Unlocking the Power of Job Evaluation:
Achieving Pay Equity and Organizational Business Objectives
Job evaluation is the process of placing a value on a job relative to other jobs in an organization. How the job is valued can have significant impact on both how employees perceive the degree of pay equity in an organization, and how leadership can leverage employee skills and abilities to achieve business objectives. In this blog, we recommend a methodology and process for making job evaluation decisions.
Deciding which jobs are placed in each salary range and making pay decisions within a salary range are pressures placed on human resources and others responsible for managing salary structures and job grades. If not managed in a consistent manner, it can consume a large amount of time for those in HR trying to maintain internal fairness, external competitiveness and attract and retain the right talent for the organization.
There are requests from department heads and leaders to give employees increases for many different reasons. Before considering making any changes to employee compensation within a salary range or adjusting the job’s grade and range, we recommend establishing a methodology and process for evaluating jobs. This will ensure that the requested changes are based on expanded scope of role and provide a transparent and consistent practice for making compensation and job grade adjustments.
According to a WorldatWork Survey on Job Evaluation (Job Evaluation and Market Pricing Practices Survey February 2020), job evaluation is often prompted by a newly created job, followed closely by significant changes in the job. Specifically:
- Newly Created Job
- Significant change in job (e.g., job responsibilities evolved)
- By request (e.g., perceived inequity by manager or pay equity issue)
- Broad-based review of department/unit/organization as a whole
- Promotion and/or transfer
- Fixed schedule
What Not to Do:
- Begin the process of job evaluation based on a call from a manager without any written documentation describing the job
- Use a candidate’s or incumbent’s resume
- Base it solely on competitive compensation data without considering the relationship of that job to others in the function
- Retitle the job to something different to elevate the perceived importance of the job while keeping it at the same level
What to Do – Use a consistent methodology that includes:
- Creating a systematic process of measuring and comparing the relative value of a job within the organization, balancing internal and external equity. Internal equity ensures fairness within the organization and external equity aligns pay with market rates.
- Review the content of the job without regard to job title or individual performance. For example, ask the manager how this job would be described if the current incumbent left and you were hiring their replacement.
- Make sure jobs with comparable roles and nature of work are assigned to the same pay range unless market forces require you to pay them differently.
- When there is a request to review the grade of the job, examine whether any of the following apply:
- A new function or job level is needed for the job, usually for new and/or open positions.
- The job grade does not seem appropriate for the job duties being performed.
- There has been a significant change in the job duties or required education, skills and experience.
- The market range for a job does not reflect the external job candidate’s pay requirements and either a new job grade is needed, or additional levels of the job are needed.
- Establish a process for classifying a job by following these steps:
- Review and analyze the job description and supporting documentation in the context of your organization and its needs. The supporting documentation could include a questionnaire asking more detail on what has changed with the job.
- For jobs within an established function or job family, e.g., Customer Service, the job description is compared to other jobs in the job family, e.g., CS Rep I, CS Rep II, CS Rep III. A decision is made at this point as to this job’s classification within the job family.
- If the job is a new function/job family:
- The job is categorized as either non-exempt or exempt individual contributor or exempt management using the Fair Labor Standards Act.
- The job will be evaluated against external market data if available.
- The new job is compared to the grade of similar jobs within the company.
- Based on the outcome of this analysis, determine the appropriate grade and range for a job.
- Be sure the incumbent’s own skills and abilities are not part of the analysis. Any requests to examine the job should be based solely on the job content.
- If the incumbent has outgrown the job as defined, there needs to be a business case to change the scope of the job to match the incumbent.
Accurate and up-to-date job descriptions will make a significant difference in the effectiveness of the job evaluation process. Well-written job descriptions provide a clear understanding of the job’s duties, responsibilities, and required qualifications, which is essential for determining its relative value within the organization.
Wilson Group partners with our clients in enhancing their job evaluation process and training leaders in writing job descriptions and making pay decisions. Please reach out if we can assist your organization in this process.