Determining equitable pay is important for organizations.
Because of a rapidly changing economy, new jobs that require differing skills, experience and qualifications are created in organizations at an ever increasing pace. With this said, the process of determining pay for various jobs becomes more complex for human resource compensation professionals. Therefore, using a simple, consistent process to equitably analyze the worth of various jobs is critical for organizations.
The Facts
Multiple reasons exist for performing job evaluations, one being regulatory compliance. According to the U.S. Equal Opportunity Employment Commission, it is "the right of employees to be free from discrimination in their compensation." Therefore, it is vital that organizations work to determine fair and equitable compensation levels. Other reasons include establishing a consistent job structure, providing a pay-for-performance baseline and establishing pay rates that are competitive. The objective is to determine which jobs should get more pay than others.
Job Evaluation Supports Equality and Relationships
Most people in the workforce are motivated by their pay, so the main objective of job evaluations is to establish consistency in the salary structure and reduce inequalities in salaries. Some select external-based or market data to evaluate jobs, while others select internal-based or job content evaluation methods. Others use both methods for better accuracy. Through job evaluation, amiable and pleasant relations are maintained between employees and management because salary disparities that lead to controversy are minimized.
Most Common Methods
The two most common methods of job evaluation are whole job ranking, where jobs are taken as a whole and ranked against each other, or a points system, in which points are awarded for various aspects of the job. In the points system, various aspects or parts of the job, such as education and experience, are assessed and a point value awarded. For example, the higher the educational requirements of the job, the higher the points scored.
Focus of Job Evaluation
The job evaluation process focuses on the job, not on a person. For instance, the focus remains on skills required for the job, not the skills the individual possesses. The job is assessed as if it were being carried out in a fully competent and acceptable manner, and if applied consistently and correctly, objective judgments can be made. Additionally, job evaluation supports organizational strategic planning and problem solving because it draws attention to unnecessary duplication of tasks as well as identifying resource gaps between jobs and functions.
Keeping It Simple
Regardless of the selected job evaluation approach, focusing on primary compensable factors is an evaluative focus that simplifies the process by standardizing and bringing uniformity to salary structure. A few of the compensable factors are skill, which is measured by factors such as experience, ability, education and training required to perform the job. Effort is the amount of physical or mental exertion needed to perform the job. Responsibility is the degree of accountability expected of the person performing the job. Working conditions assesses physical surroundings and hazards. And establishment identifies the distinct physical location of the business.
