Putting a value on evaluation

Evaluation is the foremost formal method used to determine the relative worth of jobs and, in turn, pay levels.

The 2004 Reward Management Survey from the Chartered Institute of Personnel and Development (CIPD) revealed that the proportion of companies using job evaluation is actually increasing, with 5 per cent intending to develop a job-evaluation scheme within the next 12 months. A recent survey by E-reward.co.uk reported similar findings, highlighting evaluation’s growing popularity.

The CIPD survey data shows that 49 per cent of organisations are using job evaluation as a key factor in determining pay levels for managers and first-line supervisors, while 40 per cent of organisations use job evaluation for manual workers.

Anyone with any experience of job evaluation will be familiar with the mantra that it is ‘about the job, not the person’. This noble ambition does not always compare well to the realities of organisational life – particularly at more senior levels where jobs are more role- than task-based. Where managers work in a dynamic environment with the freedom to shape their own role, job evaluation may feel less like a scientific method.

Any method of job evaluation, though, is underpinned by job analysis. The data-collection techniques used can include the review of job descriptions, person specifications, special job evaluation questionnaires, interviews – with jobholder, line manager and peers – consideration of job titles and assessment of factors such as judgement and management responsibilities.

There are two main methods of job evaluation: non-analytical and analytical schemes.

Non-analytical schemes

Ranking of whole jobs in order of ‘size’, complexity or business impact is the most straight-forward method. The system works, as the title suggests, by listing jobs in their order of importance, comparing one criterion or multiple criteria. However, using only one aspect of the job is more likely to distort outcomes. The process will usually focus on a handful of ‘benchmark’ jobs around which other roles are placed in their assessed order of importance.

Once all jobs have been listed, the employer needs to decide on the number of grades to be used. Lines are drawn through the rank order at agreed break points. Job ranking may be conducted for all jobs in the organisation, or by each separate ‘job family’, such as finance, HR or operations.

Job categorisation – sometimes termed job classification – is another non-analytical method. This is more of a top-down approach. Categories, classes or grades are determined in advance and roles are slotted or placed into the category in which they are perceived to fit best.

Paired comparison is a more rigorous approach to job ranking. It forces the employer to make a choice between two factors or two whole jobs and arrive at more objective decisions. This technique helps ensure comparable measures of worth have been applied consistently across and within each job family.

Analytical schemes

Points factor is by far the dominant form of job evaluation, the Hay method being the leading proprietary brand scheme.

The points factor method is highly analytical. It breaks down jobs into a number of factors against which points are allocated.

As a result, points factor, more than any other method, will highlight the importance of focusing on the job rather than the person as the factors are intended to be impersonal, objective lenses through which a job is deconstructed.

Grading systems are not always underpinned by a job-evaluation system, but when they are, it is more likely that objective grading decisions will be made. This is an important consideration in equal pay claims, where pay levels or benefits entitlement is linked to grade. By extension, the more informal the process for arriving at grades, the greater the risk of equal pay claims or employee relations issues.

Central to the question of whether gender differences in pay exist is consideration of whether males and females are undertaking work of equal value. If the organisation is operating an analytical evaluation system, and has chosen factors in a non-discriminatory manner, this is likely to be the most effective defence against an equal pay claim.

An analytical job evaluation method focuses on understanding different, but potentially equal value, jobs. It also establishes a rationale for ultimately paying different rates of pay, justified by objective criteria.

Therefore, organisations not only gain greater assurance that pay decisions are not biased by gender discrimination, but analytical evaluations also offer an objective basis on which to defend current practice.

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