Download MBA HRM (Human Resource Management) (Master of Business Administration) 4th Semester Compensation Management Notes
UNIT : I
Lesson 1
Introduction to Job Evaluation
O u t l i n e o f t h e l e s s o n
1.
Terminologies of job evaluation
2.
Concepts of job and evaluation
3.
Objectives of job evaluation
4.
Principles of job evaluation
5.
JOB Evaluation criteria
6.
Job Evaluation process
7.
Computerized job evaluation
L e a r n i n g O b j e c t i v e s
After studying this lesson, you should be able to:
1. Understand the various terms of job evolutions
2. Define the term job evolution
3. Outline the objectives of job evolution
4. List the principles of job evaluation
5. Identify the criteria for job evaluation
6. Observe the process of job evaluation
7. Look into the computerized job evaluation
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Introduction
Once a right candidate is placed on a right job, the person needs to be duly
compensated for the job he/she performs. In the pursuit of equal payment, there
should be established a consistent and systematic relationship among base
compensation rates for all the jobs within the organizations. The process of such
establishment is termed ,,job evaluation. Different jobs in an organization need
to be valued to ascertain their relative worth so that jobs are compensated
accordingly and an equitable wage and salary structure is designed in the
organization. This is necessary for sustaining cordial relations within and
between employees and employer. Hence, there is a need for appreciation of
intricacies of the job evaluation in the modern organizations. This lesson, as a
first steps, dedicated to discuss the various fundamental aspects of job
evolution.
Concept and related terminologies of job evaluation
In the area of job evaluation study, a certain amount of technical terminology is
used in order to facilitate communication. It is therefore desirable to list and
understand allied terms in the job evaluation, as well as some terms that are
related to and often confused with job evaluation (Exhibit. 1.1).
Position: A position is a group of tasks assigned to one individual. There are as
many positions in a firm as there are personnel.
Job: Edwin B.Flippo describes job as a group of positions that are similar as to
kind and level of work. In some instances only one position may be involved,
simply because no other similar position exists. For example, in the typical firm
the position of human resource manager also constitute a job since there is only
one human resource manager in the organizing.
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Job Analysis: It is the process of studying and collecting information relating to
the operations and responsibilities of a specific job. The immediate products of
this analysis are job descriptions and job specifications.
Motion study: This also involves study of the job. Motions study is one of the
ways of studying job. It is a process of analyzing a job to find the easiest, most
effective, and most economical method of doing it. As such, motion study is a
part of the job design function.
Job description: It is an organized, factual statement of the duties and
responsibilities of a specific job. In brief, it should tell what is to be done, how it
is to be done, and why. It is a standard of function, in that it defines the
appropriate and authorized content of a job.
Job specification: It is a statement of the minimum acceptable human qualities
necessary to perform a job properly. It is a standard of personnel and designates
the qualities required for acceptable performance.
Evaluation: Wigley explains evaluation as a data reduction process that
involves the collection of large amounts of data which are analyzed and
synthesized into an overall judgment of worth or merit. The implication here is
that the judgment of worth can be supported by the data. In her review, Foxon
found similar definitions referring to judgments of value or worth.
Job Evaluation: It is a systematic and orderly process of determining the worth
of a job in relation to other jobs. The objective of this process is to determine
the correct rate of pay. It is therefore not the same as job analysis. Rather it
follows the job analysis process, which provides the basic data to be evaluated.
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Exhibit. 1.1
Job evaluation
Measuring
relative worth of a
job
Job specification
Job Analysis
Statement of
Process of
Job
minimum acceptable
collecting job
Human qualities
related data
Job description
Statement of a job
duties and
responsibilities
In simple worlds, job evaluation is the rating of jobs in an organization. This is
the process establishing the value or worth of jobs in a job hierarchy and
compares the relative intrinsic value or worth of jobs within an organization.
Some renounced definitions of job evaluation are described below.
Scott, Clothier and Priegel defines job evaluation as "the operation of
evaluating a particular job in relation to other jobs either within or outside the
organization".
Dale Yoder described job evaluation as "a practice which seeks to provide a
degree of objectivity in measuring the comparative value of jobs within an
organization and among similar organizations".
Edwin B.Flippo defines job evaluation as "a systematic and orderly process of
determining the worth of a job in relation to other jobs".
