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Job EvaluationPrepared by

Narendra Singh Chaudhary

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Job Evaluation Job evaluation is a systematic process of

analyzing and evaluation jobs to determine the

relative worth of each job in an organization. It forms the basis for designing the

compensation management system in an

organization. since the compensation

management and the perceived fairness ofcompensation administration have a big

influence on employee morale and satisfaction.

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According to the Bureau of LaborStatistics (USA), Job evaluation is the

evaluation or rating of jobs to determinetheir positions in the job hierarchy. theevaluation may be achieved throughassignment of points or use of some

other systematic method for essential jobrequirements such as skill, experienceand responsibility.

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Objectives To determine relative worth of different jobs in

an organisation and providing the basis for thecompensation management system.

To determine the position and place of a job inthe organizational hierarchy.

To clarify the responsibility and authorityassociated with each job.

To manage internal and external consistency inthe compensation.

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To maintain complete and accurate datarelating to job description and job specificationof various jobs.

To ensure employee satisfaction with respectto the compensation.

To avoid discrimination of any kind in wageadministration.

To provide the basis for classification of new orchanged jobs.

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Principles of JobEvaluation The job dimensions have to be properly

selected and should be rated in accordancewith the demands of the job.

The dimensions selected for the purpose ofrating should be clearly defined to ensure clearunderstanding by the employees.

The evaluation program should be explained

and illustrated to the employees at alllevels.The employees as well as thesupervisors should have confidence in thesystem of evaluation.

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The employees must be actively involved in the

evaluation program. This helps develop a

sense of trust in the whole exercise. Market factors should be taken into

consideration while evaluating jobs. For

example, if there is a scarcity of statisticians in

the job market, this fact has to be given dueimportance while evaluating the job of a

statisticians.

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Process of Job Evaluation Preparation of a Job Evaluation Plan

Job Analysis

Job Description & Job Specification

Selection of job dimensions

Classification of jobs

Implementation of the evaluation

Maintenance

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Techniques of JobEvaluationQuantitative

Point Rating MethodFactor

comparison Method

Decision

Band Method

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Non-Quantitative

Ranking MethodJob Classification/

Job Grading Method

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Ranking Method Ranking is the method in which the jobs

in an organisation are assessed based

on the knowledge,skills,effort and otherjob dimensions associated with each job.

Ranking involves preparation of brief job

descriptions and assigning ranks to thejobs in accordance with their worth in the

organization.

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Techniques Of Ranking Relative Ranking

Paired Comparison Ranking

Single Factor Ranking

Once the ranking of the jobs is complete,

a monetary value is attached to each job.

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Job Grading In this method of job evaluation, the jobs are

classified and graded based on theirsignificance and their worth to the organization,

the jobs at various levels in an organization areplaced under different grades, which areclearly defined. Grades are formulated on thebasis of the nature of the tasks and

responsibilities of the jobs. For e.g.:-a grademay comprise jobs like Financial Accountants,Management Accountants, Cost Accountants

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Point rating method The point method or the point rating

method is one of the most widely used

methods of job evaluation. In thismethod, a quantitative point scale isdeveloped to evaluate the jobs. Thenumber of scales to be used and other

aspects of implementation aredetermined by the job evaluation analystor the human resource function.

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Steps in Point method Determine the job factors or compensable

Determine the sub factors

Define the degree statements or profilestatements

Assign points to factors,subfactors anddegrees ( For e.g. if experience is critical to a

job, degree I might be 20 points, degree IImight be 60 points, degree III-60 points,degree IV -80 points).

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Preparation of chart

Applying point system

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Factor comparisonmethod It is based on the principles of point rating and

ranking.

Steps involved-

Determining & defining specific factors(4 to 7)

Identify key or bench mark jobs

Comparison and ranking of various factors

upon their importance Assigning monetary values and adding up to

pay of the bench mark job and evaluation.

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Decision Band Method It is more popular in both public & private firms

for more than 25 years. It was developed byProf.Emeritus Thomas T.Paterson in 1970s

and further developed & refined by Ernst &Youngs compensation specialist in clientorganisation.

The basic premise of DBM is that the value of ajob depends on its decision-making

requirements. Decision-making is logical andequitable basis for comparing jobs because all

jobs involved decision-making on all levels.

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The DBM distinguishes six levels of

decision making or decision-bands",

ranging from the most far reachingdecisions on organizational goals to the

simplest decisions, such as how fast to

key-enter data. The DBM job evaluation produces a

decisionbased structure.

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Merits of Job Evaluation It is logical and objective method of ranking

and grading jobs for the purpose of

compensation management.

It helps in preventing & removing discrepancies

in the wage structure of an organization.

It helps in maintaining higher worker

satisfaction level by logical explanation ofissues related to job differentials

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It facilitates the entry of new jobs into the

organizational wage structure and help in

appropriate evaluation and pay structure

fixation accordingly.

It helps in comparison of organizations wage

structure with that of competitors and market

rates. It helps in decisions related to selection,

transfer and promotion of employees

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Demerits Changes in jobs and its factors can render job

evaluation techniques outdated and irrelevant.

It can give rise to employee grievance if not

properly formulated or implemented. It introduces rigidity into the pay system and

reduces opportunities for mangers top exercisediscretion.

It takes long time to implement and mayinvolve formalization of rules leading mismatchb/w financial condition of firm and establishedwage structure.

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