ASSIGNMENT-

1
Human resource management

Topic : What is job evaluation and explain its purpose, process and the benefits. Note on methods
of job evaluation.

NAME :BEULAH T

R.NUM:M24PSY08
.
Job Evaluation
What is Job Evaluation?

Job evaluation is a systematic and formal process that determines the

relative worth of different jobs within an organization.

It aims to create a fair and equitable compensation structure by

comparing jobs based on their content, responsibilities, skills, effort, and
working conditions. It's not about evaluating the performance of an
individual in the job, but the job itself. The outcome is a hierarchy of jobs
that reflects their relative value to the organization, forming the basis for
a rational pay structure.

Purpose of Job Evaluation

The core purposes of job evaluation are to:

 Establish Internal Equity: Ensure that jobs of similar worth are compensated similarly within the
organization, regardless of the individuals performing them. This addresses internal fairness concerns.

 Create a Fair Compensation Structure: Develop a logical and consistent foundation for
determining salaries and wages. This moves away from arbitrary pay decisions.

 Attract and Retain Talent: Offer competitive compensation that attracts qualified candidates
and motivates existing employees to stay. A well-defined structure supports this.

 Improve Employee Morale: Foster a sense of fairness, transparency, and trust in

compensation practices, leading to increased employee satisfaction, engagement, and reduced
turnover.
 Support HR Processes: Provide a framework for other HR functions, such as recruitment
(defining required skills), selection (comparing candidate qualifications to job requirements),
training (identifying skill gaps), and performance management (linking performance expectations
to job responsibilities).

 Comply with Legal Requirements: Help ensure compliance with equal pay and non-
discrimination laws (e.g., ensuring men and women receive equal pay for substantially equal
work).

Process of Job Evaluation

The job evaluation process typically involves these steps:

1. Job Analysis: This is the foundation. It involves systematically gathering detailed

information about each job, including its tasks, responsibilities, required skills, knowledge,
effort (physical and mental), working conditions (hazards, environment), and reporting
relationships. Methods include observation, interviews, questionnaires, and reviewing
existing documentation.

2. Job Description: Based on the job analysis, a written document is created that
summarizes the key aspects of each job. This description serves as the basis for job
evaluation and other HR processes. It outlines the purpose, duties, responsibilities, and
required qualifications for the job.

3. Selection of Evaluation Method: An appropriate job evaluation method is chosen based

on the organization's size, complexity, resources, and objectives. (See "Methods" section
below.)

4. Job Evaluation: The chosen method is applied to assess the relative worth of each job.
This involves comparing jobs to each other, either holistically or by breaking them down
into compensable factors.

5. Job Grouping (Grading/Banding): Jobs of similar value, as determined by the evaluation,

are grouped into pay grades or bands. Each grade/band has a defined salary range.

6. Salary Structure Development: Salary ranges for each pay grade are established,
typically based on market data (external equity) and organizational budget considerations.

7. Implementation and Communication: The new salary structure is communicated to

employees, explaining the rationale and how it impacts their pay. Transparency is key.

8. Review and Revision: The job evaluation system should be periodically reviewed and
updated (e.g., annually or bi-annually) to ensure its continued relevance and effectiveness,
reflecting changes in the organization, job market, and legal landscape.

Benefits of Job Evaluation

  Fair and Equitable Compensation: Ensures employees are paid fairly for the work they
do, based on the relative value of their jobs to the organization.

 Improved Transparency: Provides a clear and understandable basis for compensation

decisions, reducing perceptions of bias, favoritism, or unfairness.

 Enhanced Employee Morale and Motivation: Increases employee satisfaction,

engagement, and retention by demonstrating a commitment to fair and consistent pay
practices.

 Better Talent Acquisition: Helps attract and retain high-quality employees by offering
competitive and transparent compensation.

 Reduced Pay Disputes and Grievances: Minimizes pay-related disagreements and

conflicts by establishing a rational and objective compensation system.

 Improved HR Efficiency: Streamlines HR processes related to compensation, recruitment,

selection, training, and performance management.

 Legal Compliance: Helps ensure compliance with equal pay and non-discrimination laws,
reducing the risk of legal challenges.

 Strategic Alignment: Aligns compensation with the organization's strategic goals by

rewarding jobs that contribute most to its success.

Methods of Job Evaluation

Job evaluation methods can be broadly classified into:

1. Non-Quantitative (Non-Analytical) Methods: These are simpler and less precise, relying on
overall judgment rather than detailed analysis.
 Job Ranking: Jobs are arranged in a hierarchy from the most to the least important to the
organization. This is simple but subjective and doesn't account for the degree of difference
between jobs. Example: A small startup might rank its jobs as CEO > Head of Marketing >
Software Engineer > Marketing Assistant.
 Job Classification (Grading): Jobs are grouped into pre-defined categories or grades
based on their level of responsibility, skills, and complexity. Each grade has a general
description. Example: A government agency might have job classifications like "Clerical,"
"Technician," "Analyst," and "Manager," each with specific criteria.

2. Quantitative (Analytical) Methods: These are more complex and objective, using specific
factors and numerical values.
 Point Factor Method: Compensable factors (e.g., skill, effort, responsibility, working
conditions) are identified and defined. Each job is evaluated on these factors, and points
are assigned based on the level present. The total points for a job determine its relative
worth. This is the most widely used method. Example: The Hay System uses factors like
Know-How, Problem-Solving, and Accountability, assigning points to each.
 Factor Comparison Method: Key jobs (benchmark jobs) are selected and evaluated.
Other jobs are then compared to these benchmark jobs on the same compensable factors.
Monetary values are assigned to each factor, and the total value for a job is calculated.
Example: A company might compare its Software Engineer job to benchmark data from
industry surveys, considering factors like programming skills, project complexity, and years
of experience.
Example (Illustrative - Point Factor Method):

Imagine evaluating two jobs: "Junior Marketing Analyst" and "Senior Software Engineer." We use a
simplified point factor system with three factors:

Factor Weight Junior Analyst Senior Engineer

(Level/Points) (Level/Points)
Skills 40% 2 (80 points) 5 (200 points)
Responsibility 30% 2 (60 points 5 (150 points)
Effort 30% 3 (90 points) 4 (120 points)
Total points 230 470
Based on these points, the Senior Software Engineer is valued higher than the Junior Marketing
Analyst, justifying a higher pay range.

References:
 Milkovich, G. T., Newman, J. M., & Gerhart, B. (2017). Compensation. McGraw-Hill
Education. (A standard textbook on compensation management)

 SHRM (Society for Human Resource Management). (Various resources on job

evaluation). www.shrm.org (A professional HR organization with articles and tools)

 WorldatWork. (Various resources on job evaluation). www.worldatwork.org (A global

HR association focused on total rewards)