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Arthur A. Sloane described job evaluation as "any formalized system that
attempts to determine the relative worth of different jobs in the organization so
that jobs of greater value can be rewarded by greater pay".
According to the International Labour Organization (ILO), "job evaluation is
an attempt to determine and compare the demands which the normal
performance of a particular job makes on normal workers, without taking into
account the individual abilities or performance of the workers concerned".
The British Institute of Management defines "job evaluation as the process of
analysis and assessment of jobs to ascertain reliably their negative worth using
the assessment as the basis for a balanced wages structure".
Wendell French defines job evaluation as "a process of determining the relative
worth of the various jobs within the organization, so that differential wages may
be paid to jobs of different worth. The relative worth of a job means relative
value produced. The variables which are assumed to be related to value
produced are such factors as responsibility, skill, effort and working
conditions".
Objectives of job evaluation
The main objective of job evaluation is to ensure equitable remuneration for
relative worth of a job. As per the ILO Report, the aim of the majority of
systems of job evaluation is to establish, on agreed logical basis, the relative
values of different jobs in a given plant or machinery, i.e., it aims at determining
the relative worth of a job. The principle upon which all job evaluation schemes
are based is that of describing and assessing the value of all jobs in the firms in
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terms of a number of factors, the relative importance of which varies from job to
job".
The objectives of job evaluation, to put in a more systematic manner are to:
1. Establish a standard procedure for determining the relative worth of
each job in an organization;
2. Ensure equitable wage for a job and reasonable wage differentials
between different jobs in a hierarchical organization;
3. Determine the rate of pay for each job which is fair and equitable with
relation to other jobs in the plant, community or industry;
4. Eliminate wage inequalities;
5. Use as a basis for fixing incentives and different bonus plans;
6. Promote a fair and accurate consideration of all employees for
advancement and transfer;
7. Provide information for work organization, employees selection,
placement, training and other similar purposes;
8. Provide a benchmark for making career planning for the employees in
the organization and;
9. Ensure that like wages are paid to all qualified employees for like
work.
Principles of job evaluation
The job evaluation has certain principles. These principles are supposed to be
kept in the mind of the job evaluators. These principles are not only directives
of proper job evaluation but also provide clarity in the process of evaluation.
According to Kress, these principles are:
1. Rate the job and the jobber. Each element should be rated on the basis of
what the job itself requires;
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2. The elements selected for rating purposes should be easily explainable in
terms and a few in numbers as will cover the necessary requisites for
every job without any overlapping;
3. The elements should be clearly defined and properly selected;
4. Any job rating plan must be sold to foremen and employees. The success
in selling it will depend on a clear-cut explanation and illustration of the
plan;
5. Foreman should participate in the rating of jobs in their own
departments;
6. Maxim mum co-operation can be obtained from employees when they
themselves have an opportunity to discuss job ratings and;
7. Too many occupational wages should not be established. It would be
unwise to adopt an occupational wage for each total of point values.
Job Evaluation Criteria
The system of job evaluation utilises a total of eight measurement factors.
The various factors analyse a position in relation to the skills and
experience required for competent performance, the demands made on the
job and the overall structure and responsibility/accountability involved. A
point rating is derived for each factor and the sum of these points represents
the total points value of the job.
Basic Evaluation Rules: The basic rules for evaluating each position are:
1. The current position is evaluated without being influenced by what the
job is likely to be in the future or what it may have been in the past.
2. The position is evaluated and not the job holder. The assessment
of each factor is based on the job being performed competently. The
assessment of the job holders own performance against the standard
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required is a quite separate exercise which is outside the scope of the
job evaluation rating.
The Job Evaluation Factors: The job evaluation system comprises the following
factors: In some cases minor changes to the wording are used to define
factors and levels made in order to better align the methodology with
the clients culture and environment. Where this is done, great care is
taken to ensure inter-organisation consistency is not compromised. The
primary factor in determining compensation is an evaluation of work performed.
The internal worth of a job is evaluated based upon factor like - Know-How,
Problem Solving, and Accountability, Education, Experience, Complexity
involved in the job, Scope of job, Supervision received and, Authority
Exercised.
1. Know-How ? The knowledge, skill and experience required for
standard acceptable performance. It considers the requirement for
technical and professional skills, expertise and experience, the amount
of planning and organising required and the requirement to work with
and through others. The three dimensions of Know-How are listed below
exhibit.1.2.
