From time to time every company has to decide what it will pay for various kinds of work. In many instances these decisions are reactions to sudden changes in the pressures affecting wages, for example, market conditions, trade union claims, and the introduction of new products. Since these pressures are not necessarily uniform in their effect across the company, pay differentials become distorted.
Job evaluation provides a formal procedure for establishing, or for re-establishing, the appropriate relative values of different jobs as a first step in designing a fair-wage system acceptable to all parties.
To be successful a job evaluation scheme needs to be simple and easy to understand because of the variety of the people involved in the process and emotional nature of the subject. Yet at the same time the scheme needs to be capable of dealing with all the complexities involved in assessing relative values of many widely different jobs. These two requirements are so conflicting that it is hardly surprising that many job evaluation applications fail. Some of them certainly fail because of disagreements over the results; but many more fail –or at least do not succeed as well as they should- through a lack of general understanding of the nature of the total wage-system , and the particular contribution that job evaluation can make.
Job evaluation is defined in the Glossary of Terms Used in Work Study, British Standard 3138: 1969, as ‘a generic term covering methods of determining the relative worth of jobs’. In this context a job is described as being all the tasks carried out by a worker or group of workers in the completion of their prescribed duties and grouped together under one title or definition.
The word ‘job’ thus refers to trade or calling, and not to just a piece of work or task. It embraces, for instance, the ‘job’ of a software engineer, and not simply the job of writing a program or fixing a defect in it.
As with all management techniques, job evaluation involves the acceptance of certain basic assumptions: for instance, that the time and trouble involved in such an exercise is worth-while in that the result can be put to good use; that different kinds of work have or should have different values, and that similar jobs are of equal value; that the value of work is affected by the supply of labor and the demand for the results of the work; that the supply and demand can be resolved in terms of the mental and physical demands made by the work and the availability of appropriate labor; that these demands can be roughly quantified and compared; and that any work values so derived are related to and affected by the values of all other work.
There are other assumptions, but these are fundamental ones on which job evaluation is based, and it is important that they should be specified and understood, otherwise the argument for and against job evaluation will be futile. They will be considered in detail later in this chapter, but first we must consider why job evaluation is needed at all.
OBJECTIVES OF JOB EVALUATION
There are certain broad principles, which should be kept in mind before putting the job evaluation program into practice. These principles are:
(i) Rate the job and not the man. Each element should be rated on the basis of what the job itself requires.
(ii) The elements selected for rating purposes should be easily explainable in terms and as few in number as will cover the necessary requisites for every job without any overlapping.
(iii) The elements should be clearly defined and properly selected.
(iv) Any job rating plan must be sold to foremen and employees. The success in selling it will depend on a clear-cut explanation and illustration of the plan.
(v) Foremen should participate in the rating of jobs in their own departments.
(vi) Maximum co-operation can be obtained from employees when they themselves havean opportunity to discuss job ratings.
(vii) In talking to foremen and employees, any discussion of money value should be avoided. Only point values and degrees of each element should be discussed.
(viii) Too many occupational wages should not be established. It would be unwise to adopt an occupational wage for each total of point values.
The immediate objective of job evaluation is to find out the value of work, but it is the value which varies from time to time and from place to place under the influence of certain economic pressures, not least of which is worth of money itself. The aim of job evaluation is not to create a rate, but to discover what that rate is at that time and that place. Then any changes in worth (Wage!) can be identified, isolated and quantified.
Work and wages paid for it are emotional matters about which people get easily upset. Many of the strikes and disputes in the industries are to do with wages or working conditions. So as to avoid emotional disturbance of values, job evaluation usually measure work in points, ranks or grades, rather than in money, while the work itself is resolved into those physical and mental characteristics which it demands of the worker. These characteristics are then used as the criteria for evaluation.
Another aim of job evaluation, when it is used to form the foundation of a wage structure, is to supply bases for negotiations founded on facts, rather than on vague indeterminate ideas.
Wages are always under pressure of one kind or another and some job wages are influenced more than others, a state of affairs which has inevitably led to anomalies in rates of pay in that some are too high as compared with others and some are too low. Another of the objectives is to reveal these anomalies, although it is important to realize that job evaluation does not create them.
Another objective of job evaluation is to show where the money goes when paying for the work. If the work is analyzed into certain aspects such as skill and responsibility it is possible to determine not only what the job is worth but also the value of each of these aspects, a piece of information which is useful when trying to improve labor productivity.
There is a popular idea that job evaluation is some kind of superior incentive scheme, a sort of sophisticated alternative to piecework or measured day work. Job evaluation is not a wage system, neither is it anything to do with payment by results. If it reduces the amount of time wasted on frustrating arguments about wages- as is often claimed- then it might be regarded as some sort of incentive or encouragement to improve the industrial climate, but this is not so much an immediate objective as an individual virtue. It is always difficult to persuade people that the evaluation and the wages are not the same things. People may be worth more (or less) than the work they do, but how can we know unless we discover what the work itself is worth?
Another job evaluation‘s objective is to determine what work is worth at a standard evaluation, rather than by some vaguely called productivity deal. The politicians and economists talk about the percentage growth, the percentage improvement in productivity, percentage improvement in wages as if the percentages themselves are significant. They do not seem to know what the level of productivity ought to be in particular case, in order to compare achievements with objectives rather than with past levels.
The same apply to wages. What really matters is finding out what the work is worth and comparing the wages with this figure rather than what used to be compared with in past. In any case wages and productivity are not commensurate, for they are measured in different terms. A labor can not increase his productivity beyond a certain point.
