We can define Job Evaluation as a systematic process designed to determine the relative worth of jobs within a single work organization.
It is the process by which an organization systematically determines its compensation program.
In this process, jobs are compared in order to arrive at the appropriate worth for each job.
Job evaluation is in a close work relation with job analysis. Job analysis is the process of describing job duties, authority relationships, required skills, working conditions, and additional related information. Job analysis includes creating job specifications and descriptions. First, an analysis of jobs is carried out in the organization, paying special attention to the tasks and skills involved in performing them.
This list of specific duties for a particular job is called the job description. The personnel manager then lists the qualifications for each of these duties – the education, abilities, and experience required of the person holding the position. This list of qualifications is called a job specification. Often, the job description and job specification appear together in one form and are referred to jointly as a job description.
By job evaluation we mean the use of information in job analysis to systematically determine the value of each job in relation to all jobs within the organization. In short, job evaluation seeks to rank all the jobs in the organization and place them in a hierarchy that reflects the relative worth of each one.
Importantly, this is a classification of jobs, not people. The ranking that results is used to determine the wage structure in the organization.
Steps in Job Evaluation
The job evaluation process follows the following four steps – data collection; selection of compensable factors; Job evaluation and assigning pay to the job.
These different but related steps may now be briefly reviewed as:
- Gathering job analysis data:
First, the information has to be collected through the method of job analysis. Validity here should be a guiding principle simply meaning that the job analyst should accurately capture all of the content. It is very important to capture the similarities and differences between the jobs. Vague, incomplete or inaccurate job descriptions may result in some jobs being incorrectly evaluated.
- Selecting compensable factors:
Compensable factors are the factors that the organization chooses to reward through differential pay. These typical compensable factors are skill, knowledge, responsibility and working conditions.
- Evaluating job using certain methods:
There are four basic methods of job evaluation process.
- Assigning pay to the job:
The end product of the job evaluation exercise is a hierarchy of jobs in terms of their relative value to the organization. Assigning pay to this job hierarchy is referred to as pay structure pricing. This practice requires a policy decision about how the organization’s pay levels relate to its competitors.
Importance of Job Evaluation
When two or more people do different work for a third, some kind of job evaluation is needed.
The third person, the employer, must somehow arrive at a rate of wages per job which will not only:
(1) Be competitive in attracting and retaining employees.
(2) But also to be seen as related to the relative difficulty of their jobs.
If the employer sets wage rates that do not meet either or both pay targets, this usually results in employee dissatisfaction with the salary. Loss of good employees, inability to attract employees, low morale and low productivity are some of the business problems that are often associated with dissatisfaction with wages.
Of the two wage goals, meeting market rates and achieving satisfactory internal wage relationships, the latter has a greater priority. First, the internal wage relations are more clear to employees. If employees view them as unfair, out of line, and abusive, pay rates within the company can be a constant source of discontent, as employees are reminded of internal inequities every work day.
Second, a fair internal wage hierarchy is a prerequisite for establishing sound and workable policies regarding wage advancement for employees.
Finally, a well-considered and agreed-upon set of internal relative values for jobs greatly helps in establishing an informed position of the firm in relation to outside wage levels.
Aims and Objectives of Job Evaluation
The general objective of job evaluation is to assess and evaluate the nature of the work to be done in a particular job; Main tasks to be performed and the balance, difficulty, value, frequency and importance. Skills, qualities, abilities and attributes are matched, and a market value is placed on them, with a certain weighting as necessary or desirable.
The jobs are then placed in an order of magnitude matching them against grades, job titles, and salary scales.
Creating appropriate wage differentials for firm jobs is necessary to bring up the required caliber of labor and to encourage men to be trained for skilled jobs. Moreover, ratings (occupation differentials expressed as employment grades or numerical point values) are necessary to establish a rational and practical firm’s wage rate and salary schedules.
In companies where no such logical distinctions in wages and salaries have been established, compensation patterns are often irregular and chaotic because they will evolve from traditional attitudes, arbitrary decisions, utilitarianism, and favoritism.
In such cases, jobs that require more effort, skill, and responsibility may pay less than jobs that require fewer such attributes; Individuals in the same or similar occupations may receive widely varying compensation. Thus morale will be low and performance poor since employees have regressed heavily from these disparities, and management cannot explain the inconsistencies on a rational basis.
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