Exhibit.1.2
Technical
Measures levels ranging from learning basics work to
Know-How
specialized techniques and knowledge to professional
mastery of scientific theory.
Managerial
Measures the jobs requirements to integrate diversified
Know- How
types of supervisory or managerial activities.
Human
Measures the degree to which the job requires practical
relation
person to-person skills in persuasion, motivation, and
Know-how
selection of people.
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2. Problem Solving ? the thinking required for analysing, evaluating,
creating, reasoning, arriving at and drawing conclusions; the extent
to which this thinking is covered by precedents or circumscribed by
standards; and the degree of creativity or original thought required. The
two dimension of problem solving are presented below.
Exhibit.1.3
Thinking
The degree of structure provided by the job in solving
environment problems.
Thinking
It is the complexity of the problems in the job assignment
Challenge
and the amount of thinking required to solve job-related
problem.
3. Accountability ? The degree to which the employee is held accountable for
taking action and for the consequences of that action. It is the measured
effect of the job on end results. The freedom to act measured through the
existence or absence of constraints by managers, committees and
procedures and the impact of that action on the organization. The three
dimensions of accountability are depicted in below exhibit.
Exhibit.1.4
Freedom to act
Measures the relative degree to which decisions can
be made, the level of authority which is needed, or
the precedents, policies, and procedures which must
be considered before an employee can take action.
Magnitude
It is the degree of influence a position has on the
organizational operations.
Impact
It is the degree to which the job affects the
organizational operations. Some jobs are directly
responsible for actions while others provide counsel
and advice, which is used by others to take action.
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4. Education - The level of formal education required to perform the
functions required of a position. There is often an overlap between
education and experience, and for this reason it is often advisable to
consider the education level that would be expected of a new incumbent
recruited externally.
5. Experience - The length of practical experience and nature of
technical/managerial familiarity required. This experience is in addition
to formal education.
6. Complexity ? measured in terms of: (a) the time taken to learn and adjust
to specific job requirements, (b) the level to which the job functions are
defined and follow established and predictable patterns and, (c) the
thinking challenge required to adapt to rapidly changing
circumstances and innovative or conceptual thinking needed to initiate
new corporate direction.
7. Scope of Job - The complexity and scope of work factors tend to be
related to the education and experience level required of a position. The
calculation of points for each of these factors is based on the application
of a percentage rating of the sum of the points derived in the evaluation
of Education and Experience.
8. Supervision Received -The extent of supervision, direction or guidance
imposed on the job holder and the freedom the executive has to take
action.
9. Authority Exercised - Authority level expressed in terms of routine
expenditure, capital expenditure and investments, granting of loans,
hiring and firing staff, etc.
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Job Evaluation Process
Job Evaluation is a technique to rank jobs in an organization on the basis of
the duties and responsibilities assigned to the job. The job evaluation process
results in a job being assigned to a pay grade. The pay grade is associated with
a pay range that is defined by a minimum and a maximum pay rate. A model of
job evaluation process with the following steps is presented bellow (Exhibit
1.5).
Step One -Job Description - The position supervisor assigns duties and writes the
job description. If there is an incumbent employee, s/he reviews it, and they
both sign it. Instructions and additional assistance are available from
Human Resources, if needed. The job description is a snapshot of the job as
it presently exists, reflecting the current duties and responsibilities of the job
and/or the incumbent.
Step Two ? Approval - The vice president reviews job descriptions and, if s/he
concurs, approves the responsibilities, requirements, and depart-mental
organization contained within a job description presented for new evaluation,
and signs it. If the vice president does not concur with the contents of the
description, it is returned to the supervisor for changes.
Step Three ? Review- Human Resources reviews the job description as
submitted with the supervisor prior to evaluation by the Job Evaluation
Committee (Step 4). Human Resources help ensure that there is consistency
and equity in the job descriptions and titles by editing them for clarity and
format. If the Human Resources Office makes changes, the job description is
returned to the supervisor and vice president for signature prior to being
presented to the Job Evaluation Committee (Step 4).
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Step Four ? Evaluation - The Job Evaluation Committee (JEC) is a multi-
member committee, the members of which are appointed by the Staff Salary
Administration Committee (SSAC), representing employees throughout
organization. JEC ensures equity among jobs through the use of established,
consistent criteria for evaluation and prevents escalation of the jo
This post was last modified on 14 March 2022