Chapter 5

Job-Based Structures and

Job Evaluation
McGraw-Hill/Irwin

Copyright 2011 by the McGraw-Hill Companies, Inc. All rights reserved.

Chapter Topics
Job-Based Structures: Job Evaluation
Defining Job Evaluation: Content,
Value, and External Market Links
How-to: Major Decisions
Job Evaluation Methods
Who Should Be Involved?
The Final Result: Structure
Balancing Chaos and Control
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Job-Based Structures: Job

Evaluation
Job evaluation is the process of
systematically determining the relative
worth of jobs to create a job structure
for the organization
The evaluation is based on a
combination of:
Job content
Skills required
Value to the organization
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Job-Based Structures: Job

Evaluation (cont.)
Organizational culture
External market

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Exhibit 5.1: Many Ways to Create Internal

Structure

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Defining Job Evaluation: Content,

Value, and External Market Links
Content and value
A structure based on content orders jobs
on the basis of the skills, duties, and
responsibilities associated with the jobs
A structure based on job value orders
jobs on the basis of the relative
contribution of the skills, duties, and
responsibilities of each job to the
organizations goals

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Defining Job Evaluation: Content, Value,

and External Market Links (cont.)
Linking content with the external
market
Aspects of job content take on value
based on their relationship to market
wages
Aspect not related to the external labor
market may be excluded in the job
evaluation

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Defining Job Evaluation: Content, Value,

and External Market Links (cont.)
Measure for measure versus Much

ado about nothing

Job evaluation may be judged according

to technical standards
If participants agree that skills, effort,
responsibilities, and working conditions
are important, then work is evaluated
based on these factors

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Exhibit 5.2: Assumptions Underlying

Different Views of Job Evaluation

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Exhibit 5.3: Determining an

Internally Aligned Job Structure

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How-To: Major Decisions

Establish the purpose

Supports organization strategy

Supports work flow
Is fair to employees
Motivates behavior toward organization
objectives

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How-To: Major Decisions (cont.)

Single versus multiple plans
Different evaluation plans are used when
the work content is too diverse to be
evaluated by one plan

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How-To: Major Decisions (cont.)

To be sure that all relevant aspects of
work are included in the evaluation, an
organization may start with a sample of
benchmark jobs
Contents are well-known and relatively stable
over time
Job is not unique to one employer
A reasonable proportion of the work force is
employed in this job

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Exhibit 5.4: Benchmark Jobs

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How-To: Major Decisions (cont.)

Diversity in the work can be thought of in
terms of :
Depth (vertically)
Breadth (horizontally)

Number of job evaluation plans used

hinges on:
How detailed an evaluation is required to
make pay decisions
How much it will cost

Choose among job evaluation methods

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Exhibit 5.5: Comparison of Job

Evaluation Methods

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Ranking
Orders job descriptions from highest
to lowest based on a global definition
of relative value or contribution to the
organizations success
Alternation ranking orders job
descriptions alternately at each extreme
Paired comparison method uses a matrix
to compare all possible pairs of jobs

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Ranking (cont.)
Disadvantages:
Ranking criteria are usually poorly defined
Evaluators must be knowledgeable about every
job under study

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Exhibit 5.7: Paired Comparison

Ranking

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Classification
A series of classes covers the range of
jobs
A job description is compared to the
class descriptions to decide which
class is the best fit

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Classification (cont.)
Greater specificity of the class definition
improves the reliability of evaluation
Limits the variety of jobs that can easily be
classified

Jobs within each class are considered to

be equal work and will be paid equally

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Exhibit 5.8: Classifications for Engineering

Work Used by Clark Consulting

Source: Clark Consulting. Used by permission.

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Point Method
Common characteristics:
Compensable factors
Factor degrees numerically scaled
Weights reflect relative importance of
each factor

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Point Method (cont.)

Conduct job analysis
Determine compensable factors
Scale the factors
Weight the factors according to
importance
Communicate the plan, train users;
prepare manual
Apply to nonbenchmark jobs

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Step 1: Conduct Job Analysis

A representative sample of jobs
(benchmark jobs) is drawn for analysis
Content of these jobs is basis for:
Defining compensable factors
Scaling compensable factors
Weighting compensable factors

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Step 2: Determine Compensable

Factors
Compensable factors are those
characteristics in the work that the
organization values, that help it
pursue its strategy and achieve its
objectives

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Step 2: Determine Compensable

Factors (cont.)
Based on strategy and values of
organization
Reinforce the organizations culture, values,
business direction, and nature of work
May be eliminated if they no longer support
the business strategy

