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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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