What is the correct term for the process of determining the relative worth of jobs in order to determine pay rates?

Job evaluation aims to provide this equity and consistency by defining the relative worth of different jobs in an organization. Job evaluation is the process of determining the relative worth of different categories of jobs by analyzing their responsibilities and consequently, fixation on their remuneration.

Contents

• 1 What is Job Evaluation?
• 2 Definition of Job Evaluation
• 3 Process of Job Evaluation
  • 3.1 Gaining Acceptance
  • 3.2 Creating Job Evaluation Committee
  • 3.3 Finding the Jobs to be Evaluated
  • 3.4 Analyzing and Preparing Job Description
  • 3.5 Selecting Method of Evaluation
  • 3.6 Classifying Jobs
  • 3.7 Installing Program
  • 3.8 Reviewing Periodically
• 4 Methods of Job Evaluation in HRM
  • 4.1 Ranking Method
  • 4.2 Job Classification Method
  • 4.3 Factor Comparison Method
  • 4.4 Point Method
• 5 Objectives of Job Evaluation
• 6 Features of Job Evaluation
• 7 Principles of Job Evaluation
• 8 Advantages of Job Evaluation
• 9 FAQ Related to Job Evaluation
  • 9.1 What is job evaluation in HRM?
  • 9.2 What is the meaning of job evaluation?
  • 9.3 What is the process of job evaluation?
  • 9.4 What are the methods of job evaluation?

Job evaluation is a system of determining the relative worth of different jobs in an organization. Here a particular job of an enterprise is compared with its other jobs. Comparative study of these jobs is very necessary because on the basis of such study the structure of wages for different types of jobs is prepared. The value of each job depends on certain factors.

In other words, Job evaluation is the process of establishing the value of jobs in a job hierarchy. Job evaluation is a formal and systematic comparison of jobs in order to determine the worth of one job relative to another so that a wage or salary hierarchy results.

It is a process by which jobs in an organization are appraised. Job evaluation begins with job analysis and ends up with the classification of jobs according to their worth. The purpose of job evaluation is to determine the basic wage rates for different jobs.

Definition of Job Evaluation

These are some definitions of job evaluation given by the authors:

Job evaluation represents an effort to determine the relative value of every job in a plant and to determine what the fair basic wages for such a job should be.Kimball and Kimball

Job Evaluation is a systematic and orderly process of determining the worth of a job in relation to other jobs’. He further said that the objective of this process is to determine the correct rate of pay. It is therefore not the same as job analysis. Rather it should follow the job analysis process, which provides the basic data to be evaluated.Edwin B. Flippo

Job evaluation is a process of determining the relative worth of various jobs within the organization, so that different wages may be paid to jobs of different worth”. The relative worth of a job means the relative value produced. The variables which are considered for value produced are responsibility, skill, effort and working conditions, etc.Wendell French

Job evaluation is a practice which seeks to provide a degree of objectivity in measuring the organizational value of jobs within the organization and among similar organizations.Dale Yoder

We can define job evaluation as a process of analyzing and describing positions, grouping them, and determining their relative value by comparing the duties of different positions in terms of their different responsibilities and other requirements.

Process of Job Evaluation

The process of job evaluation involves the following steps:

1. Gaining Acceptance
2. Creating Job Evaluation Committee
3. Finding the Jobs to be Evaluated
4. Analyzing and Preparing Job Description
5. Selecting Method of Evaluation
6. Classifying Jobs
7. Installing Program
8. Reviewing Periodically

Gaining Acceptance

Before undertaking job evaluation, top management must explain the aim and use of the program to the employees and unions. To elaborate the program further, oral presentations could be made. Letters and booklets could be used to classify all relevant aspects of the job evaluation program.

Creating Job Evaluation Committee

It is not possible for a single person to evaluate all the key jobs in an organization. Usually, a job evaluation committee consisting of experienced employees, union representatives, and HR experts is created to set the ball rolling.

Finding the Jobs to be Evaluated

Every job need not be evaluated. This may be too taxing and costly. Certainly, key jobs in each department may be identified. While picking up the jobs, care must be taken to ensure that they represent the type of work performed in that department.

Analyzing and Preparing Job Description

This requires the preparation of a job description and also an analysis of job needs for successful performance.

Selecting Method of Evaluation

The most important method of evaluating the jobs must be identified now, keeping the job factors as well as organizational demands in mind.

Classifying Jobs

The relative worth of various jobs in an organization may be found out after arranging jobs in order of importance using criteria such as skill requirements, experience needed, under which conditions the job is performed, type of responsibilities to be shouldered, degree of supervision needed, the amount of stress caused by the job, etc.

