Job-Based Structures and Job Evaluation

CHAPTER 5

JOB-BASED STRUCTURES AND JOB EVALUATION

LEARNING OUTCOMES

Define job evaluation and explain the different perspectives regarding this activity.

Describe the ranking method of job evaluation and explain two specific methods of ranking.

Discuss the classification method of job evaluation and how benchmark jobs are used in this method.

Explain the six steps involved in the point method of job evaluation and describe the three common characteristics of point plans.

Discuss who should be involved in job evaluation.

CHAPTER SUMMARY

Job evaluation is the process of determining and quantifying the value of jobs. Different perspectives regarding job evaluation include the following:

• Job evaluation can determine the innate value of jobs.
• Job evaluation can determine the relative value of jobs.
• It is not possible to value jobs without external market information.
• Job evaluation is dependent on objective measurement instruments.
• Job evaluation should be conducted through a process of negotiation.

The ranking method of job evaluation put the jobs in order from highest to lowest on the basis of a global definition of value. Two methods of ranking are: (1) alternation ranking, in which the most- and least-valued jobs are selected first, then the next-most- and least-valued jobs, and so on; and (2) paired comparison, in which each job is ranked against all other jobs.

The classification method of job evaluation uses class descriptions to categorize jobs. Descriptions of benchmark jobs (those that are well known, relatively stable, and common across different employers) are used as part of the class descriptions for clarification. The final result is a series of classes with a number of jobs in each.

The six steps involved in the point method of job evaluation are:

1. Conduct job analysis.
2. Determine compensable factors.
3. Scale the factors.
4. Weight the factors and assign points.

1. Communicate the plan.
2. Apply the plan to non-benchmark jobs.

The three common characteristics of point plans are compensable factors;numerically scaled factor degree/levels, and weights reflecting the importance of each factor. Committees, task forces, or teams including non-managerial employees should be involved in job evaluation in an advisory or decision-making capacity. Union participation may also be desirable.

LECTURE NOTES

JOB-BASED STRUCTURES: JOB EVALUATION

A job-based structure is the foundation for the pay structure. The main focus in this chapter is:

• How to determine what to value in a job.
• How to quantify that value.
• How to translate that value into job structure.

Job structure is the hierarchy of all jobs based on value to the organizationandprovides the basis for the pay structure.

Job evaluation is the process of systematically determining the relative worth of jobs to create a job structure for the organization.

See Exhibit 5.1 to review the ways to create internal structure.

Some Major Decisions in Job Evaluation:

• Establish purpose of evaluation.
• Decide whether to use single or multiple plans.
• Choose among alternative approaches.
• Obtain involvement of relevant stakeholders.
• Evaluate plan’s usefulness.

See Exhibit 5.2 to determine an internally aligned job structure.

DEFINING JOB EVALUATION: CONTENT, VALUE, AND EXTERNAL MARKET LINKS

The potential to blend both internal forces and external market forces is both a strength and a challenge to job evaluation.

Job Content and Job Value

A structure based on job content refers to the skills required for the job, its duties and responsibilities. A structure based on job value refers to the relative contribution of the job to the organization’s goals.

Linking Content with the External Market

Job Evaluation is also known as a process that links job content with external market pay rates. For example, if the skill aspect of job content demands high wages in the market, then skill would be a useful way to distinguish between jobs in the evaluation.

Different Perspectives on Job Evaluation

Researchers, too, have their own perspective on job evaluation. Some say that if job value can be quantified, then job evaluation takes on the trappings of measurement:

• objective,
• numerical,
• generalizable,
• documented, and
• reliable, and can be judged according to technical standards.

Establish the Purpose(s)

Job evaluation supports the organization’s strategy by including what it is about work that adds value that contributes to pursuing the organization’s objectives. The job evaluation process supports workflow by integrating each job’s pay with its relative contributions to the organization and by setting pay for new, unique, or changing jobs. Job evaluation can reduce disputes and grievances over pay differences between jobs by establishing a workable, agreed-upon structure that reduces the role that chance,favouritism and bias may play in setting pay. It must be fair to employees. It also can motivate behaviour towardorganization objectives by calling out what it is about work that the organization values; what it is that supports the organization’s strategy and its success.

Single versus Multiple Plans

A single plan is one that uses the same factors to evaluate all job families across the organization. Multiple plans use different plans and variedfactors for different job families (e.g. clerical, managerial, production), which allow the plan to be tailored to what is important in each type of work. Many say jobs are too varied to be accurately evaluated by a single plan.

Benchmark Jobs have the following characteristics: its contents are well known and relatively stable over time; the job is common across a number of different employers; i.e., it is not unique to a particular employer. A representative sample of benchmark jobs will include the entire domain of work being evaluated such as office, production, engineering; and so on, and captures the diversity of the work within that domain. Typically, a job evaluation plan is developed using benchmark jobs, and then the plan is applied to the remaining non-benchmark jobs.

