What is job evaluation?

Job evaluation is a process used by HR professionals to assess the relative scope of a job role when compared to others within the same organisation. Over the last 20-30 years job evaluation has slowly moved to the forefront of business consciousness.

With equal pay and general workplace equality increasingly being discussed in society, businesses are placing more and more importance on having an objective framework in place to evaluate job roles across the organisation.

Whilst job evaluation isn’t a new concept, approaches to tackling the challenge of evaluating jobs have evolved over time. There are multiple different job grading systems that businesses can use to determine the relative worth of the roles within their organisation, varying from job grading to classification to simple job analysis and understanding.

At Paydata, we have been working in the field of job evaluation for many years, developing our own innovative job evaluation software to overcome the role evaluation struggles that modern businesses face. In this short analysis, our experienced team introduce a few of the most common approaches to job evaluation and identify why accurate valuation of different roles is essential for business stability.

What is a job evaluation system?

A job evaluation system is the methodology that a business follows in order to effectively evaluate the worth of different roles within the organisation. Whilst job analysis is the concept of simply identifying the responsibilities and gathering information about a role, evaluation takes this further and places a value on each position using a logical, formalised method. The job evaluation system is how these relative values are decided upon.

There are countless different job evaluation systems used by businesses of all shapes and sizes. Each varies slightly in approach, but most can fit into three generalised categories:

• Job ranking systems are very simple and clear but suffer from limitations when applied to larger organisations. Job ranking involves placing each role within the organisation in a clearly defined hierarchy, one on top of another. This instantly creates a relative value between positions that can be leveraged for key business decisions, but this approach can quickly become unmanageable or difficult to decide within larger businesses. Furthermore, job ranking is not usually a logical procedure, relying on lots of human judgement, leaving plenty of room for error or bias.
• Job classification takes a broader approach to role valuation and is much more suited to larger organisations. Instead of creating a hierarchy of individual roles, job grading creates a hierarchy of groups that each role can fit into. The different groups are assigned a description (e.g. unskilled workers, skilled workers, middle-management, executive) and then the roles are analysed and placed in their respective group. This provides a simple and effective hierarchy that can accommodate many different job roles. However, this job evaluation system doesn’t consider more detailed aspects of each position and does risk generalising or oversimplifying.
• The point or factor-based job evaluation system is the most commonly used method due to its robust, comprehensive and systematic job analysis and valuation. In this approach, evaluators identify key skills that all jobs within the organisation require and must be graded on (such as knowledge and responsibility). For additional focus, these key skills can be broken down further into sub-skills (e.g. sub-skills of knowledge might be the qualifications or experience required). After these core factors are decided upon, each role is analysed and points are assigned for each factor. These points are then combined to create a complete evaluation score that can be used to quantify the relative value of each position. This is the method that we use as part of our PAYgrade software offering as it offers the most effective job grading result.

Whilst these three types of job evaluation system encompass most approaches that modern businesses utilise, there are always slight variations between systems and techniques. Different industries and organisations are often suited to specific approaches or factors, which may influence their choice of job evaluation system

Why is job evaluation important?                                            

Having explored what job evaluation is and how it is conducted, the final point to consider is why job evaluation matters to businesses. Understanding the relative value of job roles within your organisation helps to inform multiple key business decisions and create a healthier environment to fuel growth.

Fundamentally, job evaluation allows businesses to quickly see pay discrepancies between job roles of relatively similar value. This can often occur in larger organisations with hundreds of job roles, where HR teams can struggle to monitor each individual position or where they have accidentally placed a specific position in the wrong pay grade. Amending this remuneration error is key to creating a fairly paid workplace, which plays a fundamental role in employee satisfaction, loyalty and productivity.

In addition, organisations can use job evaluation to help inform changes in pay structure. Reward strategy and design is a complex field and the right pay and benefits structure varies from business to business. Job evaluation helps to quantify departments, roles and areas of the business where job value follows specific patterns, whether they are similar or wildly different. Pay grade sizes or pay structure selection need to reflect this and shift to fit the current hierarchical and job role landscape of the business.

Other great benefits of leveraging job evaluation include the ability to find responsibility chokepoints, where new staff or roles may need to be created to spread the load and ensure that the team works to the best of its ability. The exercise may also identify whether company re-organisation might be appropriate.

Whatever your business size or sector, job evaluation can be an invaluable asset to help create the most prosperous organisation possible. The Paydata team specialise in providing bespoke pay and reward solutions, ranging from a tailored reward strategy through to salary reviews. Our PAYgrade job evaluation software is specifically designed to be quick and easy to learn, enabling organisations to get off the starting blocks immediately and start enacting change.

Discover more about PAYgrade and arrange your free demonstration today or get in touch with our specialist team and we will gladly provide you with bespoke advice.