Job evaluation will not solve the problem of determining competitive wage for a job, neither will it cut out wage negotiations around the table; but the laborer is worthy of his hire and it will indicate the value of his work as compared with that of other work at a given time and in a given place. Thus by comparison it should be possible to see whether wages claims are reasonable or exorbitant in terms of the accepted criteria.
HISTORICAL DEVELOPMENT OF JOB EVALUATION
The origin of job evaluation is not clear. Some authors think that it started with a method of classifying jobs proposed by the United States civil service as far back as 1871; others date it from the early 1920s. However, it is evident that the development of job evaluation as a technique was associated with the early twentieth century thinking that led to the introduction of ‘analytical methods’ in the work organization known as “Scientific Management”. Job analysis is the common basis of method study, work measurement and job evaluation. The principles of ‘scientific management’, some of which have been criticized for ‘dehumanization’ of work, are not the only inspiration for job evaluation; it also owes much to concern over the principle of “Equal pay for equal work”. The classification method of job evaluation, for example, was originated in order to eliminate the existing anomalies between one government department and other in the US.
The first sign of analytical job evaluation appears in the work of American Management Association (AMA) in 1920 under the signature of Charles E. Bedaux. Merrill R. Lott, after trying out a 13-factor scheme in a number of metalworking enterprises, published a substantial handbook in 1926 titled “Wage Salaries and Job Evaluation”. F.A. Kingsbury had proposed a similar method earlier in 1923. The factor comparison method, a combination of point-factor method and the non-analytical ranking method, was initially developed in 1926 by E.J. Benge. At about the same time, Classification method was formally established by the US law. Thus by the end of 1920s, the four basic methods of job evaluation, while not yet in general use, had been elaborated and tried out in number of enterprises.
The point method was refined considerably by American Expert A.L.Kress, who, towards the end of 1930s, put forward a plan based on the point method for two influential industrial organizations in the US, the National Electrical Manufacturers Association (NEMA) and the National Metal Trades Association (NMTA). The important innovation of these plans is reducing a large number of factors to the four generic factors of ‘skill’, ‘effort’, ‘responsibility’, and ‘job conditions’, each with weighting of its own. This made the plans easier to handle and more practical. They were applied throughout the electrical machinery sector with such success that many other sectors and enterprises adopted them.
Measure taken in the US to regulate the economy during the Second World War also encouraged wider adoption of Job Evaluation. The 1942 Act on economic stabilization froze wages to leapfrogging caused by labor shortage. The only exception to the freeze approved by the National War Labor Board was a wage increase intended to rectify wage anomalies shown by the job evaluation method. Trade unions had previously shown little enthusiasm towards job evaluation but it was now in their interest as well as that of their employers to adopt it. As a result, job evaluation plans quickly spread throughout the economy in the US. For example the United Steel Corp. introduced its plan soon after this regulation and even after so many years it still continues to be used with minor changes. By immediate post-war period, job evaluation had become a basic management technique in the US.
In Europe , despite a few isolated previous experiments, notably in the Federal Republic of Germany and the UK, the development of job evaluation in the industry dates back to second World War when, to rebuild their national economies, many countries introduced and promoted job evaluation in order to rationalize the wage structure and thereby improve productivity. This was done in Belgium, Denmark, Finland, France Germany and the UK.
The most original and the ambitious of these experiments was in the Netherlands, where a large-scale program for the reconstruction of the national economy led to wage freeze allowing increases in wages only in order to remove the anomalies shown by job evaluation. A national committee presented its detailed plan on the scheme in 1949. It was officially abandoned in 1959 but it left its mark in the current uses of job evaluation in establishing job and pay structures.
While the Dutch experiment may have been unique in its attempt to establish a nationwide plan, in other European countries many enterprises or branches of activity introduced job evaluation at about the same time. Thus job evaluation, particularly the method based on point rating, spread quickly in Western Europe during the period of economic reconstruction and by the 1950s it was firmly rooted there.
After this period of rapid growth, job evaluation developed somewhat more slowly both in the US and in Europe. At the same time a search for universally applicable method was replaced by a more pragmatic approach that sought to adopt the principles of job evaluation to the particular requirements of the enterprise concerned. Numerous refinements were introduced, notably in the methods of verifying basic job content data. There has also been a tendency to combine various approaches. Thus non-analytical methods have been developed.
The very limited information available on the use of job evaluation in other parts of the world seems to indicate that it has made less headway than in industrialized countries. In developing countries, there are many obstacles to its spread, such as comparatively small number of large modern enterprises and lack of technical know-how needed for job evaluation. Obviously, in countries where modern management techniques such as work study are little known it is difficult for job evaluation to gain ground. There is also the fact that grade structure in many developing countries has tended to place an important emphasis on the qualifications of the job incumbent, often irrespective of the job content. The situation is changing now.
Job evaluation is of course not entirely unknown in various developing countries. Generally speaking, two sectors appear to use it more than others, namely subsidiaries of multinational enterprises and public sector. The apparent reason for multinational enterprises using it is that they usually tend to rely on the management system prevailing into their country of origin, and job evaluation is often part of that system. In the public sector, there may be two reasons for using job evaluation- firstly, that in some countries the government intends to use job evaluation to introduce a uniform national wage structure and, secondly, that the public authorities want to make some state enterprises models of modern management.
In India, a recent survey covering a limited number of enterprises showed that seven out of the22 enterprises were using a job evaluation system. Most of them were in Steel and aviation industry and almost all of them were using a point rating method. Indian conditions do not favor job evaluation as wages there rarely primarily on job content and are more influenced by seniority, bargaining power and traditional relativities between occupations and sectors. Trade unions in India often oppose job evaluation, while the cost-of-living allowance tends to form such a high proportion of the worker’s total earnings that it may be difficult to justify using a costly technique to restructure only the basic wage.
