The Need
Job evaluation determines the relative worth of a job as compared with another job or many others. It does not set rates of pay (that’s what job pricing does); rather, it compares jobs with one another or measures them against a standard, so that we can say that the job of plant manager ranks higher than that of clerical.
Such information is vital to the organization because it serves as the foundation for many aspects of the human resources program. First, it carries over into the job pricing phase, with the result that jobs of relatively greater value within the firm are compensated more highly than those of relatively less value. Next, job evaluation pinpoints existing wage inequities.
Job evaluation exposes situations in which jobs are not being compensated in proportion to their relative value. For instance, if we know that the General manager job is classified higher than the clerical, and if we then discover that the differential in the average rates paid to the two jobs is only $50 per week, we can conclude without question that either the clerical job is being paid too high or the plant manager position is being paid too low.
Job evaluation also gives the organization a system for assigning wage rates to newly created jobs in accordance with their contribution to the firm. A new job, such as Web designer, can be evaluated and placed in the appropriate grade. This ensures that the Web designer hired by the firm will be paid fairly in relation to other jobs within the organization because the job has been placed in a grade with other positions of similar worth.
Through a formal program of job evaluation, the firm can provide a sound basis for the rates paid to employees who are transferred, demoted, or promoted from one job to another. Because job evaluation gives us the relative value of each position, we know that when an employee moves from clerical to General manager, this is a promotion to a job of significantly higher value to the firm and thus deserving of a higher rate of pay.
The Cambridge Consulting Process
Cambridge Consulting deploys different techniques in designing and delivering Job Evaluation Assignments, the most suitable being determined by the characteristics of the organization, including its size, the number of jobs involved, the time available for the study, the past experience of those responsible for the effort, and other organizational traditions.
Qualitative methods of job evaluation are distinguished by the fact that they involve the analysis of jobs as a whole. There is no attempt to isolate the components that comprise the position. Essentially there are two qualitative systems.
Ranking
Straight ranking of jobs is the simplest of all job evaluation methods; however, it is effective only where there are relatively few positions to be evaluated (customarily less than 30) and where it is possible to make logical comparisons between jobs with common characteristics, such as clerical, technical, etc.
To simplify ranking and to make it possible to rank a maximum number of positions, a technique called paired comparisons is used by Cambridge Consulting. Whereas, a matrix is constructed such that jobs are listed on both vertical and horizontal axes. Comparisons now are made between two jobs at a time, an easier and less ambiguous process than attempting to rank a number of jobs at the same time. When each job has been compared with others, it is then possible to add up the relative rankings for each to determine the final listing.
When rankings have been completed, jobs that are considered to be relatively close to each other are grouped, and these groupings are turned into salary grades.
Classification System
This second qualitative approach used by Cambridge Consulting is where an organization has a larger number of positions and where the nature of these jobs may be dissimilar.
In the classification system, jobs are sorted, much as books are sorted in a library. Different categories are defined that describe the level of complexity and the relative importance. For example, the highest classification level might be defined as one that requires a Ph.D. level of education, extensive background and experience in several professional or technical disciplines, and the ability to solve problems of complex nature and that has a critical impact on the organization. In contrast, the lowest classification level might include jobs that are simple and routine in nature, requiring only an ability to read and write, and that consist of duties and functions that can be learned easily in a short period of time.
When the classifications have been defined, jobs are then reviewed and placed into the correct classifications. After they have been placed in appropriate classifications, the jobs are then ranked. The result is a listing of all jobs in the organization from top to bottom. The grouping of jobs into grades would then follow, guided by the classifications.
The Cambridge Consulting Process
Cambridge Consulting deploys different techniques in designing and delivering Job Evaluation Assignments, the most suitable being determined by the characteristics of the organization, including its size, the number of jobs involved, the time available for the study, the past experience of those responsible for the effort, and other organizational traditions.
In large-scale organizations, job evaluations are usually so complex and involves so many jobs such that using a qualitative process is impractical. In such cases, one of two quantitative approaches is usually selected. Both of these approaches break the jobs down into compensable parts so that it becomes possible to evaluate the total worth of a job by adding up the values of its compensable parts.
Factor Comparison
This method of job evaluation, which has fallen into disuse, is based on a process that compares the degree a compensable factor is present in a particular job with the degree to which it is present key benchmark jobs. Called factor comparison, this process first involves identifying these key benchmark jobs and dividing them into their compensable factors; each factor is then assigned a dollar value, based on the job’s total worth in the competitive marketplace.
Alternatively, if a market survey is not used, it is possible to divide each key job into component factors by identifying the percentage each factor represents as a part of the whole. When these percentages have been established, comparisons are made to other jobs, also by the compensable factors.
When all jobs have been evaluated, a salary survey of the market is conducted for each of the key benchmark jobs. When salaries have been established for them, other jobs are slotted in at rates that maintain the same percentages.
The Cambridge Consulting Process
Cambridge Consulting deploys different techniques in designing and delivering Job Evaluation Assignments, the most suitable being determined by the characteristics of the organization, including its size, the number of jobs involved, the time available for the study, the past experience of those responsible for the effort, and other organizational traditions.
Cambridge Consulting mostly uses the Point Method approach to conduct job evaluation assignments, whereas the Point Method is a system whereby points are awarded to each job, based on the extent to which the job possesses compensable factors as compared with an objective standard rather than another job.
This method is preferred because objectivity is built in and because the system can remain in place over a long period of time, even though individual jobs used in the factor comparison method may have changed.
Obviously, after points are totaled, there is a complete ranking of all jobs that becomes the basis for determining job grades and eventually salary scales.
Hybrid Approaches
Our Experienced compensation consultants developed and perfected hybrid plans that can be fine tuned to an organization. This generally is not done by the organization itself because the process usually requires a sophisticated compensation administrator. An error in developing the basic plan can be costly in terms of the program’s not achieving its goals. In fact, a poorly designed job evaluation system can be counterproductive and further diminish the organization’s employee relations and economic health.
The Cambridge Consulting Process
Cambridge Consulting deploys different techniques in designing and delivering Job Evaluation Assignments, the most suitable being determined by the characteristics of the organization, including its size, the number of jobs involved, the time available for the study, the past experience of those responsible for the effort, and other organizational traditions.