structure: The wage structure that has been developed constitutes a standard. All wages paid should be within the limits of the structure. All future pay-rate changes should be in hire with the designed limits of the systematic wage structure.
Merits:
(i) It is a more detailed, quantitative & analytical method of measuring job worth.
(ii) It ensures accuracy as it deals with job components or factors rather than whole job.
(iii) Due to points allotted to job components there comes no bias in job evaluation.
(iv) It offers stability. Jobs may change over time, but the rating scales established under the point method stay intact.
(v) This method is simple to understand & easy to administer.
(vi) There is no resistance from employees & their unions as this method is free from subjectivity & manipulations.
(vii) This method contributes to a minimum of rating error.
Demerits:
(i) Point method is complex
(ii) It is costly & time consuming to develop & maintain.
(iii) The key criteria have to be carefully & clearly identified, degrees of factors have to be agreed upon in terms that mean the same for all raters, the weight of each criterion must be established & point values must be assigned to degree.
(iv) It involves considerable clerical work
(v) Small concerns cannot afford to install this system
(vi) Employees may disagree with points allocated to factors & their degree identified.
21.8.4. Factors Comparision Method :
In essence, this method is an application of the person to person system of merit rating to job evaluation. It incorporates a job-to-job type of rating. It is a refinement of simple ranking in that comparisions are accomplished job-to- job, by factors, rather than as whole jobs. This method is difficult from point method only in respect of yardstick provided for evaluating jobs. Under this method, only few jobs called “Key Jobs” are evaluated at the first instance.
The job description of key jobs must be available. The jobs are ranked by considering one factor at a time. In fact, this method is a combination of point method & rank method.
Source: http://slideplayer.com/slide/6890909/
The steps in this method are as follows:
(i) Select job factor
(ii) Select key jobs
(iii) Determine correct rates of key jobs
(iv) Rank key jobs under each job factor
(v) Allocate the correct rate of each key jobs among the job factors.
(vi) Evaluate all other jobs in terms of these factor yardsticks.
(vii) Design, adjust & operate wage structure.
Merits:
(a) It is sophisticated & quantitative ranking method
(b) It is tailor made approach because it requires a unique set of standard jobs for each organisation.
(c) It is logical method. Here jobs are compared with other jobs to determine a relative value, which the job evaluation seeks.
(d) There is no problem of translating points into monetary values.
(e) Wages for any unlike can be calculated
(f) This produces reliable & acceptable results.
Demerits:
(a) It is a complex method
(b) It uses the same five criteria to assess all jobs when, in fact, jobs differ across & within organisations.
(c) It is dependent on key jobs as anchor points (DeCenzo & Robbins)
(d) Its installation is expensive in small firms.
(e) It requires proper training to use it.
21.9. Limitations of Job Evaluation:
1. Though many ways of applying the job evaluation techniques are available rapid changes in technology & in the supply & demands of particular skills have given rise to problems of adjustment. These need to be probed.
2. Substantial differences exist between job factors & the factors emphasized in the market. These differences are wider in cases in which the average pay offered by a company is lower than that prevalent in other companies in the same industry or in the same geographical area.
Source: https://www.slideshare.net/manumelwin/limitations-of-method-of-job-evaluation-compensation-management-manu-melwin-joy
3. A Job Evaluation frequently favours group different from those which are favoured by the market. This is evident from the observations of Kerr & Fisher. They observe, “the jobs which tend to rate high as compared with the market are those of janitor, nurse & typist, while craft rates are relatively low. Weaker groups are better served by an evaluation plan than by the market; the former places the emphasis not on force but on equity.
4. Job factors fluctuate because of changes in production technology, information system, and division of labour & such other factors. Therefore, the evaluation of a job today is made on the basis of job factors & does not reflect the time job value in future. In other words, continuing attention & frequent evaluation of a job are essential.
5. Higher rates of pay for some jobs at the earlier stages than other jobs or the evaluation of a higher job higher in the organisational hierarchy at a lower rate than another job relatively lower in the organisational hierarchy often give rise to human relations problems & lead to grievances among those holding these jobs.
6. When job evaluation is applied for the first time in any organisation, it creates doubts & often fear in the minds of those whose jobs are being evaluated. It may also disrupt the existing social & psychological relationships.
7. A large number of jobs are called red circle jobs. Some of these may be getting more & other less than the rate determined by job evaluation.
8. Job evaluation takes a long time to install, requires specialized technical personnel & may be costly.
9. When job evaluation results in substantial changes in the existing wage structure, the possibility of implementing these changes in a relatively short period may be restricted by the financial limits within which the firm has to operate.
Summary:
Job evaluation is a scientific technique of ascertaining the relative worth of different jobs in an organization. It helps to serve several objectives. Graining acceptance, constituting the job evaluation committee, selecting jobs to be evaluated, describing the jobs, selecting the methods of evaluation, weighting the job factors, assigning money values and periodic reviews are the elements of job evaluation process.
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