Introduction
The Human Resources (HR) department is the link between the work processes and the people that perform them – its activities are crucial for any company’s success. The Human Resources Managers’ (HRM) responsibilities include the implementation of many complex but essential processes. They are necessary for selecting staff according to the organization’s goals, ensuring the proper working conditions of employees, and controlling other aspects of the cooperation between the organization and people. One of the critical aspects of working relationships is always salary – money compensation received by the employees for fulfilling their duties. While employees strive to get the most significant payment for their work, employers, in turn, want to reduce costs. To determine a decent wage level, which will satisfy all parties, HR specialists use various methods, one of which is job evaluation. Thus, this paper deals with the questions of job evaluation, its methods, and their advantages and weaknesses.
Job Evaluation Purpose
Attracting talented staff requires a high level of wages and providing decent working conditions. At the same time, the organization’s actions should not be unprofitable, and in this regard, the administration should be careful about the waste of monetary resources. The purpose of job evaluation is to establish the job’s value in relation to other positions in the organization. Along with this method, a market-based approach is also used, which is especially attractive for small firms. Using this method, HR specialists conduct surveys among other market participants and calculate the required level of payment. The job evaluation process, in turn, is more complicated but provides a more fair and reliable outcome.
Job evaluation is more specific to each organization as it combines the market value, the importance of a particular position for the employer, and the comparison with other roles within one organization. Applicable to all organizations rule states that work requiring more professional skills and qualifications is rated higher than the one which does not require them. To establish a salary by job evaluation, specialists find out the value of various positions in the organization. After that, they also use the market-based approach to determine the value of a place in the market. As a result, managers generate wages that meet both market and firm requirements – they create a market-competitive pay plan. This measure allows the company to remain competitive, and develop a hierarchy of positions within the firm. For these reasons, job evaluation has the advantage of being a method that considers various aspects that may influence wage levels.
Job evaluation is a standard human resource management means, and thanks to it, the company prevents injustice and inequality in labor. This procedure is a systematic process to determine the rational level of wage. While salary levels are directly dependent on employees’ responsibilities, it is essential not to confuse job evaluation with job analysis. The latter concept refers specifically to the duties that constituent the job and affect the selection of people. At the same time, an analysis may be required for job evaluation.
Approaches to the Job Comparison
As mentioned earlier, the job evaluation is based on a comparison of several positions. Dessler (2020) offers two main approaches to their comparison for a start. The first is very simple – the specialist chooses which job is more important and does not conduct further research. The second method requires the investigation of common aspects called compensable factors. This concept includes “A fundamental, compensable element of a job, such as skills, effort, responsibility, and working conditions” (Dessler, 2020, p. 359). They can be standard, including elements mentioned by Dessler (2020), or installed individually by the employer. For instance, federal law- Equal Pay Act established effort, skills, responsibility, and working conditions. Examples of factors that employers may include are problem-solving or know-how. Thus, the number of compensable factors included in a position affects its value – programming skills may be critical to a web developer and not be required for a copywriter job.
Starting Job Evaluation Process
Considering the complexity and importance of the job evaluation process, it combines the work of several specialists and includes several steps. The HR department’s professionals, the heads of the organization, representatives of workers’ unions, and the employees themselves work on the evaluation. The process begins when a need for a procedure appears. Then cooperation on the issue develops, and the administration determines representatives who will be included in the evaluation committee. This group is responsible for conducting the evaluation using the methods they consider more relevant for the particular company.
The job evaluation may be necessary in several cases that influence an organization’s performance: for example, when management opens a new position in a company or when they regularly recalculate salaries. The evaluation can also be made if there is discontent among employees or managers notice a high level of staff turnover. The cooperation of staff, management, and HR specialists to carry out the evaluation, in turn, is necessary to reach a compromise. In particular, the interests of employees will be taken into account, which means that the level of fees will not be deliberately underestimated. Management, in turn, will also monitor all processes and assess the impact of potential changes on the work of the organization. At the same time, top managers rarely join the committee itself, as they can cause suspicion of employees (Dessler, 2020). On this, representatives of workers’ unions, employees, and specialists of the HR department are usually present there.