Weights can be assigned to each such factor. When we finally add all the weight, the worth of a job is determined. The points may then be converted into monetary values.

Installing Program

On the evaluation process is over and a plan of action is ready, management must explain it to employees and put it into operation.

Reviewing Periodically

In the light of changes in environmental conditions (technology, products, services, etc.) jobs need to be examined closely. For example, the traditional clerical functions have undergone a rapid change in sectors like banking, insurance, and railways, after computerization.

New job descriptions need to be written and the skill needs of new jobs need to be duly incorporated into the evaluation process. Otherwise, employees may feel that all relevant job factors based on which their pay has been determined have not been evaluated properly.

Methods of Job Evaluation in HRM

There are three basic methods of job evaluation in HRM:

1. Ranking Method
2. Job Classification Method
3. Factor Comparison Method
4. Point Method

Ranking Method

Perhaps the simplest method of job evaluation is the ranking method. According to this method, jobs are arranged from highest to lowest, in order of their value or merit to the organization. Jobs can also be arranged according to the relative difficulty in performing them.

The jobs are examined as a whole rather than on the basis of important factors in the job; the job at the top of the list has the highest value and obviously, the job at the bottom of the list will have the lowest value. Jobs are usually ranked in each department and then the department rankings are combined to develop an organizational ranking.

The variation in payment of salaries depends on the variation of the nature of the job performed by the employees. The ranking method is simple to understand and practice and it is best suited for a small organization.

Its simplicity however works to its disadvantage in big organizations because rankings are difficult to develop in a large, complex organization. Moreover, this kind of ranking is highly subjective in nature and may offend many employees.

Job Classification Method

This method works by assigning each job a grade, level, or class that corresponds to a pay grade for instance Grade I, Grade II, Grade III, and so forth. These grades or classifications are created by identifying gradations of some common denominations, such as job responsibility, skill, knowledge, education required, and so on.

1. Class I: Executives: Further classification under this category may be Office Manager, Deputy Office Manager, Office superintendent, Departmental supervisor, etc.
   
2. Class II: Skilled workers: Under this category may come the Purchasing assistant, Cashier, Receipts clerks, etc.
   
3. Class III: Semiskilled workers: Under this category may come to Stenotypists, Machine- operators, Switchboard operators,s, etc.
   
4. Class IV: Semiskilled workers: This category comprises Daftaris, File clerks, office boys, etc.

Then, for each job grade so created standard job descriptions are determined. Thereafter, such standard description is matched with job descriptions in the organization. The standard description that most nearly matches the job description determines the job‘s grading.

This method requires a decision at the initial stage on the number of pay grades to be included in the wage and salary plan. Of course, the actual amount to be assigned to pay grades is made after the job evaluation is completed.

Factor Comparison Method

Under this method, instead of ranking complete jobs, each job is ranked according to a series of factors. These factors include mental effort, physical effort, the skill needed, responsibility, supervisory responsibility, working conditions, and other such factors (for instance, know-how, problem-solving abilities, accountability, etc.).

Pay will be assigned in this method by comparing the weights of the factors required for each job, i.e. the present wages paid for key jobs may be divided among the factors weighted by importance (the most important factor, for instance, mental effort, receiving the highest weight). In other words, wages are assigned to the job in comparison to its ranking on each job factor.

Point Method

The point method is widely used currently. Here, jobs are expressed in terms of key factors. Points are assigned to each factor prioritizing each factor in order of importance. The points are summed up to determine the wage rate for the job. Jobs with similar point totals are placed in similar pay grades. The procedure involved may be explained thus:

1. Select key jobs. Identify the factors common to all the identified jobs such as skill, effort, responsibility, etc.
2. Divide each major factor into a number of sub-factors. Each sub-factor is defined and expressed clearly in the order of importance, preferably along a scale. The most frequent factors employed in point systems are:
   
   1. skill (key factor): Education and training required, Breadth/depth of experience required, Social skills required, problem-solving skills, Degree of discretion/use of judgment, and Creative thinking.
      
   2. Responsibility/Accountability: Breadth of responsibility, Specialialised responsibility, Complexity of the work, Degree of freedom to act, Number of nature of the subordinate staff, Extent of accountability for equipment/plant, Extent of accountability for product/materials.
      
   3. Effort: Mental demands of a job, physical demands of a job, Degree of potential stress.
      
   4. Find the maximum number of points assigned to each job (after adding up the point values of all sub-factors of such a job). This would help in finding the relative worth of a job.
3. Once the worth of a job in terms of total points is expressed, the points are converted into money values keeping in view the hourly/daily wage rates. A wage survey is usually undertaken to collect wage rates of certain key jobs in the organization.

