By way of background, there are two main approaches: non-analytical and analytical job evaluation. The former enables whole jobs to be compared when it comes to ranking them, whereas analytical job evaluation is based on a methodology of breaking whole jobs down into defined factors (including knowledge, scope, communication) and levels (1, 2, 3). Jobs are then compared with a total points score used to determine the overall grade.
At Paydata, we focus on analytical job evaluation which provides a more granular framework for organisations. Importantly, grading which is not based on an analytical, gender neutral method does not provide a defence against equal pay claims. The following benefits are specific to the analytical methodology.
1) Promotes transparency around pay decisions
Job evaluation minimises subjectivity and enables rational, consistent and transparent decisions to be made about roles. Information and facts about the job are all evaluated in the same way within established parameters. Decision making is grounded in fact, the system is designed to be logical and there is a consistent methodology. Transparency is achieved because employees and managers know and understand how decisions are made.
When evaluating a job make sure you take the time to fully understand the job and the working environment. Job analysis can be through observation, with the job analyst observing the employee at work, through a structured interview with the line manager or job holder, or through a questionnaire completed by the line manager and/or job holder. The best approach often depends on the type of job involved. For example, the observation approach arguably better suits jobs in a production environment, whereas the structured interview approach arguably better suits office-based jobs.
2) Achieves a fair system of pay
Job evaluation can develop an organisation-wide equitable grade and pay structure.
Different pay structures suit different organisations:
Narrow-graded structures typically consist of a sequence of job grades into which jobs of broadly equivalent value are placed. This structure usually includes 10 or more grades and pay ranges are attached to each grade.
Broad-grade structures are similar to narrow-grade structures, but they have fewer and wider grades used for reference and to control progression.
The job family structure allows different grade structures to co-exist. This enables organisations to have different pay arrangements for different families – particularly useful when you are operating in different labour markets that have vastly different pay practices.
Pay spine structures are often found in the public sector and consist of a number of pay points. Job grades are aligned to the pay spine and the pay ranges for the grades are defined by the relevant pay points. The width of grades can vary and pay progression is normally based on length of service.
Make sure you involve all relevant stakeholders when determining the guiding principles for the design and operation of the structure; analyse the options and select the ones which best meets the guiding principles (but keep the structure as simple as possible). All models can promote a fair system of pay clearly aligned to the organisation’s culture, values and HR strategy; getting the communication right from the outset is vital, so that everyone understands they are being paid fairly and appropriately. Key messages, communication channels and feedback mechanisms should all be planned alongside the system’s design and implementation.
3) Ensures pay levels are externally competitive
Job evaluation can ensure that pay levels in the organisation for each role are externally competitive. Whilst matching job titles, brief descriptions, job capsules and job descriptions can be used in benchmarking roles, the framework provided by job evaluation grades is the most accurate way to match internal jobs to external market data sources and ensure that like is compared with like.
When matching to external sources of market data, always ask the provider if they have grades that link to other job evaluation schemes to ensure you receive the most accurate comparison. Paydata run a number of salary surveys that can be linked to other job evaluation schemes.
4) Supports equal pay
The Equal Pay Provisions of the Equality Act 2010 ensure that men and women in the same employment performing equal work receive equal pay. Job evaluation provides the data to support an equal pay audit so that equal pay is being checked across:
Like work – where similar tasks are performed which involve similar skills. Job titles are the most common indicator of like work.
Work rated as equivalent – where roles have similar job evaluation scores and are in the same grade. A fair job evaluation scheme is required to make this assessment.
Work of equal value – work which is not the same or rated as equivalent may be of equal value in terms of effort, skill and decision-making. Jobs that may be entirely different in content might be considered work of equal value when the demands made on the employees doing them are assessed.
The golden rule for work of equal value is not to assume that different types of jobs (e.g. manual and administrative) cannot be of equal value. While some employment tribunal cases have considered the question ‘what is equal?’ the answer really lies in the application of fair analytical job evaluation. This is the most reliable way of assessing whether jobs are of equal value.
5) Supports recruitment, career development and succession planning
In a career family structure, development paths are clearly set out for each role. These are usually defined by family/level profiles that describe the knowledge, skills, experience and competencies required at each family/level.
Informed recruitment, career development and succession planning decisions can take place in the context of a wider hierarchy that the framework provides. Individual employees can be encouraged to see what is required of them to get to the next level in the structure. A director can see where there is no natural successor for a particular role and put in place plans to address the issue.
A collaborative approach develops a robust system
When developing a job evaluation system and the resulting career family structure that best fits the organisation, it is important to involve other HR specialists, including recruitment and learning and development, alongside employees and line managers, to secure buy-in from the outset. Read more about job evaluation and how Paydata can help with our online job evaluation system PAYgrade.