PRINCIPLES OF JOB EVALUATION
Job evaluation is not scientific – it cannot be since there is no way of scientifically measuring jobs. It is therefore a process of judgment. The ‘correctness’ of the results it provides can only be assessed in terms of their acceptability to the vast majority of people to whom they apply. The key to such success lies in guiding the judgment made about jobs within a process which is systematic and minimizes the subjectivity of the results, ensuring they are as objectives and justifiable as possible. To do this there are certain requirements which must be met:
1. An understanding of the job must be achieved.
2. Judgments must be made about the size of each job.
3. Common criteria are needed to assess the job content.
4. A common scale of measurement is required against which to make judgments.
5. Cross-checks are needed to ensure that the judgments are sound.
6. Rate the Job not the Man.
7. The elements should be clearly defined and properly selected.
Additionally there are a number of basic principles which are important, and underlie the whole process of job evaluation:
Evaluation is concerned with the job not the person performing it. This is very basic, but much easier to say than to achieve in practice. The reason for this is that often those evaluating the jobs will know (perhaps quite well) the actual job holder. Such knowledge should not be used. It is useful to imagine the job being performed – not by the present job holder but by a replacement who performs all aspects of the job acceptability.
2. Evaluation is based on Job Content which means that in making evaluation judgments we must be concerned with what the job has to do and achieve. Thus two dangers have to be avoided: -------the judgment on the job size must not be influenced by job titles which can be misleading, or by knowledge of current status of the job in some other firm thus causing a bias in the opinion
------the jobs are evaluated as they are not as they could be, should be, might be or used to be. It would be wrong to construct a ‘model’ organization and evaluate that, rather than the reality of the organization as it is.
3. Since evaluation is concerned solely with organizational reality, care should be given to evaluate jobs at a fully acceptable standard of performance: they should not reflect good or poor performance of current job holders, but what is properly required by the job to achieve organizational effectiveness.
4. The evaluation process must respect the principles of consistency and gender neutrality.
5. Only people who have been trained in work evaluation should be selected as evaluators.
6. Evaluators will need to assess the facts and ensure they have all the requisite information. They must be confident that, based on these facts, they have made a decision they can defend.
7. Current occupational group and level and rates of pay should not influence evaluators or the evaluation of the work. The compensation a job currently receives is known to influence people’s perception of how important that job is. Studies have indicated that evaluator knowledge of current pay had a statistically significant effect on evaluations, with lower compensated work receiving lower evaluations. Evaluators need to guard against this potential bias.
8. Evaluators must not make assumptions about the work or current hierarchical relationships. Making assumptions about the work will introduce bias about its value into the evaluation process. They must demonstrate neutrality and objectivity. Evaluators are responsible for applying the classification standards objectively on the basis of the work description and other relevant information provided that is required by the classification standard. Personal performance (unless an employee-oriented evaluation plan is being used), recruiting difficulties, salaries, or the present classification level of the position should not be considered in the evaluation process.
BASIC ASSUMPTIONS IN JOB EVALUATION
The first assumption is that the work must have some intrinsic worth when judged against certain criteria, but that whatever this worth may be it will not necessarily be the same as the wage. Implicit in this assumption is the next, and this is that these criteria can be identified, specified, and quantified. The usual criteria are
Those human characteristics or qualities that are required to do the work satisfactorily.
The assumption that these characteristics- or factors as they are usually called- will be in more or less short supply according to the demand that is put on them.
The usual factors are skill, responsibility, physical effort, mental effort, and working conditions. Working conditions are included on the assumptions that those aspects of the environment which are adverse or dangerous make work unattractive and so affect the supply of labor.
There will be many aspects of the above factors, such as different kinds of skill and responsibility. We merely assume that there are certain aspects of the work that affects its value, because these aspects are what the work demands and the worker supplies. One of the most important assumption which needs to be made and which is often overlooked is that if the correct factors are chosen as the criteria, if these factors are then valued correctly in relation to each other, and if the work is assessed and evaluated in terms of these factors, then the job values so determined should be proportional to the current wage rates. This principle is fundamental to the process of job evaluation.
Another assumption is that when the economic pressures affect the wages, and they have to be altered accordingly, the basic evaluation of work is not affected. The evaluation depends on the criteria and so long as the criteria do not change, neither should evaluation. Everything decays, and job evaluation is not the exception. It begins to decay even before it is completed, and can be kept in good order only by careful maintenance. But once the system has begun to collapse the best maintenance possible will not restore it. So this leads us to two more assumptions: One that the system will need to be carefully maintained if it is to serve its intended purpose; and, two, that even then it will have limited life and will need to be replaced eventually.
STEPS IN JOB EVALUATION
Major procedural steps to be followed in a Job Evaluation program are as under (Exhibit 0):
1. Triggers to the Job Evaluation
There are certain triggers that start the job evaluation process. These may mandatory evaluations as mentioned by law, requests by employees, and management requests.
It is to be expected that most requests for the evaluation of posts/jobs will emanate from individual employees and employee organizations acting on behalf of employees. Most of these requests will probably be based on perceptions that posts are underrated. As with management requests, the departmental policy on job evaluation) should indicate the procedure in terms of which these requests are to be submitted to the job evaluation unit.