Objectives of Job Evaluation

The basic objective of job evaluation is to determine the relative contributions that the performance of different jobs makes towards the realization of organizational objectives. This basic objective of job evaluation serves a number of purposes which may be grouped into three categories: wage and salary fixation, restructuring job hierarchy, and overcoming anomalies. These are the objectives of job evaluation:

1. To determine the equitable wage differentials between the different jobs in the organization.
   
2. To eliminate the wage inequities.
   
3. To establish a rational basis for incentive, wage structure, and bonus schemes.
   
4. To develop a consistent wage policy.
   
5. To provide a framework for periodic review and revision of wage rates.
   
6. To provide a basis for wage negotiations with trade unions by providing information.
   
7. To minimize wage discrimination on the basis of age, sex,-caste, religion, region, etc.
   
8. To enable the management to gauge and control the payroll cost.

Features of Job Evaluation

The purpose of job evaluation is to produce a defensive ranking of jobs on which a rational and acceptable pay structure can be built. The important features of job evaluation may be summarized thus:

1. It tries to access jobs, not people.
   
2. The standards of job evaluation are relative, not absolute.
   
3. The basic information on which job evaluations are made is obtained from job analysis.
   
4. Job evaluations are carried out by groups, not by individuals.
   
5. Some degree of subjectivity is always present in job evaluation.
   
6. Job evaluation does not fix pay scales, but merely provides a basis for evaluating a rational wage structure.

Principles of Job Evaluation

The following are the principles of job evaluation:

1. All jobs in an organization will be evaluated using an agreed job evaluation scheme.
   
2. Job evaluators will need to gain a thorough understanding of the job.
   
3. Job evaluation is concerned with jobs, not people. It is not the person that is being evaluated.
   
4. The job is assessed as if it were being carried out in a fully competent and acceptable manner.
   
5. Job evaluation is based on judgment and is not scientific. However, if applied correctly it, can enable objective judgments to be made.
   
6. It. is possible to make a judgment about a job’s contribution relative to other jobs in an organization.
   
7. The real test of the evaluation results is their acceptability to all participants.
   
8. Job evaluation can aid organizational problem solving as it highlights duplication of tasks and gaps between jobs and functions.
   
9. Clearly defined and identifiable jobs must exist. These jobs will be accurately described in an agreed job description.

Advantages of Job Evaluation

These are the important advantages of job evaluation:

1. Job evaluation is a logical and to some. extent objective method of ranking jobs relative to one another. It may help in removing inequalities in existing wage structures and in maintaining sound and consistent wag differentials in a plant or industry.
   
2. In the case of new jobs, the method often facilitates fitting them into the existing wage structure.
   
3. The method helps in removing grievances arising out of relative wages, and it improves labor-management relations.
4. The method replaces the many accidental factors, occurring in less systematic procedures, of wage bargaining with more impersonal and objective standards, thus establishing a clear basis for negotiations.
5. The method may lead to greater uniformity in wage rates, thus simplifying wage administration.
6. The information collected in the process of job description and analysis may also be used for the improvement of selection, transfer, and promotion procedures on the basis of comparative job requirements.
7. Such information also reveals that workers are engaged in jobs requiring less skill and other qualities than they possess, thereby pointing to the possibility of making more efficient me of the plants‘ labor force.

What is job evaluation in HRM?

Job evaluation is the process of establishing the value of jobs in a job hierarchy. Job evaluation is a formal and systematic comparison of jobs in order to determine the worth of one job relative to another so that a wage or salary hierarchy results.

What is the meaning of job evaluation?

Job evaluation is a system of determining the relative worth of different jobs in an organization. Here a particular job of an enterprise is compared with its other jobs. Comparative study of these jobs is very necessary because on the basis of such study the structure of wages for different types of jobs is prepared. The value of each job depends on certain factors.

What is the process of job evaluation?

Following are the Steps process of job evaluation:
1. Gaining Acceptance
2. Creating Job Evaluation Committee
3. Finding the Jobs to be Evaluated
4. Analyzing and Preparing Job Description
5. Selecting Method of Evaluation
6. Classifying Jobs
7. Installing the Program
8. Reviewing Periodically.

What are the methods of job evaluation?

These are three basic methods of job evaluation in HRM:
1. Ranking Method
2. Job Classification Method
3. Factor Comparison Method
4. Point Method.

What determines the relative worth of a job?

What is the term for the process used to determine the worth of a job?

Which term refers to the systematic process of determining the relative worth of jobs in order to establish which should be paid more than others within an organization?

What is the process that determines the relative value of one job in relation to another quizlet?