JOB EVALUATION IN ORGANIZATIONS:CREATING THE JOB-EVALUATION SYSTEM

1. CREATING THE JOB-EVALUATION SYSTEM

Implementing Job Evaluation

The major decisions involved in the design and administration of job evaluation include:

1. What are the objectives of job evaluation?

2. Which job-evaluation method should be used?

3. Should a single plan or multiple plans be used?

4. Who should participate in designing the system?

Specifying the Macro Objectives of Job Evaluation

From a macro standpoint, job evaluation allows an organization to establish a pay structure that is internally equitable to employees and consistent with the goals of the organization. Once an orga- nization decides on its strategic goals and its value system, job evaluation can help to reward jobs in a manner consistent with the strategic mission. For example, organizations in mature industries may decide that continued success depends on greater risk taking amongst employees, particularly in new product development. Compensable factors can be chosen to reinforce risk by valuing more highly those jobs with a strong risk-taking component. Once this emphasis on risk taking is com- municated to employees, the first step in reshaping the value system has begun.

Since they guide the design and administration of job evaluation, strategic plans and business objectives need to be clearly and emphatically specified. Unfortunately, these initially established objectives too often get diluted, discarded, or muddled in the midst of all the statistical procedures performed. Another complication can be the bureaucracy that tends to accompany the administration of job evaluation. Job evaluation sometimes seems to exist for its own sake, rather than as an aid to achieving the organization’s mission (Burns 1978). So an organization is best served by initially establishing its objectives for the process and using these objectives as a constant guide for its decisions.

Specifying the Micro Objectives of Job Evaluation

Some of the more micro objectives associated with job evaluation include:

Help foster equity by integrating pay with a job’s contributions to the organization.

Assist employees to adapt to organization changes by improving their understanding of job content and what is valued in their work.

Establish a workable, agreed-upon pay structure.

Simplify and rationalize the pay relationships among jobs, and reduce the role that chance, fa- voritism, and bias may play.

Aid in setting pay for new, unique, or changing jobs.

Provide an agreed-upon device to reduce and resolve disputes and grievances.

Help ensure that the pay structure is consistent with the relationships among jobs, thereby sup- porting other human resource programs such as career planning, staffing, and training.

Choosing the Job-Evaluation Method

Obviously, the organization should adopt a job-evaluation method that is consistent with its job- evaluation objectives. More fundamentally, however, the organization should first decide whether job evaluation is necessary at all. In doing so, it should consider the following questions (Hills 1989):

Does management perceive meaningful differences between jobs?

Can legitimate criteria for distinguishing between jobs be articulated and operationalized? Will job evaluation result in clear distinctions in employees’ eyes?

Are jobs stable and will they remain stable in the future?

Is traditional job evaluation consistent with the organization’s goals and strategies? Do the benefits of job evaluation outweigh its costs?

Can job evaluation help the organization be more competitive?

Many employers design different job-evaluation plans for different job families. They do so be- cause they believe that the work content of various job families is too diverse to be adequately evaluated using the same plan. For example, production jobs may vary in terms of working conditions and the physical skills required. But engineering and marketing jobs do not vary on these factors, nor are those factors particularly important in engineering or marketing work. Rather, other factors such as technical knowledge and skills and the degree of contact with external customers may be relevant. Another category of employees that might warrant special consideration, primarily due to supervisory responsibilities, is management.

The most common criteria for determining different job families include similar knowledge / skill/ ability requirements, common licensing requirements, union jurisdiction, and career paths. Those who argue for multiple plans, each with unique compensable factors, claim that different job families have different and unique work characteristics. To design a single set of compensable factors capable of universal application, while technically feasible, risks emphasizing generalized commonalities among jobs and minimizing uniqueness and dissimilarities. Accurately gauging the similarities and dissimilarities in jobs is critical to establish and justify pay differentials. Therefore, more than one plan is often used for adequate evaluation.

Rather than using either a set of company-wide universal factors or entirely different sets of factors for each job family, some employers, such as Hewlett-Packard, start with a core set of common factors, then add other sets of specialized factors unique to particular occupational or functional areas (finance, manufacturing, software and systems, sales, management). These companies’ experiences suggest that unique factors tailored to different job families are more likely to be both acceptable to employees and managers and easier to verify as work related than are generalized universal factors.

Deciding Who Will Participate in the Job Evaluation Process

Who should be involved in designing job evaluation? The choice is usually among compensation professionals, managers, and / or job incumbents. If job evaluation is to be an aid to managers and if maximizing employee understanding and acceptance is an important objective, then all these groups need to be included.

Compensation / Job-Evaluation Committees

A common approach to gaining acceptance and understanding of pay decisions is through use of a compensation (job-evaluation) committee. Membership on these committees seems to vary among firms. They all include representatives from key operating functions, and increasingly, with the em- phasis on employee empowerment, they are including nonmanagerial employees. In some cases, the committee’s role is only advisory; in others its approval may be required for all major decisions.

Employee–Manager Participation

Participation in the design and administration of compensation plans seems related to increased trust and commitment on the part of employees and managers. Lack of participation makes it easier for employees and managers to imagine ways the structure might have been rearranged to their personal liking. For example, an operating manager may wish to elevate the job title for a star performer in order to exceed the maximum pay permitted for the existing job title. This is less likely to occur if the people affected by job-evaluation outcomes are involved in the design and administration pro- cesses. Some evidence has been found, however, for the assertion that incumbents tend to rate their jobs higher than their supervisors. Hence, there is a need for a system of checks and balances in the process (Huber 1991).

Unions

Management probably will find it advantageous to include union representation as a source of ideas and to help promote acceptance of the results. For example, at both AT&T and Borg-Warner, union– management task forces have participated in the design of new job-evaluation systems. When this occurs, the union joins with management to identify, negotiate, and resolve problems related to the job-evaluation process. As noted below, not everyone buys into this notion of cooperation.

Other union leaders, however, feel that philosophical differences prevent their active participation in job evaluation (Burns 1978). They take the position that collective bargaining yields more equitable results than does job evaluation. In other cases, jobs are jointly evaluated by union and management representatives, and disagreements are submitted to an arbitrator.