Managers may from time-to-time request the job evaluation unit to evaluate specific jobs/posts for a variety of reasons. These reasons could include perceptions that jobs are over- or under rated recruitment and retention problems with specific categories of staff, etc. The departmental policy on job evaluation should indicate the procedure in terms of which management requests are to be submitted to the job evaluation unit
2. Planning Acceptance of the Job Evaluation Program:
Since the personnel department is a staff department it cannot itself enforce a Job Evaluation program. It must win co-operation and acceptance for the program from top line executives, employees, labor unions and first line supervisors. This can be done in two ways: by soliciting participation and by communicating information. Participation leads to identification with the plan and greater acceptance of it by persons active in its formulation. Communication regarding the purposes of Job Evaluation, the process by which it is carried out, and the results currently attained is also vitally important. To the extent this information is provided voluntarily to all concerned it creates a feeling of trust and stimulates interest. A variety of methods may be adopted to organize and communicate information to different categories of persons. Conferences may be planned for top line executives to explain to them their obligations under the program. For example, Job Evaluation necessarily presupposes self-discipline by management and its willingness to abide by Job Evaluation findings rather than to allow judgment or favoritism to influence salary decisions. Similarly, training program may be instituted to acquaint supervisors with the plan to be used, role that they will be expected to play and the day to-day problems which they may face in administering and explaining the program to their subordinates.
One of the most effective and widely used media Jar introducing Job Evaluation to workers is a letter addressed to the employees signed by the personnel officer. It brings out two important points in which employees are interested namely, it stresses management’s support and it assures the employee that his wages will not be reduced as a result of a program. Effective results have also been attained through the publication and distribution of booklets, which explain in some detail the general principles of Job Evaluation.
3. Selection of Jobs to Be Evaluated
Due to difficulties of time and money all jobs and positions within an enterprise are not evaluated at one time. Most companies in the beginning evaluate only shop jobs and office work. Executive, professional, and technical jobs are usually excluded. But later on when conditions permit these jobs are also brought into the plan. Sometimes a pilot plan is installed to evaluate a group of jobs within a single department or in a single plant of a multi-plant company. If the plan works well, it is extended to other units in the organization.
4. Preparing job descriptions and job specifications
Before any job can be evaluated it is necessary to know what the duties of the job are. A job description is required, therefore, indicating in considerable detail the duties and responsibilities of each job or position in the enterprise. From these job descriptions, individual job specifications are prepared. On the basis of the information contained in these job specifications individuals in the enterprise are evaluated. Before employing any job specification for evaluation purposes, its accuracy and acceptance should be thoroughly checked. It should be made certain that there is no omissions and-duplication of responsibilities in it and that it has been harmoniously accepted by the employee concerned. Once all job specifications covering jobs selected for evaluation have been thus checked and agreed upon we have the foundation for determining the relative worth of each job through one of several methods of job evaluation described below.
5. Appointment of a Committee to perform job evaluation
Job evaluation may be carried out either by the employees or by outside consultants or by employees and outside consultant jointly. In the first case, a committee consisting of senior, experienced and respected representatives of management and workers is constituted. Employees’ participation in job evaluation work reduces their doubts and suspicions about the program. But the committee lacks objectivity and speed because its members have to carry out job evaluation work in addition to their normal duties. These disadvantages are removed when job evaluation is performed by outside experts who generally work on a full time basis. Employees, however, resent appointment of outside experts and view them with suspicion and doubt. These experts may also lack intimate knowledge about the problems’ of the enterprise. As such the best course is to ask both employee representatives and consultants to perform job evaluation jointly. The joint venture makes it possible to combine the intimate knowledge of the company possessed by the employees with the necessary expertise of the consultants.
6. Selection of a Job Evaluation Method
As a student will read in the following section there are in use today four basic methods of job evaluation. While the basic approaches of all these methods are somewhat similar, they differ in their detailed procedures. Some methods are designed specifically for evaluating clerical and administrative jobs; others work best when applied only to operative jobs. Sometimes it may be decided to evaluate the same jobs by two t different methods. The greater the amount of agreement between the two results, the greater would be their reliability.
7. Periodic Review
A periodic review, usually every one or two years, of all job descriptions must be done. Many job evaluation programs have failed because management failed to recognize this fact. A periodic review of all job descriptions is important for two reasons:
One, it softens the feelings of those who believe that their work was not properly described or evaluated last time and that they will get a fair deal at the time of review. Two, it enables management to keep itself abreast of changes taking place in the nature of a job. As the nature of a job changes factors which form the basis of job evaluation also change. Thus automation of job reduces ‘physical effort’ and increases ‘responsibility’. The need for daily application of a skill is also reduced but the need for potential skill in emergencies increases. New factors, ‘machinery utilization’ and ‘isolation from fellow workers’ become important.
Exhibit 0 - Steps in Job Evaluation
Process of Job Evaluation in INDIA
In India, the National Institute of Personnel Management (NIPM) has laid down the following steps which should be taken to install a Job Evaluation program:
1. Analyze and Prepare Job Description
This requires the preparation of a Job description and also an analysis of job requirements for successful performance.
2. Select and Prepare a Job Evaluation Plan
This means that a job must be broken down into its component parts i.e., it should involve the selection of factors, elements needed for the performance of all jobs for which money is paid, determining their value and preparing written instructions for evaluation.
3. Classify Jobs
This requires grouping for arranging jobs in a correct sequence in terms of value to the firm, and relating them to the money terms in order to ascertain their relative value.
4. Install the Program
This involves explaining it to employees and putting it into operation.
5. Maintain the Program
Jobs cannot continue without updating new jobs and job changes in obedience to changing conditions and situations.
