HRM/U3 Topic 10 Job Evaluation: Concept, Process and Significance
In simple words, job evaluation is the rating of jobs in an organization. This is the process of establishing the value or worth of jobs in a job hierarchy. It attempts to compare the relative intrinsic value or worth of jobs within an organization. Thus, job evaluation is a comparative process.
Below are given some important definitions of job evaluation
According to the International Labour Office (ILO) “Job evaluation is an attempt to determine and compare the 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 British Institute of Management defines job evaluation as “the process of analysis and assessment of jobs to ascertain reliably their negative worth using the assessment as the basis for a balanced wage structure”. In the words of Kimball and Kimball “Job evaluation is 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”.
Wendell French defines job evaluation as “a process of determining the relative worth of the various jobs within the organization, so that differential wages may be paid to jobs of different worth. The relative worth of a job means relative value produced. The variables which are assumed to be related to value produced are such factors as responsibility, skill, effort and working conditions”.
Now, we may define job evaluation as a process used to establish the relative worth of jobs in a job hierarchy. This is important to note that job evaluation is ranking of job, not job holder. Job holders are rated through performance appraisal. Job evaluation assumes normal performance of the job by a worker. Thus, the process ignores individual abilities of the job holder.
Job evaluation provides basis for developing job hierarchy and fixing a pay structure. It must be remembered that job evaluation is about relationships and not absolutes. That is why job evaluation cannot be the sole determining factor for deciding pay structures.
External factors like labour market conditions, collective bargaining and individual differences do also affect the levels of wages it, organizations. Nonetheless, job evaluation can certainly provide an objective standard from which modifications can be made in fixing wage structure.
The starting point to job evaluation is job analysis. No job can be evaluated unless and until it is analyzed.
Objectives of Job evaluation
The main objective of job evaluation is to determine relative worth of different jobs in an organization to serve as a basis for developing equitable salary structure. States an ILO 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 and 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.
The objectives of job evaluation, to put in a more orderly manner are to:
(i) Provide a standard procedure for determining the relative worth of each job in a plant.
(ii) Determine equitable wage differentials between different jobs in the organization.
(iii) Eliminate wage inequalities.
(iv) Ensure that like wages are paid to all qualified employees for like work.
(v) Form a basis for fixing incentives and different bonus plans.
(vi) Serve as a useful reference for setting individual grievances regarding wage rates.
(vii) Provide information for work organization, employees’ selection, placement, training and numerous other similar problems.
(viii) Provide a benchmark for making career planning for the employees in the organization.
PROCEDURE OF JOB EVALUATION
Though the common objective of job evaluation is to establish the relative worth of jobs in a job hierarchy, there is no common procedure of job evaluation followed by all organizations. As such, the procedure of job evaluation varies from organization to organization. For example, a job e valuation procedure may consist of the eight stages as delineated.
- Preliminary Stage
This is the stage setting for job evaluation programme. In this stage, the required information’s obtained about present arrangements, decisions are made on the need for a new programme or revision of an existing one and a clear cut choice is made of the type of programme is to be used by the organization.
- Planning Stage
In this stage, the evaluation programme is drawn up and the job holders to be affected are informed. Due arrangements are made for setting up joint working parties and the sample of jobs to be evaluated is selected.
- Analysis Stage
This is the stage when required information about the sample of jobs is collected. This information serves as a basis for the internal and external evaluation of jobs.
- Internal Evaluation Stage
Next to analysis stage is internal evaluation stage. In the internal evaluation stage, the sample of bench-mark jobs are ranked by means of the chosen evaluation scheme as drawn up at the planning stage. Jobs are then graded on the basis of data pending the collection of market rate data. Relative worth of jobs is ascertained by comparing grades between the jobs.
- External Evaluation Stage:
In this stage, information is collected on market rates at that time.
- Design Stage:
Having ascertained grades for jobs, salary structure is designed in this stage.
- Grading Stage
This is the stage in which different jobs are slotted into the salary structure as designed in the preceding stage 6.
- Developing and Maintaining Stage
This is the final stage in a job evaluation programme. In this stage, procedures for maintaining the salary structure are developed with a view to accommodate inflationary pressures in the salary levels, grading new jobs into the structure and regarding the existing jobs in the light of changes in their responsibilities and market rates.
The Advantages of Job Evaluation to an Organization
An effective job evaluation serves a purpose for the employee and for the organization as well. There are several advantages that a job evaluation brings to an organization that can help the organization to grow efficiently. Understanding the benefits of a job review to the company can help managers better prepare for, and execute, their employee evaluations.
(i) Adjust the Salary Structure
According to the Management Study Guide, the company can use employee evaluations to determine if the corporate salary structure is set up properly. Evaluations can help identify the high-achieving employees and help raise company productivity. By using the results of job evaluations, an executive team can determine where pay raises are necessary and where it may also be necessary to adjust pay downward based on employee performance.
An employee job evaluation needs to be an interactive process between the manager and the employee. By evaluating employee performance, managers can help identify areas where each employee needs improvement. Using this information, the company can develop a training schedule that will help strengthen employee skills to the point where each employee is able to competently perform his job. Job evaluations can also identify exceptional employees, and they can be placed in training programs that can help to accentuate their above-average skills.
(iii) Managerial Candidates
A successful company needs competent leaders, and job evaluations can serve to help identify those employees who could be management prospects. By identifying potential managerial candidates, a company can develop a personnel plan that will include internal promotions and the utilization of talent that has experience with the company.
(iv) Talent Pool
Job evaluations help to identify employees who have abilities beyond their current job functions. This allows the company to get a better idea of what level of talent is in house and what range of jobs employees can cover. When the company is considering opening a new department, it can look to its evaluations of current employees to find experienced talent to populate the new department before spending the money to hire and train new employees. This is also useful when departments are being closed and the company needs to determine which employees to keep and which employees to let go