See Exhibit 5.3 to review different perspectives on job evaluation and its supporting assumptions.

See Exhibit 5.4 which benchmarks jobs.

Choose Between Methods

Ranking, classification and point method are the most common job evaluation methods. Exhibit 5.5compares the methods. They all begin by assuming that an accurate job analysis has been translated into useful job descriptions.

JOB EVALUATION METHODS

Most of the job evaluation methods are quantitatively based and incorporate little if any qualitative information. Below, ranking, classification and the point method are reviewed.

Ranking

Ranking is a job evaluation method that ranks jobs from highest to lowest based on a global definition of value. This method is informed with the relative value of the jobs to the organization. While ranking is simple, if there are few jobs in the organizations, it is hard to overcome subjectivity and becomes unwieldy Two ways of ranking are common: alternation ranking and paired comparison methods.

The alteration ranking method ranks the highest-and lowest-valued jobs first, then the next-highest and lowest-valued jobs, repeating the process until all jobs have been ranked. The paired comparison method lists all jobs across columns and down rows of a matrix, comparing the two jobs in each cell and indicating which is of greater value, then ranking jobs on the basis of the total number of times each is ranked as being of greater value.

Classification

Classification methods are widely used in the public sector. Classification is a job evaluation method based on job class descriptions into which jobs can be categorized.

Go toExhibit 5.6 to see an example of level descriptions.

General class descriptions are created and benchmarked jobs are slotted into each class. Then, the written job descriptions are compared to the class description, which are anchored with the benchmark jobs from different job families to determine in which class the job falls.

A benchmark job is one that is well known, with agreed upon contents, common across various employers, represents the entire range of jobs being studied, and is commonly accepted in the external market for wage setting. Classification method is commonly used in the federal government.

Exhibit 5.7- The Point Plan Process

Point Method

Although complex to develop, point plans are relatively easy to administer and justify. All point methods have the common characteristics including:

1. compensable factors,
2. numerically scaled factor degrees and
3. weights that reflect the relative importance of each factor.

The point method is a job evaluation method that assigns a number of points to each job, based on compensable factors that are numerically scaled and weighed. The sum of points for each job determines its position in the job structure.

.NETWORTH Federal Government Classification System Modernization

Compensable factors are defined on the basis of the strategic direction of the business and how the work contributes to that strategy. As reviewed below, the Six Steps in the design of a point plan include:

1. Conduct job analysis.
2. Determine compensable factors.
3. Scale the factors.
4. Weight the factors according to the importance and assign points to each one.
5. Communicate the plan and train users and prepare manual.
6. Apply data to non-benchmark jobs

1. Conduct Job Analysis

A good job analysis is essential to job evaluation and the point method.

2. Determine Compensable Factors

Compensable factors are those characteristics in the work environment that the organization values that help it pursue its strategy and achieve its objectives. They must be based on the work itself, the strategy and values of the organization and acceptable to the stakeholders.

Business Related factors are those that are consistent with the organization’s values and business strategy.

Based on the Work Itselfimplies that the chosen factors reflect the work performed in the organization.

Acceptable to the Stakeholders are factors chosen to reflect the views of all those involved in the process.

This means adapting factors from existing plans which tend to fall into four generic groups: skills, effort, responsibility, and working conditions.

It is important to note the linkage between competitive advantage (or the business practice or process that results in better performance than one’s competitors) and the determination of compensable factors.

See Exhibit 5.8 to reviewa real-life example of compensable factors for the Government of Newfoundland.

Exhibit 5.9 shows an example of compensable skills for human relations skills.

Go to Exhibit 5.10 to seean example of the definition of compensable factors focused on multinational responsibilities.

3. Scale the Factors

Scales describing the different degrees within each factor should include enough degrees to adequately distinguish jobs, but not so many so that it is difficult to determine which degree is appropriate for a given job. Factor degree/level is a description of several different degrees or levels of a factor in jobs; a different number of points will be associated with each degree/level.

4.See Exhibit 5.11 which is a research example for subfactordegrees.Weight the Factors According to Importance

Weights reflect the importance of that factor to the organization. This can be done either through committee judgement or statistical analysis.Most statistical approaches derive factor weights to fit an agreed-upon criterion pay structure. Factors weights are assigned to each factor to reflect differences in importance attached to each factor by the employer.

Exhibit 5.12 shows factor weighting and assignment of points.

Criterion Pay Structure

This step is key since the weights are based upon it. The structure may be chosen based on current rates paid for benchmark jobs, market rates for benchmark jobs, rates for predominantly male jobs (in an attempt to eliminate bias) or union negotiated rates.

