Job Evaluation

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 Learning Objective

Students will be able to learn the following concepts in detail:

◾ Job Evaluation: Meaning and Definition

◾ Objectives of Job Evaluation
◾ Advantages of Job Evaluation
◾ Principles of Job Evaluation:
◾ Process of Job Evaluation
◾ Job Evaluation Methods
◾ Limitations of Job Evaluation

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 Job Evaluation: Meaning and Definition

Job evaluation is the process of analyzing and assessing

various jobs systematically to ascertain their relative
worth in an organization

In the words of Edwin B. Flippo. "Job evaluation is a

systematic and orderly process of determining the worth
of a job in relation to other jobs.“

In the words of Dale Yoder, "Job evaluation is a

practice which seeks to provide a degree of objectivity
in measuring the comparative value of jobs within an
organization and among similar organizations."
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 Objectives of Job Evaluation

◾ To establish an orderly, rational, systematic structure of jobs based

on their worth to the organization.

◾ To justify an existing pay rate structure or to develop one that

provides for internal equity.

◾ To assist in setting pay rates that are comparable to those of in

similar jobs in other organizations to compete in market place for
best talent.

◾ To provide a rational basis for negotiating pay rates when

bargaining collectively with a recognized union.

◾ To ensure the fair and equitable compensation of employees in

relation to their duties.

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 Cont……

◾ To ensure equity in pay for jobs of similar skill, effort,

responsibility and working conditions by using a system that
consistently and accurately assesses differences in relative value
among jobs and

◾ To establish a framework of procedures to determine the grade

levels and the consequent salary range for new jobs or jobs which
have evolved and changed.

◾ To identify a ladder of progression for future movement to all

employees interested in improving their compensation.

◾ To comply with equal pay legislation and regulations determining

pay differences according to job content.

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To develop a base for merit or pay-for-performance.
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 Advantages of Job Evaluation

Job evaluation 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.

1. Reduction in inequalities in salary structure

2. Specialization
3. Helps in selection of employees
4. Harmonious relationship between employees and
manager
5. Standardization
6. Relevance of new jobs
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 Principles of Job Evaluation:

1. Rating of the job should be done rather than the rating of man
doing the job which is a concern of merit rating.

2. The factors selected should be less in number.

3. The job evaluation plan must be acceptable to the employees.

4. The weightage given to the various factors should not be

disclosed to the formen or supervisors while discussing with
them job evaluation plan.

5. There should be a limited number of occupational wages, as far

as possible.

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 Process of Job Evaluation:

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 Job Evaluation Methods:

After job analysis preparations of job descriptions comes the essential

stage of job evaluation, namely, the systematic comparison of jobs in
order to establish a job hierarchy. The techniques which have been
commonly used tend to fall into one of the two main categories:
◾ Non-analytical or Non-quantitative or summary methods
◾ Analytical or quantitative methods.

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 Ranking Method:

The ranking method is the simplest form of job evaluation . In this method, each job as a
whole is compared with other and this comparison of jobs goes on until all the jobs have
been evaluated and ranked. All jobs are ranked in the order of their importance from the
s implest to the hardest or f rom the highest to the lowest.
Merits:

Ranking method has the following merits:

1 . I t i s t h e s i mp lest met h o d .
2 . I t i s q u i te eco n omical t o p u t i t i n t o eff ect .
3 . I t i s l es s t i me co n s umi ng an d i n v olv es l i t t le p ap er wo r k .

Demerits:

The method suffers from the following demerits:

1. The main demerit of the ranking method is that there are no definite standards of
judgment and also there is no way of measuring the differences between jobs.
2. It suffers f rom its sheer unmanageability when there are a large number of jobs.

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 Grading Method:

Grading method is also known as ‘ classification method’. Once the grades are established,
each job is then placed into its appropriate grade or class depending on how well its
characteristics f i t in a grade. In this way, a series of job grades is created. Then, different
wage/ salary rate is f ixed for each grade.

Merits:
The main merits of grading method of job evaluation are:

1 . T h i s met h o d i s eas y t o u n d erstan d an d s i mp l e t o o p er ate.

2 . It is economical and, therefore, suitable for small organisations.
3 . The grouping of jobs into classifications makes pay determination problems easy to
administer.
4 . T h i s met h o d i s u s ef u l f o r Go v er nment j o b s .

Demerits:
The demerits of this method include:

1 . Th e met h o d s u ff ers f r o m p er s onal b i as o f t h e co mmi t tee memb er s .

2 . It cannot deal with complex jobs which will not f i t neatly into one grade.
3 . This method is rarely used in an industry.

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 Points Rating

This is the most widely used method of job evaluation. Under this method, jobs
are broke down based on various identifiable factors such as skill, effort,
training, knowledge, hazards, responsibility, etc. Thereafter, points are allocated
to each of these factors. Weights are given to factors depending on their
importance to perform the job. Points so allocated to various factors of a job are
then summed.

Merits:

1. It is the most comprehensive and accurate method of job evaluation.

2. Prejudice and human judgment are minimised, i. e. the system cannot be

easily manipulated.

3 . Being the systematic method, workers of the organisation favour this method.

4 . The scales developed in this method can be used for long time.

5 . Jobs can be easily placed in distinct categories.

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 Demerits:

1. It is both time-consuming and expensive method.

2. It is difficult to understand for an average
worker.
3. A lot of clerical work is involved in recording
rating scales.
4. It is not suitable for managerial jobs wherein the
work content is not measurable in quantitative
terms.

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 Factor Comparison Method

This method is a combination of both ranking and

point methods in the sense that it rates jobs by
comparing them and makes analysis by breaking jobs
into compensable factors. This system is usually
used to evaluate white collar, professional and
managerial positions.

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 Merits:

This method holds the following merits:

1. It is more objective method of job evaluation.

2. The method is flexible as there is no upper limit on the rating of a
factor.
3. It is fairly easy method to explain to employees.
4. The use of limited number of factors (usually five) ensures less chances
of overlapping and over-weighting of factors.
5. It facilitates determining the relative worth of different jobs.

Demerits:
The method, however, suffers from the following drawbacks:

1. It is expensive and time-consuming method.

2. Using the same five factors for evaluating jobs may not always be
appropriate because jobs differ across and within organisations.
3. It is difficult to understand and operate.
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 Limitations of Job Evaluation

1. It lacks scientific precision because there is no standard list of factors

to be considered and, moreover, all factors cannot be measured
accurately.

2. It presumes that jobs of equal worth will be equally attractive to the

employees, but it is not true in real life.

3. It tends to be inflexible in so far as it does not give right weightage to

wage rate prevalent in the industry or region as a whole.

4. It says nothing about the absolute size of wage differentials

appropriate to the evaluated job structure.

5. The trade unions often regard job evaluation with suspicion because
some of the methods, particularly point method and factor comparison
method, are not easy to understand, and they fear that job evaluation
will do away with collective bargaining.

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 SIGNIFICANCE OF JOB EVALUATION

◾ 1 .Job evaluation helps to rate the job

◾ 2. Job evaluation helps to determine pay structure
◾ 3. Job evaluation helps in bringing harmonious relation
between labour and management
◾ 4. Job evaluation helps to minimize the cost of recruitment
and selection
◾ 5. Job evaluation helps to differ job other than skills
◾ 6. Job evaluation helps to determine the cost and rate of
production
◾ 7. Job evaluation helps to determine the requirement of
training and development
◾8. Job evaluation helps to minimize cost

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 Outcome

Students will be able to understand the concept of

Job Evaluation in Detail.

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