PROCESS OF JOB EVALUATION
Job evaluation plans have been in use for approximately 75 years in the public and private sectors. There are many variations to the design a job evaluation plan. However, they all basically follow the same approach, which is to value each job in a defined group of jobs based on a common set of generic factors.
The first set of decisions that an organization is required to make when installing a job evaluation plan is to determine which jobs in the organization will be covered by the plan and what factors will be used in the job evaluation process.
Exhibit 1 lists factors that are frequently used in job evaluation plans. The factors are selected depending upon the type of jobs to be evaluated.
Exhibit 1 Examples of Job Evaluation Factors
The second step in the job evaluation process is to collect information about each job to be evaluated. This can be done using a job analysis questionnaire, job descriptions, observation and interviews with employees and supervisors.
Exhibit 2
Step three in the process is to systematically rate each job based on the job evaluation factors selected. The points assigned for each of the factors are totaled for each job. Exhibit 2 illustrates how the factors are subdivided by degrees. The degrees define the extent that the factor is found in the job. Exhibit 3 illustrates the evaluation of a job.
Exhibit 3
The forth step is to select the benchmark jobs from the jobs that have been evaluated. The benchmark jobs are those jobs commonly found in most organizations and are typically included in salary surveys. The benchmark jobs connect the internal pay structure with the external labor market.
A technique to visualize the relationship between the internal structure and the market (Exhibit 4) is to plot each of the benchmark jobs using the benchmark's total job evaluation points as the X axis and the average market rate as the Y axis. A line of best fit can be developed from the plot. This line can be used as a guide to determine the number of grades, the midpoints for each pay grade, and which jobs should be grouped in the same grade.
Exhibit 4 (Source Jenss & Associates)
CASE ANALYSIS - Job Evaluation process in Syntel Inc. Syntel was established in 1980 as a provider of software services. Originally called "Systems International" with earnings of $30,000 its first year, Syntel has grown into a $270 million corporation. Syntel currently employs over 10,600 employees in 27 offices and nine Global Development Centers worldwide.
Typically, there are two career paths that most consultants follow; one is technical and the other is management. However, Syntel caters to each employee's career goals. There are some consultants who are interested in building up their skills with the latest emerging technologies while others are interested in customer interfacing or project management. Syntel's training programs cater to these varied interests and were designed to meet these career development goals.
Approximately 4-8 weeks prior to the employee’s scheduled evaluation date, Human Resources (HR) will notify the supervisor or manager of the evaluation due date via email. The email will include the following attachment:
Performance evaluation file with basic information completed (employee name, dates, job title, department, etc.)
The manager will review the job duty (available on the H/R Intranet site) with the employee to be sure it is up to date and current. (It must accurately reflect the job responsibilities and requirements of the position). This is then used as the foundation for the performance evaluation. Any updates to this description must be submitted to HR for processing.
Process timing: Probation employees: 15 calendar days prior to the median point of their probation period and again at 15 days prior to expiration of their probation period. Regular employees: 15 calendar days prior to their evaluation date (based on the hire date into current position).
Exhibit 5: Syntel’s Job Evaluation process (Source: Syntel India Ltd.)
OUTLINE OF JOB EVALUATION TECHNIQUE
There are number of different systems of job evaluation each of which is directed towards the same end, namely to find out what work is worth. But work covers a very wide range of activities some of which are extremely simple and some are very complicated indeed. So the choice of particular system will depend on the kind of work it is expected to measure.
Over the years, job evaluation has developed and evolved from a fairly simple procedure into complex method using computers and very sophisticated techniques. More recently there has been a tendency towards simplicity once again. The old multi-factor rating is now being replaced with systems in which only two or three factors are used.
Systems can be roughly divided into two types. First there is analytical kind in which the work is analyzed into certain factors or sub-factors, and second the non-analytical in which whole jobs are used. It is important to remember that all job evaluation is done by comparison. In the analytical system, it is the factors that are compared between job and job.
DIRECT AND INDIRECT COMPARISONS
Just as there are two types of system, so there are two ways of making comparisons. Jobs may be compared directly with job or it may be compared indirectly through some sort of measuring scale. It is as though one compares height of two people by standing them back –to- back – direct comparison- or by actually measuring them both on a scale- indirect comparison- to find out which is the taller of the two. Usually, but not always, the analytical types of schemes use indirect comparison techniques.
Job evaluation started in a simple way indeed. There was no attempt at factorization, no indirect comparison, but jobs were simply ranked in their assumed order of importance. Then the higher ranked jobs were rated as worth more and the lower ranked jobs as worth less, with the others somewhere between. This was done with clerical work, when such work was less complicated than it is today, but the system, known as ranking has remained with us.
The next development in the job evaluation is called ‘grading’ or ‘classification’. Here again there is no attempt to analyze the work, except in so far as each job is fully described. In grading a number of typical job descriptions are written out and each is ascribed a quite certain value. After a study of their own job descriptions other jobs are graded according to how they match up with the typical ones. Those that fall into same grade are accorded the same value.
Of the indirect systems, ‘factor comparison’ is widely commended. Here several key jobs are selected as being monetarily typical of the establishment. Their current wages are dividing among various factors, and the factor values checked against a previous ranking of the selected jobs under various factor headings.
The most popular of the indirect systems is the so-called ‘weighted system’. Here again a number of key jobs is selected as being typical of the establishment. They are awarded a number of points for each of the chosen factors, and the resulting total assessment is plotted against a current rate for the selected jobs. The graph thus produced is used to measure the remaining jobs in the establishment.
