Single or Multiple Job Evaluation Plans?

Collection of Job Information

In the HR function, job information provides the information base for various HR tasks and initiatives, including job evaluation plans or schemes.

Salary Formula 6A

Classification of Job Evaluation Techniques

Other than market pricing, here are the other job evaluation techniques.

Salary Formula 6B

Source: A Combined Analytical Method of Job Evaluation written by Ai Su

Job Evaluation Methods

The following is an excerpt from Part 4, Chapter 11 titled “Establishing Strategic Pay Plans” of the book Human Resource Management (11th Edition) written by Gary Dressler

Employers use two basic approaches for setting pay rates: market-based approaches and job evaluation approaches.

  1. Compensable Factors – Factors that jobs have in common can be used to establish how the jobs compare to one another.
  1. Preparing for Job Evaluation – Job evaluation is a judgmental process and demands close cooperation among supervisors, HR specialists, employees, and union representatives. The main steps include identifying the need for the program, getting cooperation, and then choosing an evaluation committee. The committee then performs the actual evaluation.
  1. Job Evaluation Methods: Ranking – The simplest job evaluation method ranks each job relative to all other jobs, usually based on some overall factor like “job difficulty.” There are several steps in the job ranking method: obtain job information, select and group jobs, select compensable factors, rank jobs, and combine ratings.
  1. Job Evaluation Methods: Job Classification – This is a simple, widely used method in which raters categorize jobs into groups; all the jobs in each group are of roughly the same value for pay purposes. The groups are called classes if they contain similar jobs or grades if they contain jobs that are similar in difficulty but otherwise different.
  1. Job Evaluation Methods: Point Method – It involves identifying several compensable factors for the jobs, as well as the degree to which each factor is present in each job. Assume there are five degrees of the compensable factor “responsibility” a job could contain. Further, assume you assign a different number of points to each degree of each compensable factor. Once the evaluation committee determines the degree to which each compensable factor (like “responsibility” and “effort”) is present in the job, the committee can calculate a total point value for the job by adding up the corresponding points for each factor. The result is a quantitative point rating for each job.
  1. Computerized Job Evaluations – Using quantitative job evaluation methods such as the point method can be time-consuming. Computer-aided job evaluation streamlines this process. Most computerized systems have two main components: structured questionnaires and statistical models. These elements allow the computer program to price jobs more or less automatically by assigning points.

Fundamental Compensable Factors

The 4 fundamental compensable factors are skills, effort, responsibility and working conditions.

Major Limitations of Job Evaluation

The major limitations of job evaluation and construction of a job grading structure are:

  • Job evaluation is a technical and time-consuming task.
  • It does not directly address the problems of attracting and retaining employees.
  • It does not resolve pay inequalities between occupational groups in public and private sectors.
  • It reduces job flexibility and adaptability because organizations retain outdated job structures for too long and people doing jobs become fixed in their ideas about work tasks.
  • It may breed risk avoidance and disinterestedness in initiative taking amongst employees since the scheme and its evaluated job descriptions and grades may foster legalistic emphasis on doing work that are only within the specifications of the job grade.
  • Traditional job structures are less suitable for fast moving, non-unionized companies.
  • There is no direct correlation between job evaluation schemes and business performance.
  • Employees who reached the end of their job grade structure would find it hard to leave their employer as not all businesses have similar practices.

Source: Strategic Approach to Human Resource Management by Tapomoy Deb
Single or Multiple Job Evaluation Plans?

Related to the decision on the salary structure, a decision has to be made as to whether to use:

  • A single job evaluation plan with to evaluate all the organization’s jobs.
  • Separate job evaluation plans with different compensable factors for different job families.

There are employers that design different job evaluation plans for different types of work because they believed that the work content is too diverse to be usefully evaluated by one plan. For example, production jobs may vary in terms of manipulative skills, knowledge of statistical quality and working conditions but these tasks and skills may not be relevant to engineering and finane jobs. Consequently, a single, universal plan may not be acceptable to employees or useful to managers.

The advantages of using a single job evaluation plan are:

  • Meet regulatory compliance enforcing laws on pay discrimination by gender and race.
  • It allows the use of standardized job analysis questionnaire.
  • It allows the use of a job evaluation plan that is based entirely on market-pay information.

The advantages of using multiple job evaluation plans are:

  • It allows the use of different compensable factors for different job families. The rationale for different plans for different job families is that the organizations pay for different things in different job families.
  • The organization may be paying for different things in different job groups.
  • The pays of different job families do not always move together and in equal amounts.
  • Job-content comparisons are strongest within narrow job clusters and weakest among broad job clusters.

One alternative would be (1) make a plan for service or production and maintenance jobs, paid primarily for physical skills, (2) make a plan for office and technical jobs, paid primarily for mental skills, and (3) make a plan for exempt jobs (managerial and professional), paid primarily for discretionary skills. In this case, compensable factors such as responsibility and decision making are used for executive jobs, while physical demands and skills are categorized for manual jobs, and the accuracy and amount of supervision is specified for clerical and technical jobs.