The evaluation committee has several functions that help to achieve an objective result. According to Dessler (2020), they primarily choose several benchmark jobs, which represent the basis, criteria, or guide against which the value of other positions is assessed. The second step is to determine the compensable factors of the posts. Thirdly, the evaluation itself takes place using one of the essential methods – job classification, ranking, or point method.
Job Ranking
The most common, time-saving, and simple method of job evaluation is ranking. Using this approach, the evaluation committee ranks the job in relation to other positions using common factors, such as duties’ complexity, as a basis for comparison. Specific steps are required to use this method:
- As mentioned earlier, job analysis can be part of the evaluation process, and this procedure is the first step in ranking. The analysis provides the necessary information about the responsibilities for which the person holding the estimated job is responsible. The data provide the required basis for ranking and make it convenient. Dessler (2020) indicates that in some cases, there is a need to study vacancy specifications. Specifications are usually presented in a list of compensable factors, which are the essence of work in a particular position. However, he also argues that this method relies more on a general perception of a job than on individual compensable factors, which is more characteristic of other approaches (Dessler, 2020). This feature makes the method so simple, but at the same time is its weakness, which will be further presented in the discussion of ranking potential.
- The second step in the ranking method is selecting and grouping evaluated jobs (Dessler, 2020). This procedure is necessary to not compare completely different positions in the organization, such as engineer and HR specialists. Committees often use separation according to already existing departments in the company or make a new cluster analysis.
- Although studying compensable factors in ranking is not as important as in other methods, their selection is the third step. According to Dessler (2020), usually, one factor is enough to rank the job as a whole further. At the same time, an essential aspect of the procedure is an adequate explanation of the factor to avoid misunderstanding and differing interpretations.
- The next step that the evaluation committee applies its ranking. Dessler (2020) describes this procedure in the following way: each member of the committee receives cards representing the job duties, and then they put the order from difficult to easy. The way that some specialists use to establish this hierarchy is the alternation ranking method. In this approach, the manager step-by-step selects one of the most challenging positions and the easy one, then the same – the highest and lowest difficulty of the remaining ones until the end of the cards.
- After personal ranking from each committee member, participants combine assessments to obtain an overall result.
- Following the next step, the committee uses surveys and studies conducted to determine the level of salaries in the market. The current fee in the organization for the job is compared with the average value in the market.
- Finally, an adjustment is made in favor of an increase or decrease in the way the wage is both fair for employees and profitable for the organization.
Method’s Potential
The use of the ranking method for job evaluation has several advantages and disadvantages that determine the potential for its use. Its main strength is simplicity and convenience, especially when evaluating a small number of jobs – up to 30. This benefit is valuable for small companies with a limited number of employees and which are not ready to spend resources and time on revaluation (Dessler, 2020). However, using this method, small companies’ managers will be able to strengthen their relationship with staff, taking into account employees’ views.
It is difficult for large companies to use ranking if many jobs are estimated. The situation threatens to be confusing, and the procedure will not bring the necessary results. Moreover, the method’s specificity suggests the subjectivity of the participants, which may affect the purity of the outcome. The general evaluation of jobs using a limited number or not using at all of the compensable factors does not provide a basis for clear criteria – only for guesses and judgments of committee participants. The lack of a transparent system and the standard for evaluation is also inconvenient if new positions are often introduced. Thus, with all its simplicity, the method may not be effective for large corporations.
Other Job Evaluation Methods
Besides ranking, there are several other methods for evaluating a job. Dessler (2020) identifies two more as key ones – job classification and point method. Various sources, for example, the article “Job evaluation methods” (n.d.) on the Business Jargon website or “Methods of job evaluation” (n.d.) on the MBA Knowledge Base distinguish factor comparison method separately. At the same time, they divide the four methods into qualitative (analytical) methods – point method and factor comparison method, and quantitative (non-analytical) – ranking and job classification. However, Dessler (2020) indicates that the factor comparison method is a particular ranking method and is rarely used. It demands that the committee evaluate and rank compensatory factors and not the work as a whole.
