HR-MPR- Job Evaluation
What is Job Evaluation?
Job Evaluation is defined as a systematic procedure used to ascertain the monetary worth of a role and is typically conducted by the HR department. In the realm of Human Resources, conducting a job evaluation might be a necessary task to establish the appropriate salary for a given role. By comparing the responsibilities of each position, job evaluations assist in ensuring fair compensation for all employees. Various methods exist for job evaluation, each aiming to quantify the value that a particular role contributes to the organisation. Evaluations are role-based rather than employee-based, meaning they assess the position, not the individual occupying it. This is a common practice in newly established companies or when new roles are being introduced.
Methods of Job Evaluation
Job evaluations, which are systematic processes to ascertain the monetary value of a position, can be categorised into two primary types: Qualitative and Quantitative. The qualitative methods, such as job ranking and classification, are typically quicker, while the quantitative methods, like factor comparison and point factor, take into account the skills and responsibilities required by each role.
1. Job Ranking: This method involves arranging each role in a hierarchy, based on its value to the company or the complexity of its duties. It is particularly suitable for smaller companies due to its simplicity and can handle up to 100 jobs. It is also useful when reducing positions, as similar roles can be grouped together during the ranking process. However, it is subjective and may benefit from being combined with a quantitative method for more accurate results.
2. Job Classification: This method involves sorting roles based on a pre-established grading system or classification method. For instance, categories could include executives, skilled workers, semi-skilled workers, and unskilled workers. Each role is then placed into a category, which helps determine the salary for each position within that category. This method can be subjective and may struggle to categorise unique roles.
3. Market Pricing: This external job evaluation method involves setting salaries based on what other companies pay employees in the same position. This can be determined through third-party compensation surveys, allowing you to offer competitive wages. However, it does not consider internal equity, which could result in an employee earning less than their colleagues or the demands of their work if the market rate for their role is low. To mitigate this, market pricing can be combined with an internal job evaluation method.
4. Point Factor: This method involves assigning points to each role and then ranking them. A detailed point system is developed, where each skill or job responsibility could represent a point. The roles are then assigned a total number of points and ranked from highest to lowest to help determine their salaries.
5. Factor Comparison: This method combines the job ranking and point factor methods. Each job is ranked based on certain factors, such as the number of skills required or the necessary knowledge. These factors are then assigned points, and the total number of points determines the job's ranking.