A job evaluation is a systematic way of determining the value/worth of a job in relation to other jobs in an organization. It tries to make a systematic comparison between jobs to assess their relative worth for the purpose of establishing a rational pay structure. Job evaluation needs to be differentiated from 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 and different roles.
There are four basic methods of job evaluation currently in use which are grouped into two categories:
1. Qualitative Methods
(a) Ranking or Job Comparison
(b) Grading or Job Classification
2. Quantitative Methods
(a) Point Rating
(b) Factor Comparison
Methods of Job Evaluation
1. Ranking Method
The ranking method is the simplest form of job evaluation. In this method, each job as a whole is compared with other and this comparison of jobs goes on until all the jobs have been evaluated and ranked. All jobs are ranked in the order of their importance from the simplest to the hardest or from the highest to the lowest.
Ranking method is appropriate for small-size organizations where jobs are simple and few. It is also suitable for evaluating managerial jobs wherein job contents cannot be measured in quantitative terms. Ranking method being simple one can be used in the initial stages of job evaluation in an organization.
Merits of Ranking Method
(i) It is the simplest method.
(ii) It is quite economical to put it into effect.
(iii) It is less time consuming and involves little paper work.
Demerits of Ranking Method
(i) The main demerit of the ranking method is that there are no definite standards of judgment and also there is no way of measuring the differences between jobs.
(ii) It suffers from its sheer unmanageability when there are a large number of jobs.
2. Grading Method
Grading method is also known as ‘classification method’. This method of job evaluation was made popular by the U.S. Civil Service Commission. Under this method, job grades or classes are established by an authorised body or committee appointed for this purpose. A job grade is defined as a group of different jobs of similar difficulty or requiring similar skills to perform them. Job grades are determined on the basis of information derived from job analysis.
The grades or classes are created by identifying some common denominator such as skills, knowledge and responsibilities. The example of job grades may include, depending on the type of jobs the organisation offers, skilled, unskilled, account clerk, clerk-cum-typist, steno typist, office superintendent, laboratory assistant and so on.
Merits of Grading Method
(i) This method is easy to understand and simple to operate.
(ii) It is economical and, therefore, suitable for small organizations.
(iii) The grouping of jobs into classifications makes pay determination problems easy to administer.
(iv) This method is useful for Government jobs.
Demerits of Grading Method
(i) The method suffers from personal bias of the committee members.
(ii) It cannot deal with complex jobs which will not fit neatly into one grade.
(iii) This method is rarely used in an industry.
3. Points Rating
This is the most widely used method of job evaluation. Under this method, jobs are broke down based on various identifiable factors such as skill, effort, training, knowledge, hazards, responsibility, etc. Thereafter, points are allocated to each of these factors.
Weights are given to factors depending on their importance to perform the job. Points so allocated to various factors of a job are then summed. Then, the jobs with similar total of points are placed in similar pay grades. The sum of points gives an index of the relative significance of the jobs that are rated.
Merits of Points Rating
(i) It is the most comprehensive and accurate method of job evaluation.
(ii) Prejudice and human judgment are minimized, i.e. the system cannot be easily manipulated.
(iii) Being the systematic method, workers of the organization favour this method.
(iv) The scales developed in this method can be used for long time.
(v) Jobs can be easily placed in distinct categories.
Demerits of Points Rating
(i) It is both time-consuming and expensive method.
(ii) It is difficult to understand for an average worker.
(iii) A lot of clerical work is involved in recording rating scales.
(iv) It is not suitable for managerial jobs wherein the work content is not measurable in quantitative terms.
4. Factor Comparison Method
This method is a combination of both ranking and point methods in the sense that it rates jobs by comparing them and makes analysis by breaking jobs into compensable factors. This system is usually used to evaluate white collar, professional and managerial positions.
Merits of Factor Comparison Method
(i) It is more objective method of job evaluation.
(ii) The method is flexible as there is no upper limit on the rating of a factor.
(iii) It is fairly easy method to explain to employees.
(iv) The use of limited number of factors (usually five) ensures less chances of overlapping and over-weighting of factors.
(v) It facilitates determining the relative worth of different jobs.
Demerits of Factor Comparison Method
(i) It is expensive and time-consuming method.
(ii) Using the same five factors for evaluating jobs may not always be appropriate because jobs differ across and within organizations.
(iii) It is difficult to understand and operate.