Job Classification
Job classification, also known as the job grading method, is a time-consuming but relatively well-known procedure used to determine salary levels. As part of this approach, specialists group jobs by relatively equal value. Groups into which positions are divided are called classes or grades, depending on their similarities. Classes are groups that contain similar jobs, which also share general requirements as the need for physical effort or specific skills. At the same time, grades unite jobs, which have common compensable factors but may differ in general, for example, mechanics and firefighters (Dessler, 2020). Thus, the basis of the method is the separation of vacancies by the responsibilities’ complexity and qualifications needed to perform them.
Specialists can use several techniques to categorize jobs and develop classes and grades. Dessler (2020) describes two main strategies and their mixing that are used widely. According to the first technique, managers represent classes or grades and then allocate jobs depending on their correlation with the created group description. Using the second technique, specialists select several rules based on compensable factors for groups. For example, such a rule can determine the seriousness of the decisions made on positions in a given class or grade. The jobs are then redistributed according to how they relate to the proposed rules. Finally, as Dessler (2020) noted, both methods are usually used in a mixed form in practice. Analysts choose compensable factors and, based on their number and degree of complexity, develop a description of a class or grade. The jobs in the organizations are then distributed according to the developed system.
The method is widely used as it provides convenient tools for evaluation, and categorization made is based on profound judgment. The grouping itself is a convenient tool used in other methods, and in this regard, this tool is the basis for evaluating work. However, the way this method creates groups is a rather complex and time-consuming process. It requires deep analysis and judgment, and the analysts’ time.
Point Method
This method uses a compensable factors score and the determining points to its various degrees. In this way, considering a particular job, analysts using a scale (for example, from 1 to 5, where 5 is high and 1 is low degree), evaluate each of the factors characteristic to the position. The points assigned to the factors are then added together to form a rating for the evaluated jobs. According to Dessler (2020), this method is currently the most popular among specialists. Its popularity is grounded by the fact that some organizations like Hay Group and the National Trade Association developed “packaged” point plans (Dessler, 2020). Employers can use the proposed standards or make some changes according to personal needs but do not spend many resources developing their system.
Computerized Job Evaluations
The use of job evaluation methods, especially when the procedure takes place in a large company, often takes many resources and much time. Thanks to modern technologies, analysts managed to simplify processes and reduce them in time using computerized job evaluations. Dessler (2020) notes their two main components – the structural questionnaire and the use of the statistical model. Such systems automatically assess jobs, saving employee effort and providing reliable data.
Conclusion
Thus, job evaluation is a necessary procedure for determining the value of jobs in an organization. It affects the level of salary, which the employees receive for the performance of their duties. Evaluation is necessary because a decent and competitive level of payment attracts talented employees, which helps develop the company. At the same time, the evaluation allows the wage to remain fair compared to other employees and not cause losses to the company. Approaches to job comparisons differ: specialists can choose which position is more critical or evaluate compensable factors – the essential elements of work as responsibility or skill.
Analysts use different methods of job evaluation, which have their advantages and disadvantages. The simplest method – ranking – involves evaluating the whole work, sometimes based on one compensable factor. Following it, members of the evaluation committee set the job hierarchy from the most important to the least. Then they compare current salary levels with those represented on the market and, depending on the difference, regulate levels in their organizations. The job classification or grading method divides jobs into classes or grades, depending on the duties and compensable factors. Finally, the point method gives points for different degrees of compensable factors in the job duties, and the sum is the rating of works. Most methods are quite a time- and effort-consuming, so to save resources, companies use computer systems to conduct evaluations.
References
Dessler, G. (2020). Human resource management (16th ed.). Pearson.
Job evaluation methods. (n.d.). Business Jargon. Web.
Methods of job evaluation. (n.d.). MBA Knowledge Base. Web.