Job Evaluation Definition And Methods for HR

21 of October, 2022

How do you determine what to pay for a certain position? What are the ways you can determine this? Are there methods for calculating this? If you are new to HR, these and more are some questions you might have asked yourself. Thankfully, there is a simple answer to these questions: job evaluation.

In this article, we would be telling you all you need to know about job evaluation and some of the methods used by HRs for evaluating jobs and assigning pay.

What is Job Evaluation?

Job evaluation can be defined as the means of determining the value of a skill, position, or job. It is the means through which compensation for a job is determined in order to ensure equality and fairness. 

The purpose of job evaluation is to create a payment or job compensation structure that is fair and consistent throughout all the positions in the organization. It aims to ensure that every employee receives adequate compensation for work done and that each employee’s work is valued accordingly.

This process of valuation is rather complicated and can often be tasking and requires a lot of patience and experience to be done right.  

The evaluation is often done by the HR department; however, consultancy companies often work with HR to determine more deserving compensation plans when things are especially complicated. 

Job Evaluation Methods

As stated earlier, job evaluation processes may be a bit tasking. There are methods you can however employ to make the process a lot easier. These methods can be divided into two major categories:

Internal Comparison

As the name suggests, this method determines compensation for a position or a job by comparing it to other positions within the same organization.

External Comparison

As with the internal comparison method, the external comparison method compares the job to be evaluated. Instead of comparing the job to be evaluated with other jobs in the organization, it is compared to that same position across the job market. 

These methods can further be classified depending on the data they use which could be either qualitative data or quantitative data. Methods that make use of qualitative data make comparisons based on the characteristics or quality of the position. Those that make use of quantitative data use numerical values to make comparisons. 

Moreover, depending on which method of comparison you choose, the method of evaluation you would be using would vary. Below are some of the most common methods:

Internal Methods

Here are some of the job evaluation methods classified under internal methods.

Ranking method

This method ranks all the positions in an organization in order of importance. It is a qualitative method that is often used; however, this method can be very subjective and is best used alongside another method in order to avoid errors. 

Classification method

This is also a qualitative method of job evaluation. It requires analyzing or writing down job descriptions and classifying them into grades. After being classified, their impact on the job would determine their compensation. But just like the ranking method, this is also quite subjective. 

Point Factor Method

This is a quantitative method that uses points to determine the compensation level of a position. This method requires creating factors that can influence compensation. Such factors may include skill or labor; however, once these factors have been established, points would then be assigned to them. The position with the highest number of points would get the most compensation. 

Factor Comparison Method

This is a more complex method of determining compensation for jobs. It is a quantitative method that combines both the ranking method and the point factor method. 

As with the point factor method, there must be established factors that influence compensation. Then, in place of points as with the point factor system, HR uses benchmark jobs that are paid to determine how to measure the established factors. Then, in place of points, monetary values are used to determine compensation.

External Methods

Competitive Market Analysis

This is an effective quantitative method of job evaluation. Using this method, HR may need to purchase external data from third parties. This data would contain information on the salary of a job position in the market. They then use that data to determine the compensation required for that position within the organization.

Conclusion

By now we have established that job evaluation is very important in any organization, though it can be very tasking. However, with tools like Sesame’s HR Software, deducing job compensation can be much less tasking.