Job evaluation explained.
Since mankind began exchanging money for goods and services, businesses and their staff have been negotiating the price of work. For the purposes of fair pay, organisations would ‘evaluate’ the jobs performed within them to determine their value to the organisation.
By considering a job’s cognitive and physical requirements, as well as working conditions and responsibilities, businesses were historically able to assess the worth of a specific role.
It became clear in the late 20th century that a system of job evaluation could bring far more benefits than just fair pay. It could boost efficiency, improve recruitment and provide a strong foundation for operations.
In the years before, two methods of job evaluation - analytical and non-analytical – became prominent. Levelling systems in collective labour agreements and for compensation surveys are often non-analytical and strongly linked to the price of labour, whereas analytical job grading schemes have a stronger focus to determine the internal relativities within an organisation.
Methods of Job Evaluation
The following methods assess the overall jobs’ requirements. The grading decision is made by assessing the job in direct comparison with other jobs by making a discretionary decision.
The simplest form of job evaluation. A whole-job, job-to-job comparison which results in an internal job value hierarchy from highest to lowest. Ranking is very uncommon nowadays and is widely considered to be unreliable and biased. It would not stand up in court in a trial for equal pay.
A qualitative form of job content evaluation that compares jobs to predefined class descriptions established for each job level. Jobs are placed in whichever classification best describes them. This approach is most common in compensation surveys and collective labor or shop agreements.
A quantitative form of job evaluation that uses defined factors and levels within each factor. Job requirements are compared to the definitions of the factor levels, with corresponding points assigned to the appropriate level awarded to the job and added for all factors to determine the total job score. The total job scores are used to create a job hierarchy by using either the original points (Job Ranking) or a translation into a grade structure (Job Grading). A prominent example for a job ranking method is the International Labor Organization’s Scheme of Geneva from 1950.
Purpose of Job Evaluation
Internal Job Evaluation:
- ensures internal pay equity & defense against equal pay claims,
- builds & maintains grade-based salary structures with pay bands
- supports a job architecture for process optimisation and digitalisation
- determines & manage job-specific competencies
- supports talent management with succession planning
This approach is not as common in the USA as it is in Europe.
(External) Market pricing:
Compensation benchmarking focuses entirely on determining external market prices for jobs found within the organisation.
- Under this method either the non-analytical approach of job classification or the analytical approach of a point factor system are used to determine the value of the job.
- Job content will be taken into account by matching the job against pre-defined disciplines, job families or benchmark functions. From this combination the market prices of a job will be derived.
- Additional factors may be taken into account to determine the labor market / peer group, such as region / locality of operations, company size and sector of operations.
The exclusive use of this approach is most common in the USA and much less common in Europe.
A combination of internal and external job evaluation:
This is where the internal values determine equal value of work and serve as a basis for the above mentioned use cases. Here, market rates are often used as an additional source of information to determine the height and spread of pay bands or the market going rates for specific jobs in a hiring process.
The gradar approach.
When it comes to job evaluation, the consulting industry has made the process increasingly vague and complex in recent years. And they almost always use proprietary systems that need the “secret knowledge” of their specialised staff.
We’ve introduced an easy-to-use, affordable software suitable for every business. Considering wider factors such as professional knowledge, specific responsibilities and interpersonal skills, we offer a progressive, transparent job evaluation service.
We designed the gradar system with our clients in mind. We are committed to providing a simple, standardised service with a number of user-inspired features which your business can operate independently.
We evaluate jobs across 25 grades in three different career paths; individual contractors, management roles and project management roles.