DETERMINANTS OF THE CHOICE OF METHODS
Once it is concluded that it would be advantageous to introduce a job evaluation scheme, the next step is to select a suitable method. A number of factors will influence the choice and preparation of a plan tailored to the requirements of the enterprise. These include:
1. Legal and social background;
2. Organizational structure and technology
3. Management cycle and personnel policy;
4. Labor-management relations
5. The cost of evaluation in terms of time and money
6. The staff needed to carry out the evaluation.
The legal and social background
In many countries the employer’s freedom to fix wages is limited by labor legislation, collective agreements, and public opinions. The legal background is especially important in public sector. In the private sector however, the scope of the change that job evaluation can bring is limited due to resistance from workers.
Social values may also influence job evaluation, for example through the importance attached to the factors other than job content in pay determination. Thus in India and number of Asian countries seniority is so important in personnel management that the concept of a “job” as distant from the jobholder has little meaning, with the result that job evaluation is not widely used.
Organizational Structure and Technology
The choice of the method will depend largely on the technology used and organizational structure. In a small setup, a comparatively simple method such as rank classification will probably suffice; but a large multi-plant enterprise will most probably have to draw up a highly complex plan or several plans. The management of such an enterprise could elect to choose several schemes at once.
Another important element to be considered is technology, i.e., the extent to which machinery and production requirements determine job content. The choice of method would vary invariably between research laboratory and library. So not only the current technology needs to be taken into account but the progress of the technology should be observed.
Management Style and Personnel policy
Management style in the enterprise will also influence the choice of a method of job evaluation and the way in which it is applied. According to one expert, managerial behavior can be viewed as varying from autocratic to democratic.
As regards to personnel policies, some enterprises follow a highly pragmatic approach, recruiting already trained workers as occasion requires; others have highly developed policies based on long-term forecasting of enterprises’ needs in human resources and pursue systematic training & development for existing staff.
Labor Management Relations
As no job evaluation scheme can succeed unless workers approve it, careful study and due consideration should be given to labor-management relation in the enterprise. There are the general questions of relation between the management and the worker’s representatives- whether there are any arrangements for regular consultations between the two parties. Many a job evaluation scheme has been undertaken only for its results to be totally rejected because of trade union opposition. So a prior agreement has to be reached with the workers union as a matter of joint exercise.
Some trade unions consider the point rating system more acceptable than others, since each job can be seen as comprising a number of separate elements. It also provides an opportunity for individual workers or their representatives to see where changes have take place and to question grading.
APPROPRIATE SCHEMES FOR STAFF, OPERATIVES, AND MANAGEMENT
It would seem that some sort of weighted points system is most popular for both staff and operatives, although it is not recommended that the same system should be used for both. In the case of staff, with greater opportunities for promotion, it is important that the factors chosen should lead towards the establishment of some sort of career structure based on families of jobs.
Usually, because staff is not so well organized into unions, the problem of introducing a system where they are concerned will differ from those encountered in operative schemes. Another factor to be taken into account is the presence or otherwise of financial incentive. So while weighted point system is applied generally to both staff and operatives, the grading is almost entirely restricted to operative work, and ranking is likewise used to staff.
There may be some difference in the method of compiling the data for staff and operatives. While the method of questionnaire is preferred, it is subject to tampering by staff due to their expertise and knowledge. The chances are more in the case of staff to overstate their work and achievements. Hence too much weight age should not be given to this feature.
So far little has been mentioned about the evaluation of managerial work. When one considers evaluation of any class of work, one question arises: What is the objective? Objectives have already been discussed earlier and if it is felt that some of them directly relate to management then job evaluation will be applied to management too. But it will be remembered that the wage and therefore the value of the work to the community at large, contains certain rewards for personal factors which differ in different jobs and may also differ in same job when performed by different people.
Certainly, the same general basic assumptions will apply, although the criteria employed will be different from those used in other categories of work. If a weighted point system is used then the factors will be different for different systems.
One of the major difficulties encountered in the management job evaluation is the lack of reference points at the top end of the scale. The salaries differ widely in the industry too as can be seen by Mercer’s 2006 CEO Compensation Survey below Exhibit 6 .
Exhibit 6 (Source: Mercer’s 2006 CEO Compensation Survey)
As there are not usually not many top managers in an establishment the number of comparisons is strictly limited. With a large corporation, it is possible to find a sufficient number of references.
With any technique such as job evaluation that because it works it is well. There are a record number of public companies in which management was evaluated by consultants to the apparent satisfaction of everyone except the management. The staff is still at work; the corporation is performing its function and achieving most of the objectives. Nevertheless, many authors believe that it possible and desirable to evaluate all jobs up to the top of the management pyramid. It is argued that management should submit to the same constraint and determinants as are used for the rest of the employees.
JOB EVALUATION IN SMALLER & NEW BUSINESSES
Mainly, job evaluation has in the past been limited to the larger organization. It is necessary to have a fairly large number of reference points in the salary or wage criteria, which are not available in the small concern. Then again, job evaluation is expensive to apply, and many smaller firms feel that this expense is not justified. So they usually match or compete with what their big brother offer in the market. This is pity, because one of the advantages of job evaluation is that it gives a breakdown showing where the money goes into creating a job value. This enable a management to effectively use its money. Generally speaking, it is not worthwhile to employ job evaluation system in an enterprise employing fewer that 20 people.
A new business presents rather similar problems. All job evaluation schemes use as their criteria the current rates, sorting them out into those that are satisfactory as compared with the others, those that are low, and those that are high.