5. Communicate the Plan and Train Users

A job evaluation manual shouldbe prepared for use by employees and managers charged with the responsibility of implementing job evaluation (usually a committee. Users must be trained in how to use the manual.)

6. Apply to Non-benchmark Jobs

Finally, it is necessary to combine factor scales and weights to translate them to actual job points. This is done by dividing the maximum points for the system among the factors, according to their weights and each degree of a factor is given an equal number of points based on the points for that factor.

WHO SHOULD BE INVOLVED?

The people who should be involved are those who require the relevant information and who can commit high involvement to the assessment of the evaluation and structures.

See Exhibit 5.13 to review a typical example of those who conduct job evaluations.

EVALUATING THE USEFULNESS OF RESULTS

The Design Process Matters

Research suggests that attending to the fairness of the design process and the approach chosen (job evaluation, skill/competency-based plan, and market pricing) rather than focusing solely on the results (the internal pay structure) is likely to achieve employee and management commitment, trust and acceptance of the results.

Appeals/Review Procedures

No matter the technique, no job evaluation plan anticipates all situations. It is inevitable that some jobs will be evaluated incorrectly. Consequently, review procedures to handle such cases and to help ensure procedural fairness are required.

Political Influences

A study at a university found that more powerful departments in the university (as indicated by the number of actual members and the size of budget) were more successful in using the appeals process to get jobs paid more or reclassified.The authors concluded that in addition to assessing the worth of a job, the entire job evaluation process reflects the political and social context within the organization.

THE FINAL RESULT: JOB STRUCTURE

The final result of the job analysis- job description- job evaluation process is a job structure; a hierarchy of work. This hierarchy translates the employer's internal alignment policy into practice.

Go toExhibit 5.14 to seean example of four hypothetical job structures for a single organization.

BALANCING CHAOS AND CONTROL

It is important to balance sufficient ambiguity to afford flexibility and to adapt to changing conditions. However, if the approach to job evaluations is too generic, then it may not provide sufficient detail to justify pay decisions.

REVIEW QUESTIONS

1. How does job evaluation translate internal alignment policies (loosely coupled versus tight fitting) into practice? What does (a) organizational strategy, (b) flow of work, (c) fairness, and (d) motivating employee behaviours toward organizational objectives, have to do with job evaluation?

Organizational Strategy- The job evaluation aligns with the organization’s strategy by including what it is about work that adds value that contributes to the organization’s objectives.

Flow of Work- The job evaluation process supports work flow by integrating each job pay with its relative contributions to the organization and setting pay for new, unique or changing jobs.

Fair to employees- Job evaluation can reduce disputes and grievances over pay differences among jobs, by establishing a workable, agreed-upon structure that reduces the role that chance, favouritism and bias may play in setting pay.

Motivating employee behaviours toward organization objectives- Job evaluation informsemployees what it is about their work that the organization values; what supports the organization’s strategy and its success. It can also help employees adapt to organization changes by improving their understanding of what is valued.

1. Why are there different approaches to job evaluation? Think of several employers in your area (a hospital, Wal-Mart, manufacturing plant, bank, university/college) What approach would you expect each of them to use? Why?

Different employers wish to emphasize different aspects of work; consequently, a wide variety of job evaluation approaches exist. Some wish to be more formalistic, legalistic, and use very detailed plans. For example, many nurses are unionized and also face constant review from patients and their families. For both of these reasons, hospitals tend to spell out quite specifically who is responsible for what. In the current economy, retailers have high turnover because they employ relatively unskilled labour and pay low wages. It likely is a first job for employees. Job duties therefore need to be spelled out.

A college/university would require innovative employees willing to do what it takes to accomplish a changing job, so may be better served with a more generic job evaluation process. However, colleges and universities employ a wide variety of skills, so would likely have multiple plans.

1. What are the advantages and disadvantages of using more than one job evaluation plan in any single organization?

Advantages of multiple plans include: a higher likelihood of covering all significant aspects of work among various job families, items can be specific enough to pinpoint job differences and similarities, and they are easy to verify as work-related.

Disadvantages of multiple plans include: the need to identify appropriate factors for each job family, difficulty meshing the results of separate plans together and having a risk of undervaluing/overvaluing some job families in comparison to others.

1. Why bother with job evaluation? Why not simply market price? How can job evaluation link internal consistency and external market pressures?

With job evaluation, the systematic evaluation of job descriptions reflects the job structure. This structure and the underlying relationships among jobs are the basis of internal consistency. Internal consistency may suffer with market pricing because the focus is on remaining externally competitive.

EXPERIENTIAL EXERCISES

Consider your university or college. Develop compensable factors for your institution to evaluate jobs. Would you use one job evaluation plan or multiple plans? Should the school’s educational mission be reflected in your factors? Or are generic factors okay? Discuss. Ask students to identify the actual factors used.