Effective job evaluation methods for your business

Job evaluation is an increasingly important HR technique that has surged in popularity over recent years. The process of comparing different job roles within the same business or organisation to determine their relative worth can create an informed and effective framework that underpins the reward strategy throughout your business.

The challenges for almost any company include defining the ‘value’ of a role, which can be done in countless different ways, and how to select one of the various job analysis methods used to rank each role in relation one-another.

Despite these challenges, there’s no doubt that job evaluation is becoming more popular to conduct fair and unbiased pay decisions. There are numerous additional advantages to correctly identifying the value of each role within your business, as it can help to identify structural issues as well as pay discrepancies and responsibility chokepoints.

At Paydata, we specialise in providing holistic pay and reward solutions for all kinds of businesses and organisations. With decades of experience, we help organisations shape their pay and reward strategy through surveys, consultancy, evaluation and analysis. Our PAYgrade job evaluation software is just one aspect of our pay and reward offering and is specifically designed to be easy to teach, simple to use and highly effective.

Leveraging this experience with job evaluation, the Paydata team have put together a brief guide highlighting the different job analysis methods you can use in your organisation. Most businesses prefer the most detailed approach possible, whilst smaller organisations often require a quick interim solution. We hope the following resource helps to inform your own approach to job evaluation.

Job evaluation techniques

1. Job ranking

Job ranking is the simplest job evaluation method and suits small upstarts and organisations that are yet to grow and expand. Job ranking is a straightforward hierarchy system that lists each role within the organisation and lists them from the most important and valuable to the least important and valuable. This instantaneously creates a value-driven system that compares each role based on relative importance, informing the wage and benefits structure.

A disadvantage of job ranking includes the potential bias involved. The best job evaluation and analysis methods are as systematic as possible, relying very little on human judgement. This method relies entirely on human judgement that might be easily swayed by bias and illogical thought; however, for smaller organisations, it can be a quick and effective solution.

2. Job grading

Job grading is a more holistic approach compared to job ranking, making it more versatile and suitable for larger businesses and organisations. Job grading works similarly to pay grades and involves roles being grouped together under wider categories. Each of those categories is placed into a company hierarchy to identify relative value and importance.

An example would be creating job grades such as executives, managers, skilled workers and unskilled workers. Each of these categories could host a multitude of different roles and responsibilities whilst it would be easy to rank them based on value and importance.

Disadvantages of job grading include the fact that it relies on human judgement when assigning roles to specific grades and can also miss the nuances of individual positions’ relative importance. Often, certain individuals may have a lot of different responsibilities that improve their overall value to the business, even though they fit into a wider category overall. This can lead to roles of varying authority and responsibility being grouped together and viewed in the same way, despite this not being the case.

On the other hand, this is a fairly straightforward and effective approach for larger organisations that  need a hierarchical breakdown to inform a pay structure review.

3. Point or factor-based

Finally, the point or factor-based system offers a detailed and individually driven approach to job evaluation.

The factor-based job evaluation technique starts by identifying skills that appear in all roles within the organisation. After deciding on a group of holistic ranking factors, each job role within the organisation is analysed and evaluated, scoring a specific number of points for each factor. After all of the roles have been scored, their total scores can be added together to create a complete hierarchical list of positions, outlining their level of difficulty and relative value to the organisation.

This is a longer process and can require a lot of resources to be completed correctly, however upon completion, it can have huge benefits when designing a new reward structure or trying to solve issues within a business’ structure.

With over 20 years’ experience of working in the pay and reward sphere, we understand that it can take HR teams weeks to learn how to use some job evaluation software systems efficiently and correctly. Therefore, we designed our PAYgrade software to be easily accessible and straightforward to use from the outset.

If you are interested in learning more about how job evaluation can help your business, please get in touch with our dedicated team or discover more about our PAYgrade software here.