1. Chapter 5 Job-Based Structures and Job Evaluation
McGraw-Hill/Irwin
Copyright © 2011 by the McGraw-Hill Companies, Inc. All rights reserved.

2. Chapter Topics Job-Based Structures: Job Evaluation
Defining Job Evaluation: Content, Value, and External Market Links
“How-to”: Major Decisions
Job Evaluation Methods
Who Should Be Involved?
The Final Result: Structure
Balancing Chaos and Control

3. Job-Based Structures: Job Evaluation
Job evaluation is the 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

4. Job-Based Structures: Job Evaluation (cont.)
Organizational culture
External market

5. Exhibit 5.1: Many Ways to Create Internal Structure

6. Defining Job Evaluation: Content, Value, and External Market Links
Content and value
A structure based on content orders jobs on the basis of the skills, duties, and responsibilities associated with the jobs
A structure based on job value orders jobs on the basis of the relative contribution of the skills, duties, and responsibilities of each job to the organization’s goals

7. Linking content with the external market
Defining Job Evaluation: Content, Value, and External Market Links (cont.)
Linking content with the external market
Aspects of job content take on value based on their relationship to market wages
Aspect not related to the external labor market may be excluded in the job evaluation

8. Defining Job Evaluation: Content, Value, and External Market Links (cont.)
“Measure for measure” versus “Much ado about nothing”
Job evaluation may be judged according to technical standards
If participants agree that skills, effort, responsibilities, and working conditions are important, then work is evaluated based on these factors

9. Exhibit 5.2: Assumptions Underlying Different Views of Job Evaluation

10. Exhibit 5.3: Determining an Internally Aligned Job Structure

11. “How-To”: Major Decisions
Establish the purpose
Supports organization strategy
Supports work flow
Is fair to employees
Motivates behavior toward organization objectives

12. “How-To”: Major Decisions (cont.)
Single versus multiple plans
Different evaluation plans are used when the work content is too diverse to be evaluated by one plan

13. “How-To”: Major Decisions (cont.)
To be sure that all relevant aspects of work are included in the evaluation, an organization may start with a sample of benchmark jobs
Contents are well-known and relatively stable over time
Job is not unique to one employer
A reasonable proportion of the work force is employed in this job

14. Exhibit 5.4: Benchmark Jobs

15. “How-To”: Major Decisions (cont.)
Diversity in the work can be thought of in terms of :
Depth (vertically)
Breadth (horizontally)
Number of job evaluation plans used hinges on:
How detailed an evaluation is required to make pay decisions
How much it will cost
Choose among job evaluation methods

16. Exhibit 5.5: Comparison of Job Evaluation Methods

17. Ranking
Orders job descriptions from highest to lowest based on a global definition of relative value or contribution to the organization’s success
Alternation ranking orders job descriptions alternately at each extreme
Paired comparison method uses a matrix to compare all possible pairs of jobs

18. Ranking (cont.) Disadvantages:
Ranking criteria are usually poorly defined
Evaluators must be knowledgeable about every job under study

19. Exhibit 5.7: Paired Comparison Ranking

20. Classification A series of classes covers the range of jobs
A job description is compared to the class descriptions to decide which class is the best fit

21. Classification (cont.)
Greater specificity of the class definition improves the reliability of evaluation
Limits the variety of jobs that can easily be classified
Jobs within each class are considered to be equal work and will be paid equally

22. Exhibit 5.8: Classifications for Engineering Work Used by Clark Consulting
Source: Clark Consulting. Used by permission.

23. Point Method Common characteristics: Compensable factors
Factor degrees numerically scaled
Weights reflect relative importance of each factor

24. Point Method (cont.) 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

25. Step 1: Conduct 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

26. Step 2: Determine Compensable Factors
Compensable factors are those characteristics in the work that the organization values, that help it pursue its strategy and achieve its objectives

27. Step 2: Determine Compensable Factors (cont.)
Based on strategy and values of organization
Reinforce the organization’s culture, values, business direction, and nature of work
May be eliminated if they no longer support the business strategy

28. Step 2: Determine Compensable Factors (cont.)
Based on the work itself
Documentation must support the choice of factors
Acceptable to the stakeholders

29. Step 2: Determine Compensable Factors (cont.)
Adapting factors from existing plans
Skills and effort required, responsibility, and working conditions
National Electrical Manufacturers Association (NEMA), National Metal Trades Association (NMTA), Equal Pay Act (1963), and Steel plan
The Hay Guide Chart-Profile Method

30. Exhibit 5.12: Factors in Hay Plan

31. Exhibit 5.13: Hay Guide Chart – Profile Method of Job Evaluation
Source: Hay Group, “The Hay Guide Chart-Profile Method of Job Evaluation: An Overview,”

32. Step 2: Determine Compensable Factors (cont.)
How many factors?
“Illusion of validity” - Belief that factors capture divergent aspects of a job and both are important
“Small numbers” - If even one job has a certain characteristic, it is used in the entire work domain

33. Step 3: Scale the Factors
Scales reflecting different degrees within each factor are constructed
Most scales consist of four to eight degrees
Also include undefined degrees such as plus and minus around a scale number
Major issue: Interval scaling

34. 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

35. Exhibit 5.14: Factor Scaling – National Metal Trades Association

36. 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

37. Step 4: Weight the Factors According to Importance (cont.)
Select criterion pay structure
Committee members recommend the criterion pay structure
Statistical modeling techniques are used to determine the weight for each factor
Statistical approach is termed policy capturing to differentiate it from the committee a priori judgment approach
Weights also influence pay structure

38. Exhibit 5.14: Job Evaluation Form

39. Step 5: Communicate the Plan and Train Users
A manual is developed
Describes job evaluation method
Defines compensable factors
Provides information to distinguish varying degrees of each factor
Users require training and background information on the plan
Appeals process may be included
Communication is required to build employee acceptance

40. Step 6: Apply to Nonbenchmark Jobs
Final step involves applying plan to remaining jobs
Plan becomes a tool for managers and HR specialists
Trained evaluators will evaluate new jobs or reevaluate jobs whose work content has changed

41. 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

42. Who Should be Involved?
Managers and employees with a stake in the results
Committees, task forces, or teams that include representatives from key operating functions, including nonmanagerial employees
Including union representatives helps gain acceptance

43. Who Should be Involved? (cont.)
Compensation professionals are primarily responsible for most job evaluations for most jobs
Design process matters
Attending to the fairness of the design process and approach chosen is likely to achieve employee and management commitment, trust, and acceptance of results

44. Who Should be Involved? (cont.)
Compensation professionals are primarily responsible for most job evaluations for most jobs
Appeals/review procedures
Inevitable that some jobs are incorrectly evaluated
Requires review procedures for handling such cases and helping to ensure procedural fairness

45. 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

46. The Final Result: Structure
The final result of the job analysis – job description – job evaluation process is a structure, a hierarchy of work
Organizations commonly have multiple structures derived through multiple approaches that apply to different functional groups or units

47. The Final Result: Structure (cont.)
Internal alignment is most influenced by fair and equitable treatment of employees doing similar work in the same skill/knowledge group

48. Exhibit 5.17: Resulting Internal Structures – Job, Skill, and Competency Based

49. Balancing Chaos and Control
Job evaluation changed the legacy of decentralization and uncoordinated wage-setting practices of the 1930s and 1940s
Must be flexible to adapt to changing conditions
Avoids bureaucracy and increases freedom to manage
Also reduces control and guidelines, making enforcement of fairness difficult