Is the process of determining the relative worth of different jobs in an organization with a view to link compensation?

The job evaluation process follows the following four steps – data collection; selection of compensable factors; Job evaluation and assigning pay to the job.

These different but related steps may now be briefly reviewed as:

1. Gathering job analysis data:

First, the information has to be collected through the method of job analysis. Validity here should be a guiding principle simply meaning that the job analyst should accurately capture all of the content. It is very important to capture the similarities and differences between the jobs. Vague, incomplete or inaccurate job descriptions may result in some jobs being incorrectly evaluated.

1. Selecting compensable factors:

Compensable factors are the factors that the organization chooses to reward through differential pay. These typical compensable factors are skill, knowledge, responsibility and working conditions.

1. Evaluating job using certain methods:

There are four basic methods of job evaluation process.

1. Assigning pay to the job:

The end product of the job evaluation exercise is a hierarchy of jobs in terms of their relative value to the organization. Assigning pay to this job hierarchy is referred to as pay structure pricing. This practice requires a policy decision about how the organization’s pay levels relate to its competitors.

Importance of Job Evaluation

When two or more people do different work for a third, some kind of job evaluation is needed.

The third person, the employer, must somehow arrive at a rate of wages per job which will not only:

(1) Be competitive in attracting and retaining employees.

(2) But also to be seen as related to the relative difficulty of their jobs.

If the employer sets wage rates that do not meet either or both pay targets, this usually results in employee dissatisfaction with the salary. Loss of good employees, inability to attract employees, low morale and low productivity are some of the business problems that are often associated with dissatisfaction with wages.

Of the two wage goals, meeting market rates and achieving satisfactory internal wage relationships, the latter has a greater priority. First, the internal wage relations are more clear to employees. If employees view them as unfair, out of line, and abusive, pay rates within the company can be a constant source of discontent, as employees are reminded of internal inequities every work day.

Second, a fair internal wage hierarchy is a prerequisite for establishing sound and workable policies regarding wage advancement for employees.

Finally, a well-considered and agreed-upon set of internal relative values ​​for jobs greatly helps in establishing an informed position of the firm in relation to outside wage levels.

Aims and Objectives of Job Evaluation

The general objective of job evaluation is to assess and evaluate the nature of the work to be done in a particular job; Main tasks to be performed and the balance, difficulty, value, frequency and importance. Skills, qualities, abilities and attributes are matched, and a market value is placed on them, with a certain weighting as necessary or desirable.

The jobs are then placed in an order of magnitude matching them against grades, job titles, and salary scales.

Creating appropriate wage differentials for firm jobs is necessary to bring up the required caliber of labor and to encourage men to be trained for skilled jobs. Moreover, ratings (occupation differentials expressed as employment grades or numerical point values) are necessary to establish a rational and practical firm’s wage rate and salary schedules.

In companies where no such logical distinctions in wages and salaries have been established, compensation patterns are often irregular and chaotic because they will evolve from traditional attitudes, arbitrary decisions, utilitarianism, and favoritism.

In such cases, jobs that require more effort, skill, and responsibility may pay less than jobs that require fewer such attributes; Individuals in the same or similar occupations may receive widely varying compensation. Thus morale will be low and performance poor since employees have regressed heavily from these disparities, and management cannot explain the inconsistencies on a rational basis.

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What process determines the relative worth of each job in an organization?

Is a process of determining the relative worth of a job it is a process which is helpful even for framing compensation plans by the personnel manager?

Which method do companies use to determine job worth?

What is job evaluation in compensation management?