APPLICATION OF JOB EVALUATION
The job evaluation process presents many other valuable insights, including a clearer understanding of the interrelationships of accountabilities, capability requirements, development needs, and, of course, setting competitive, value-based pay practices.
Organizational Design and Analysis
Many people presume that organizational structures are the result of systematic, methodical planning. However, in our experience, they evolve over time and are often shaped by personalities, politics, and compromise into complex mosaics of operating and support functions, business units, and internal alliances. The unintended consequence may be overlaps and/or gaps in key accountabilities necessary to meet core business objectives. In many organizations, jobs are designed with a functional bias rather than from an overall organizational perspective. Thus, when looking across an organization, accountabilities become unclear, important decisions flounder, and business processes bog down.
The result: confusion and potential turf wars. A rigorous job analysis and job evaluation process provides organizations with a common framework and language to more effectively design jobs within the structure that best supports business strategy. Strategic goals and objectives can then be clarified and distributed into job-specific accountabilities, to ensure that there are no gaps or redundancies. It also enables organizations to identify and align key interrelationships across critical business processes—especially when the benefits of doing so might not be immediately obvious to the parties involved. Organization and job design most jobs are designed with a functional bias rather than from an overall organizational perspective. Must be integrally managed, just as automobile engine components must be designed to mesh under a variety of circumstances. Improperly integrated designs may cause an engine to fail. The same is true for organizations.
Step Differences
Steps of “just noticeable” difference can be used to analyze organizational hierarchy. In this context, we can consider the consequences of changes that have occurred as organizations moved to leaner structures. Exhibit 7 compares the “traditional” manufacturing hierarchy with a leaner structure typically found in similar businesses today. The steps of difference between the positions can be clearly measured through use of the Hay Job Evaluation Methodology. In a traditional structure, the distance between the work of a manager and subordinate is typically two steps, providing for a meaningful promotion between the levels.
The distance between manager and subordinate in a lean structure may be four or more steps, making job content progression between the levels difficult, even impossible, for a top performing incumbent to achieve. Flatter structures often require career patching opportunities that are horizontal (across streams of work) rather than vertical (within the function).
Since the recent economic downturn, a large number of jobs have been eliminated without a commensurate reduction in work, which means the content of many jobs may have increased. Plus, employees still with the company assume accountabilities of remaining jobs, often without any rationalization or integration of existing accountabilities. Adding too many and/or unrelated accountabilities often creates distractions and confusion that limit job effectiveness.
Exhibit 7 (Source: Hay Management Group)
Succession Planning and Development
Job size and shape also illuminate the nature of development. For example, it is probably easier to move the manager from a smaller plant to a larger plant than to move that same manager into a sales position. In the former scenario, the person understands the high-performance behaviors. The role is simply larger, not necessarily different. But the lateral move from a collaborative role to an action-oriented, target focused role will mean deploying very different behaviors and skills. Earlier, we explained the concept of step difference as an aid to judgments on job size relativities. When combined with organization structure analysis and job design, analysis of step differences between jobs within a hierarchy can also be used to assess the extent to which a job prepares one for the additional challenges of a more important job (see Exhibit 8). A one-step difference between boss and subordinate roles means that there is a job that provides a good feeder situation for succession planning purposes. However, such a job may present a bottleneck to decision making. A two-step difference means that progression from the subordinate position to the manager’s role is possible, but may be a stretch. Progression preparation greatly dissipates if the difference between roles is three steps or more
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“Traditional” line structures typically incorporate two-step differences between manager and subordinate, with opportunities for internal succession. In leaner structures, vertical progression is less possible, and career development and succession planning should look to lateral moves and moves “outside the chimney” to secure future leadership development.
Exhibit 8 (Source: Hay Management Group)
Pay Structures and Grading
Job evaluation is often used for—and is primarily associated with—assessing internal relativities and developing compensation administration arrangements that reflect the value-added contribution of specific roles. The relationship between job size and pay can easily be demonstrated in Exhibit 9. For salary administration purposes, this provides the basis for grouping jobs into grades and/or bands.
Debate continues over the relative merits of traditional grades and broad bands. In the former, all positions are administered around a common midpoint or target salary. On the other hand, broad-banded structures may provide greater flexibility and often focus management’s pay decisions more on individual capability than job size. Market anchors are often used for jobs within a band as a point of reference, while midpoints are used in graded structures to reflect internal equity as well as external competitiveness.
Exhibit 9 (Source: Hay Management Group)
SCOPE AND LIMITATIONS OF JOB EVALUATION
Some authorities limit job evaluation to the evaluation of work to its lowest acceptable levels of quality and quantity. Work below this level is worthless and should not be done at all. As, however, different kinds of work may have different kinds of accomplishments, and as the range of accomplishment between lowest acceptable and highest achievable is a feature of the work itself, others hold that every work should be evaluated.
The factors that influence different levels of performance are not always the same as those that are used as the criteria for evaluating the work itself. For instance, physical effort may be one such criterion and so may be the skill. More work of the same kind will involve greater physical work, but it will not necessarily involve more skill. Better work will involve perhaps grater skill but may not need more physical efforts. Thus it seems better to evaluate the work itself against its own criteria at its lowest acceptable level, and to appraise performance against some other criteria. Some kinds of work can be measured comparatively easily and accurately in terms of quantity and quality of the product or service. Where there is a tangible result which can be counted and checked for quantity against a standard of acceptability such criteria may be used to determine the value of the work over and above the lowest acceptable level.
