What is job evaluation?

Job evaluation is a method of figuring out what different positions in your workplace should make as a yearly salary. It is a structured way of measuring a specific job’s value compared to other positions in your organization. In other words, it is a method of calculating wages for your employees.

This is an important task for managers to go understand so that if changes in the organization begin to happen, you’re able to account for a change in wage. This is also extremely important for organizations as they expand as it will help them get new staff while keeping in mind the budget.

Why do a job evaluation?

There are many reasons why an organization would go through the job evaluation process. The following are the most common:

• New positions are being created.
• Employees are getting promotions.
• The company is integrating new technology that changes the way people do their job.
• The organization is being restructured causing employees to be given different or new responsibilities.
• There are changes in job descriptions or workload for particular positions.
• Changes in policy and procedure can cause a change in pay scale.

These changes need organizations to do a job evaluation in order to keep budgets on track and make sure that employees continue to get fair wages.

Job evaluation methods

When performing a job evaluation, there are five different methods that have been proven successful.

1. Ranking Method

This job evaluation method ranks jobs according to their perceived value compared to the other jobs within the organization. This method is a quick way of deciding on which jobs have a higher rank and thus should have a higher wage.

The ranking method is well suited for smaller organizations with just a few positions. For example, a small company might only have a few categories of positions: owner, manager, assistant manager and team members. With this example, you could easily add people to your staff when ready and have a clear idea of what salary expectations would be.

2. Grading or Classification Method

This type of job evaluation requires you to group different jobs according to particular characteristics such as skills required or level of responsibility. Once you’ve created the different groups, they are then given a grade or classification. These different grades or classifications will then determine your pay scale for the positions within the groups.

This job evaluation method can be used for small or medium-sized businesses, where there might be roles that are similar but have different duties. For example, in a retail setting, you might have both salespeople and cashiers that have similar roles and levels of responsibility. By using the grading/classification system you could perform a job evaluation that would take into account the different duties and skills needed and come up with a better idea of what each position requires.

3. Point Factor Method

The point factor job evaluation method uses specific duties or factors within the position and then assigns each factor a value. For each position, you would determine which factors were relevant to the job and then add up the values. The final numbers would then be used to perform the job evaluation of each position, the higher the number, the higher the wage.

This method for job evaluation is most useful in medium-sized organizations that have a variety of positions. By pre assigning points for each job factor, you can perform your job evaluation objectively, simply allocating points according to your system.

4. Factor Comparison Method

This method is the same as the point factor method, but it also assigns a monetary value for each factor. This is a very subjective method of job evaluation as it is up to the person performing the evaluation as to what factor should have what monetary value.

That being said, the factor comparison method can be very useful in a small to medium-sized business with multiple positions that perform a variety of tasks. This can be especially important when an organization needs to make budget cuts as the evaluation will determine if there is any overlap in duties.

5. Competitive Market Analysis

This job evaluation method uses what other companies are paying their staff according to what they can find in job postings. First, the job positions are categorized according to roles and duties. Then the evaluator will find job postings with similar duties and compare wages.

Using this type of job evaluation method can be very helpful when you are creating new positions within your organization.

If your company is growing and you need to create new jobs, it can be difficult to figure out what type of salary to offer. By using competitive market analysis you can make decisions about salaries that are based on facts within the industry.

Related: How to Grow Your Business

These methods of job evaluation can allow any company to determine if the salaries they offer are fair to all positions. It can also make sure that similar positions have an equal number of duties so that employees do not get overworked.

Phases of job evaluation

Being able to perform a successful job evaluation requires you to go through the following four phases.

1. Initial planning meeting

Managers from different departments will have a meeting to discuss the process of job evaluation and how it will be performed. Managers ask questions such as:

• What is our budget?
• What roles are we evaluating?
• What job evaluation method are we using?

2. Design and develop a plan

In this phase, you determine exactly how you’re going to evaluate each role. For example, if you are using the point-factor method, you come up with your point system. Making sure you have a clear understanding of how you will be evaluating each position will make the next phase a lot easier.

3. Categorize roles

This is when you go through the job evaluation method and categorize the different roles within your organization. This phase of the job evaluation can take a long time as it can be hard to decide what categories each role should fall under. Sticking with the plan you created in phase two is important as you want to be as objective as possible when performing a job evaluation.

4. Communicate and implement structure

This final phase of the job evaluation process is communicating with staff the results of the job evaluation and implementing the new structure and pay scales for the employees. It is important to be sensitive when communicating any changes in wages, especially if people are getting a pay decrease. Try to communicate these changes in a one-on-one meeting so that employees can have the time to ask any questions they might have about the process.

Related: How to Create Effective Communication at the Workplace

These phases of job evaluation are a crucial part of the process as you want to make sure that you have a clear understanding of what your objective is and how you are going to perform this difficult task.

Performing a successful job evaluation is important when your organization is going through changes. By using the above guide, you’ll be able to create a job evaluation process that is efficient and easy to understand.