Almost every organisation reaches a point in its development where the organically grown HR processes need a systematic structure. In the absence of a common basis, it is often difficult to align HR tools and the introduction of new services and processes is hindered.
The Academy to Innovative HR (AIHR) defines job evaluation as «the systematic process of determining the relative value of different jobs in an organisation. The aim of job evaluation is to compare jobs to create a pay structure that is fair, equitable and consistent for everyone. This ensures that everyone gets their value and that different jobs have different entry and performance requirements.» The aim of the process is to make positions comparable within and outside a company, thereby making them fair. This process should in no way be mixed with the process of a performance evaluation. The evaluation of a position does not take into account the person in a position or even their performance. Job evaluation only takes into account fixed factors that determine the value of a position in a company. The logic followed is that positions with the same challenges and requirements are paid equally.
There are different methods of job evaluation.
Job ranking method
In this method, each job is compared as a whole with others, and this comparison of jobs continues until all jobs have been evaluated and ranked. All tasks are ranked in order of importance from easiest to most difficult or from highest to lowest. This method can easily be used in smaller companies where employees know many of the positions. This method is subjective.
Position classification method
In the job classification method, the rater writes descriptions for each class of jobs and then assigns them to the level that best matches the class description. Because this method is subjective and there are a variety of jobs and general job descriptions, jobs may fall into more than one grade.
The point method is an extension of the factor comparison method. Each factor is then divided into levels or grades to which points are then assigned. Each job is scored using the job evaluation instrument. The points for each factor are added together to give a total score for the job. This method is very time consuming and significant participation from many stakeholders is required.
The factor comparison method is a combination of the ranking and scoring methods. The first step is to identify benchmark jobs (i.e. jobs performed by several people with similar tasks within the company, e.g. administrative assistant, storekeeper, security guard, accountant, sales representative, supervisor and manager). In addition, after completing the factor analysis, the company must select compensable factors and rank all benchmark jobs. Next, the employer must compare the jobs to the benchmark market rates, which will result in the assignment of monetary values for each compensable factor. Finally, the company should compare all its jobs with the respective benchmark jobs.
When do you need a job evaluation?
Identify which positions and job functions are similar in terms of pay, promotion, lateral promotion, transfer, assignment and allocation of work and other internal parity issues. It is important that employees perceive your workplace as fair, equitable and providing equal opportunities for employees. Your process for determining salary and promotion opportunities should be transparent and understandable to employees.
Determine appropriate pay or salary levels and decide on other compensation issues. This is an important factor in employee job satisfaction. Employees talk about their salaries. Public employee salaries are published globally. Employees will recognise any inequities in your company’s compensation system.
Understanding organisational structures
An analysis of the organisational structure before a growth phase supports the principle «form follows function» follows function and enables time-delayed initiatives. Assessments of positions facilitate understanding of one’s own organisational structure.
Increase staff motivationand loyalty
Support the development of job descriptions, job profiles, performance standards, competencies and the performance appraisal system. These tools, especially in large companies, must be fair and not dependent on the boss, individual managers and departmental whims. Employees always compare themselves – and employers who take this into account when developing their employee systems win the loyalty and commitment of their employees.
Improve employee career planning
Support employee career planning, career management and succession planning. A career path that provides opportunities for employees is important for all employees, but especially for your millennial employees. Pay attention to the language they use when they move to another company. Most of the time they are leaving you for a better opportunity, a promotion or a position where they see more career potential.
Clear requirements definitions make recruitment easier
Support the employee recruitment process by establishing job roles that help develop job postings, evaluate candidates’ qualifications, determine appropriate compensation and salary negotiation, and other factors related to recruiting employees.
Provide clarity during mergers
During acquisitions and mergers, intergration between positions is difficult. Classifying positions provides clarity and helps companies achieve a common understanding of tasks and contribution levels.