Whichever point of view prevails, there would be little disagreement that the criteria for evaluating work are not the same as those of evaluating a worker. In job evaluation, it is most important to distinguish between the work and the worker. Work is done by people and people paid wages for the work done, and wages vary according to all sorts of personal attributes and relationships, the effects of which influence the values of all other wages. Job evaluation is however concerned with the value of the job, not of the people who do it. The technique is cold and clinical, based as it is on factual criteria, and is limited to determining the rate for the job. If this is a limitation it is not a fault. Other techniques exist for measuring the value of the person, and should be used accordingly where appropriate.
All Work can be evaluated. It can all be evaluated against the same criteria, and to do so might seem to be desirable. If, as is often claimed, an objective of job evaluation is to show that justice is done in the determination of job values, then to have a whole range of work judged in similar terms and criteria throughout would seem to help. In practice however, it would be extremely irksome, and might be a means to the end opposite to that desired. While, prima facie, it might be thought best to measure all jobs by the same yardsticks, jobs differ enormously in their demands on many varied human characteristics. They differ also in size, and are done in different locales, and to measure them all in the same terms would be like trying to measure all dimensions with a tape measure.
As it is possible to evaluate all jobs against some criteria or other, the problem is whether to cove whole range of employees or to stop short at some predetermined point. It will be found that that the criteria at the top of the hierarchy may be different from those at the bottom, while the number of references at the higher levels may be too small to be significant. The law does not differentiate between different people, but treats all in a specific group alike. It is their actions which are differentiated under the law, and same applies in the job evaluation. Thus it may be necessary to have separate and different schemes for different groups of jobs, perhaps one for production, another for maintenance, yet another for supervisions, and another for clerical and administrative grades. When separate schemes are used there is likely to be some common ground between them, and so it may be possible to compare the separate parts of the system.
IMPLICATIONS OF JOB EVALUATION
Anomalies and Exceptions
Once the evaluation is complete it will be seen that there are a number of anomalies. But the anomalies will be between the value of the work and what is paid, not between the value of the work and the evaluation, for what is paid will have been influenced by the pressures already mentioned. In fact the application itself may have taken so long that the current rates originally used as criteria will be no longer valid. Even so, temptation to adjust the criteria as the work proceeds, so as to take care of such variations, should be resisted. There must be a day from which hence-forward no further changes shall be accommodated.
There will be two kinds of anomalies. First will be group anomalies where whole job families or associated jobs are found to be over-or under paid as compared with their evaluations. Then there will be the individual anomalies of tow kinds also: those that attach to jobs, and those that attach to individuals. Such is the human nature that any mention of job evaluation will give rise to hopes of more wages. Thus there will always be anomalies of underpayment. Group anomalies, like individual ones, are not the fault of the evaluation, but it may very well be blamed for revealing what was already there. All anomalies must be resolved. There is a temptation to deal with group only and ignore individual.
The first thing to do about the anomalies is to find the root cause. In looking for the causes, one should examine carefully the criteria on which the evaluation is based.
Effects on productivity
The connecting link between job evaluation and productivity is tenuous indeed. We always compare with the past performance. It is very unfortunate that the questions of wages and in particular of that wage increases should be associated with improvements in productivity. In any case most of the productivity improvements are not made by the people who directly profit from them through increased wages. As the only available measure of productivity is likely to be profit level, any improvement in the wages should be deferred till the profit is ascertained.
Cost of application
The cost of an application will depend on many things, but it can be broken down into four components.
Preparatory expense involved in seeking advice on suitable schemes, consultancy, indoctrinating management and workers and generally working out the policy.
Next will be the cost of actual application, interviews, and writing up of the job descriptions etc.
Next will be the cost of informing all concerned of the results and the hearing and settling of disputes.
Finally the cost of maintaining and reviewing the system.
By far the most expensive part of the activity is to do with the preparations of job descriptions. Even when there is a considerable amount of factual evidence, it needs to be verified.
Publication of the results will not be very expensive, but the cost of disputes and complaints will depend on how well the preliminary work is done. In any case, the number of disputes and the time lost due to them should be materially being reduced. Maintenance cost will be no greater. Tangible costs and benefits are not the only ones; there are many intangibles also which are none the less real and worth while.
Life of application
No system can be expected to survive intact for ever. It is bound to decay. It is a good system indeed which will survive for five years. But there is a big difference between remodeling a good system to make a better one, and introducing an entirely new one. Once a system has been designed, it is possible to see what is required to renovate it, and keep it up to date. When wage structures are based on job evaluation, there are few anomalies, and the grounds for complaints are rare.
Certainly there should be built into the system itself a periodic review. Sometimes it is claimed that once the differentials have been agreed they are there for all the time. The only new variable will be conversion of differential into cash. Job evaluation has undergone no radical change in itself for a good many years. There has been a gradual hark back to simple non-analytical schemes, but one suspects mainly in order to find something different. Some firms have been practicing the art for years, some with considerable success. Most have slightly modified their schemes as the years have gone by; but it would be difficult, if not impossible, to find even one that has given it up after having made a success of it, despite the wasting disease that attacks it.
References:
1] Morris, J.W., Principles and Practice of Job Evaluation, Heinemann: London, 1973.
2] Rai University Publication, Compensation Management, Rai University Press, 2004.
3] IGNOU Publication, Compensation Structures and Differentials-Job Evaluation and Internal Equity, IGNOU Press, 2003.
4] Hay Group Inc., Working Paper-Hay Job Evaluation, Hay Group, 2005.
5] International Labor Office (ILO), Job Evaluation, Oxford & IBH publishing company, 1987.
Note- All the work in the essay is original by the author Atul Zade and appropriate sources are mentioned at appropriate places. This work does not violate any copyright rule.
Atul Zade
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