An Evaluation of Job Evaluation

Job Evaluation:  an assessment of job tasks and responsibilities to create a top-to-bottom hierarchy reflective of the relative value that the company places upon its jobs.

Throughout my Compensation career, I have never enjoyed having to evaluate jobs.  Quite the opposite.  As soon as my career progressed high enough I delegated responsibility to a subordinate and washed my hands of it.  Job evaluation is a thankless task, with the evaluator subject to criticism from all sides.

• If you agree with an evaluation request, you’re only admitting to the obvious.
• If you disagree and value the job different (lower), you clearly don’t understand the key tasks and responsibilities.
• The subjective nature of the process is viewed with suspicion by everyone.
• Job evaluators do not receive Christmas cards.

Despite my criticism for the process, the art of evaluating jobs has been around since the Hay folks and the National Metal Trades Association (NMTA) in the 1930's.

• Companies need a method to establish a hierarchy of job importance (A is bigger than B, B is bigger than C, etc.).
• They need to explain the relationship of jobs, one to another (A is how much bigger than B?).
• Companies want to set employee expectations and manage the Reward process (price the jobs).

Job Evaluation does have other purposes as well.  It sets career progression steps and assists with organizational development (which jobs are necessary).  It also allows the company to avoid the criticism that the competitive labor market has dictated who should be paid more or less than others.

Despite these worthy goals disdain for the process comes from many directions:

• Job descriptions are often poorly written, with content manipulated by managers seeking to gain an advantage.
• Pressure is often brought to bear on the Evaluator to increase (almost never the opposite) a rating.
• Evaluation language, forms, and procedures are often complicated and confusing to employees and managers alike.
• Senior management support for the integrity of the process is often limited and tentative.
• Employees are skeptical of an inherently subjective process where decisions are made by someone from outside their functional area.

For those who use a job evaluation process (whole job or quantitative), a procedural next step is to place a price tag on each position– and to do that you need to conduct a study of the competitive marketplace.  That's called Market Pricing.

Market Pricing

This is the one process that gets you straight to the core of the matter – placing a monetary value on your jobs.  Some of its advantages are:

• More objective, especially if using multiple sources.
• Easier for management to accept, vs. the judgment of “some analyst in HR."
• Easier to defend results to otherwise biased managers.
• The evaluator is subject to less criticism (my personal favorite).

Many companies follow both processes, first job evaluation and then market pricing, but does that two-phased time and effort add value?  I have my doubts, especially if the prime goal is to establish a salary structure.

Sometimes the competitive market conflicts with your hierarchy.

What if the marketplace indicates a job is worth @$50,000, but because of your evaluation process the current midpoint is either much higher or much lower?  Ignoring the market could prove costly, in terms of either dollars or employee disengagement.  But if you follow competitive practice – then what is the point of your job evaluation process?

When faced with a choice most companies would follow the marketplace and make the change.   So, at the end of the day, the true indicator of the value placed on your hierarchy is through market pricing.

Another concern; while Job Evaluation can be a long and tedious process, it isn’t a sufficient end in itself.  You still must price the jobs to create an effective salary structure.  The external survey data needs to be “interpreted” by a skilled analyst to ensure position matches are appropriate and the subsequent data properly integrated.  We call this “massaging the data.”

Some examples of how market data can be massaged between the survey source(s) and the salary structure:

• When you cluster diverse market data points into a graded salary structure.
• When you are not able to afford competitive rates, you may lower the value of each position by creating a below-market salary structure.
• When you move jobs into certain grades to reflect the organizational realities of your company (the senior analyst must be either one or two grades higher than the core analyst).
• There will also be “favored sons,” positions that must be slotted a certain way in your hierarchy, regardless of market data.

If your goal is to price the internal and external value of your positions you don't need an involved job evaluation process, but you do need market pricing.   I would suggest a market pricing effort first, to establish competitive pay levels, and then if desired for other purposes follow up with some form of whole job evaluation process (keep it simple).  Finally, the evaluator(s) should recommend a degree of massaging to ensure that the results “make sense,” from both an internal as well as external viewpoint.

Maybe that way they'll receive a few Christmas cards this year.

Chuck Csizmar CCP is founder and Principal of CMC Compensation Group, providing global compensation consulting services to a wide variety of industries and non-profit organizations.  He is also associated with several HR Consulting firms as a contributing consultant.  Chuck is a broad based subject matter expert with a specialty in international and expatriate compensation.  He lives in Central Florida (near The Mouse) and enjoys growing fruit and managing (?) a clowder of cats.

Creative Commons image, " Bureaucrat," by Delmara Dealings

Comments

[E. James (Jim) Brennan]

Chuck: your solution will definitely work well for most small and many large firms whose benchmark jobs can be identically matched with excellent precise relevant market survey data.

Folks should remember that market pricing IS a point-factor job evaluation system of its own: each "point" is a whole dollar and the only factor is the job title (or "whole job").

Since most employers can't precisely match each job and also have unique internal values even for benchmark jobs where the skill, effort, responsibilities and working conditions are identical, a need to "interpolate" frequently arises. THAT is where most job eval systems that incorporate subjective factors and weights fall apart.

Easiest solution is to "peg" job values as X% or Y$ above or below the closest relevant benchmarks. Has its flaws, but remains defensible: i.e., we consider our Left-Handed Specialist to be 8% more valuable than the more easily found Right-Handed peer. Why? Cuz the CEO sez so!

Or use paired comparison for the many unique jobs. There are lots of alternative JE methods.

Simply having SOME semi-objective system to consistently settle disputes about where a "different" job should fit in the internal peer/pay structure is immensely valuable.

Back in The Day, I used high-level predictive statistical analysis systems to custom design point-factor plans that precisely predicted the current desired market/internal value of every benchmark job. It was then consistently applied to unique jobs. Problem was, of course, it had to be carefully regularly updated and periodically re-validated. Like, when internal values change dramatically, or when STEM or other hot job market values move inconsistently.

It's a number-cruncher's dream but a nightmare for KISS system advocates.

[Jacque Vilet]

Agree with you 100%.