2. 5-2
Job-Based Structures: Job Evaluation
■ Job evaluation – process of systematically
determining the relative worth of jobs to create a
job structure for the organization
■ The evaluation is based on a combination of:
– Job content
– Skills required
– Value to the organization
– Organizational culture
– External market
3. 5-3
Defining Job Evaluation: Content,
Value, and External Market Links
■ Content and value
– Exchange value
■ Linking content with the external market
– Value of job content is based on what it can
command in the external market
■ “Measure for measure” vs. “Much ado
about nothing”
7. 5-7
Defining Job Evaluation: Content, Value,
and External Market Links (cont.)
■ “How-To”: Major decisions (cont.)
– Single versus multiple plans
▪ Characteristics of a benchmark job:
– Contents are well-known and relatively stable over time
– Job not unique to one employee
– A reasonable number of employees are involved in the job
▪ Depth and breadth of job
▪ Refer Exhibit 5.4
– Choose among methods
10. 5-10
Ranking
■ Orders job descriptions from highest to lowest
based on a global definition of relative value or
contribution to the organization’s success
–Simple, fast, and easy to understand and explain
–Initially, the least expensive method
–Can be misleading
– Two approaches
▪Alternation ranking
▪Paired comparison method
12. 5-12
■ Uses class descriptions that serve as the
standard for comparing job descriptions
■ Classes include benchmark jobs
■ Outcome: Series of classes with a number of
jobs in each
Classification
14. 5-14
Point Method
■ Three common characteristics of point methods:
–Compensable factors
–Factor degrees numerically scaled
–Weights reflect relative
importance of each factor
■ Most commonly used approach to establish pay
structures in U.S.
■ Differ from other methods by making explicit
the criteria for evaluating jobs – compensable
factors
15. 5-15
■ Conduct job analysis
■ Determine compensable factors
■ Scale the factors
■ Weight the factors according to importance
■ Communicate the plan, train users; prepare
manual
■ Apply to nonbenchmark jobs
Designing a Point Plan: Six Steps
16. 5-16
Step 1: Conduct Job Analysis
■ Point plans begin with job analysis
■ A representative sample of jobs (benchmark
jobs) is drawn for analysis
■ Content of these jobs is basis for:
– Defining compensable factors
– Scaling compensable factors
– Weighting compensable factors
17. 5-17
Step 2: Determine Compensable Factors
■ Compensable factors – characteristics in the
work that the organization values, that help it
pursue its strategy and achieve its objectives
■ Compensable factors play a pivotal role
– Reflect how work adds value to organization
– Decision making is three-dimensional:
▪ Risk and complexity
▪ Impact of decision
▪ Time that must pass before evidence of impact
19. 5-19
Step 2: Determine Compensable Factors
(cont.)
■ To be effective, compensable factors should be:
– Based on strategy and values of organization
– Based on work performed
▪ Documentation is important
– Acceptable to the stakeholders
– Adapting factors from existing plans
▪ Skills, and effort required; responsibility, and working
conditions
▪ NEMA, NMTA, Equal Pay Act (1963), and Steel plan
20. 5-20
Compensable Factors - How Many
Factors?
– “Illusion of validity” - Belief that factors are
capturing divergent aspects of a job and are
both important
– “Small numbers” - If even one job has a certain
characteristic, it must be a compensable factor
– “Accepted and doing the job” – 21 factor, 7
factors, 3 factors
– Research results
▪ Skills explain 90% or more of variance
▪ Three factors account for 98 - 99% of variance
24. 5-24
Step 3: Scale the Factors
■ Construct scales reflecting different degrees
within each factor
– Most factor scales consist of four to eight degrees
■ Issue
– Whether to make each degree equidistant from
adjacent degrees (interval scaling)
25. 5-25
Step 3: Scale the Factors (cont.)
■ Criteria for scaling factors
■ Ensure number of degrees is necessary to distinguish
among jobs
■ Use understandable terminology
■ Anchor degree definitions with benchmark-job titles
and/or work behaviors
■ Make it apparent how degree applies to job
27. 5-27
Step 4: Weight the Factors According to
Importance
– Different weights reflect differences in
importance attached to each factor by the
employer
– Determination of factor weights
▪ Advisory committee allocates 100 percent of the
value among factors
28. 5-28
Step 4: Weight the Factors According to
Importance (cont.)
■ Select criterion pay structure
– Committee members recommend the criterion pay
structure
– Statistical approach is termed policy capturing to
differentiate it from the committee a priori judgment
approach
– Weights also influence pay structure
30. 5-30
Step 5: Communicate the Plan and Train
Users
■ Involves development of manual containing
information to allow users to apply plan
– Describes job evaluation method
– Defines compensable factors
– Provides information to permit users to distinguish
varying degrees of each factor
■ Involves training users on total pay system
■ Includes appeals process for employees
– Employee acceptance is imperative
▪ Communication
31. 5-31
Step 6: Apply to Nonbenchmark Jobs
■ Final step involves applying plan to remaining
jobs
– Could involve both designers and/or employees
trained in applying the plan
■ Tool for managers and HR specialists once plan
is developed and accepted
■ Trained evaluators will evaluate new jobs or
reevaluate jobs whose work content has
changed
– May also be part of appeals process
32. 5-32
Step 7: Develop Online Software
Support
■ Online job evaluation is widely used in larger
organizations
■ Becomes part of a Total Compensation Service
Center for managers and HR generalists to use
33. 5-33
Who Should be Involved?
■ Managers and employees with a stake in the
results should be involved
– Can include representatives from key operating
functions, including nonmanagerial employees
■ Organizations with unions find including union
representatives helps gain acceptance
– Extent of union participation varies
34. 5-34
Who Should be Involved? (cont.)
■ Design process matters
– Attending to fairness of design process and approach
chosen likely to achieve employee and management
commitment, trust, and acceptance of results
■ Appeals/review procedures
– Inevitable that some jobs are incorrectly evaluated
– Requires review procedures for handling such cases
and helping to ensure procedural fairness
35. 5-35
Who Should be Involved? (cont.)
■ “I know I speak for all of us when I say I speak
for all of us”
– Procedures should be judged for their susceptibility
to political influences
36. 5-36
The Final Result: Structure
■ The final result of the job analysis – job
description – job evaluation process is a
structure, a hierarchy of work
■ Managerial, technical, manufacturing, and
administrative
38. 5-38
Balancing Chaos and Control
■ Job evaluation changed the legacy of
decentralization and uncoordinated wage-setting
practices left from the 1930s and ’40s
■ It must afford flexibility to adapt to changing
conditions
– Avoids bureaucracy and increases freedom to
manage
– Reduces control and guidelines, making enforcement
of fairness difficult