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Step 2: Determine Compensable

Factors (cont.)
Based on the work itself
Documentation must support the choice of
factors

Acceptable to the stakeholders

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Step 2: Determine Compensable

Factors (cont.)
Adapting factors from existing plans
Skills and effort required, responsibility, and
working conditions
National Electrical Manufacturers Association
(NEMA), National Metal Trades Association
(NMTA), Equal Pay Act (1963), and Steel plan
The Hay Guide Chart-Profile Method

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Exhibit 5.12: Factors in Hay Plan

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Exhibit 5.13: Hay Guide Chart

Profile Method of Job Evaluation

Source: Hay Group, The Hay Guide Chart-Profile Method of Job Evaluation: An Overview, http://
www.haygroup.com/ww/services/index.aspx?ID=1529.

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Step 2: Determine Compensable

Factors (cont.)
How many factors?
Illusion of validity - Belief that factors
capture divergent aspects of a job and
both are important
Small numbers - If even one job has a
certain characteristic, it is used in the
entire work domain

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Step 3: Scale the Factors

Scales reflecting different degrees
within each factor are constructed
Most scales consist of four to eight
degrees
Also include undefined degrees such as
plus and minus around a scale number

Major issue: Interval scaling

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Step 3: Scale the Factors (cont.)

Criteria for scaling factors:
Ensure number of degrees is necessary to
distinguish among jobs
Use understandable terminology
Anchor degree definitions with
benchmark-job titles and/or work
behaviors
Make it apparent how degree applies to
job
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Exhibit 5.14: Factor Scaling

National Metal Trades Association

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Step 4: Weight the Factors

According to Importance
Different weights reflect differences in
importance attached to each factor by
the employer
Determination of factor weights
Advisory committee allocates 100 percent
of the value among factors

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Step 4: Weight the Factors

According to Importance (cont.)
Select criterion pay structure
Committee members recommend the
criterion pay structure
Statistical modeling techniques are used
to determine the weight for each factor
Statistical approach is termed policy
capturing to differentiate it from the
committee a priori judgment approach
Weights also influence pay structure
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Exhibit 5.14: Job Evaluation Form

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Step 5: Communicate the Plan and

Train Users
A manual is developed
Describes job evaluation method
Defines compensable factors
Provides information to distinguish
varying degrees of each factor

Users require training and background

information on the plan
Appeals process may be included
Communication is required to build
employee acceptance
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Step 6: Apply to Nonbenchmark

Jobs
Final step involves applying plan to
remaining jobs
Plan becomes a tool for managers and
HR specialists
Trained evaluators will evaluate new
jobs or reevaluate jobs whose work
content has changed

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Step 7: Develop Online Software

Support

Online job evaluation is widely used in

larger organizations
Becomes part of a Total Compensation
Service Center for managers and HR
generalists to use

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Who Should be Involved?

Managers and employees with a stake
in the results
Committees, task forces, or teams
that include representatives from key
operating functions, including
nonmanagerial employees
Including union representatives helps
gain acceptance

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Who Should be Involved? (cont.)

Compensation professionals are
primarily responsible for most job
evaluations for most jobs
Design process matters
Attending to the fairness of the design
process and approach chosen is likely to
achieve employee and management
commitment, trust, and acceptance of
results
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Who Should be Involved? (cont.)

Compensation professionals are primarily
responsible for most job evaluations for
most jobs

Appeals/review procedures
Inevitable that some jobs are incorrectly
evaluated
Requires review procedures for handling
such cases and helping to ensure
procedural fairness
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Who Should be Involved? (cont.)

I know I speak for all of us when I
say I speak for all of us
Procedures should be judged for their
susceptibility to political influences

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The Final Result: Structure

The final result of the job analysis
job description job evaluation
process is a structure, a hierarchy of
work
Organizations commonly have multiple
structures derived through multiple
approaches that apply to different
functional groups or units

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The Final Result: Structure (cont.)

Internal alignment is most influenced
by fair and equitable treatment of
employees doing similar work in the
same skill/knowledge group

5-47

Exhibit 5.17: Resulting Internal Structures

Job, Skill, and Competency Based

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Balancing Chaos and Control

Job evaluation changed the legacy of
decentralization and uncoordinated
wage-setting practices of the 1930s
and 1940s
Must be flexible to adapt to changing
conditions
Avoids bureaucracy and increases
freedom to manage
Also reduces control and guidelines,
making enforcement of fairness difficult
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