Which method of job evaluation is also known as grading?

A job evaluation is a way for the business owner to rate and rank specific job titles within the company to determine their relative worth. This shouldn't be confused with a performance evaluation that reviews how well an employee is doing at a specific job. Job evaluations are primarily internal evaluations that don't consider the comparison to external jobs and salaries.

Tip

Three common methods of a job evaluation are the ranking method, the classification method and the point method.

The Ranking Method

The ranking method is a typical hierarchy in a company. Jobs are ranked in the order of duties and power. This is often seen in smaller companies with fewer than 40 employees. The top of the hierarchy is considered the most important level; the person who sits at the top has the most authority. As you go down in the ranking method, duties become less specialized and jobs considered less valuable or expendable. Salaries are typically generated in order of job importance to the company.

An example of the ranking method might have the vice president of operations over the marketing director. Under the marketing director might be the sales representative followed by a clerk and a receptionist.

The Classification Method

The classification method creates a grading system for each job. The job position might be generic, such as creative associate, but the person filling this level of competency has specific skills and specific duties. For example, you may advertise the job with pay commensurate with experience and education. The classifications would then break down that experience and education into three levels: level one, level two and level three.

Level three might be the most educated person with a four-year university degree and three years of applicable experience. Level two might have the requirement of a two-year degree and two years of experience. The level one candidate has no degree but has two years of experience in the related job activities.

The Point Method

The point system is used in large organizations and is usually more expensive to establish, but after it is established, it is easier to implement. It defines roles in a similar way to a ranking system but across various types of skill sets in a large organization. This method often considers 11 to 28 factors that define the level of expertise, importance and need of a specific job. For example, knowledge and skills might be one factor important to a company. Another might be the work environment, while another is communication skills.

Each factor is rated, and the total defines where in the hierarchy a position or an employee sits. For example, a top-level manager might need to possess a high level of knowledge and communication skills. The point score, when tallied might be 1,100. A clerk might not need the same level of knowledge or skills and that job's point score might only total 400. From there, the job is graded with the higher-level positions holding a higher grade. The manager might sit at grade 10, while the clerk is at grade four.

Job evaluation and the methods you use are vital to determine employee output. Measuring productivity is relatively easy when there is a tangible output of measurable material. However, it can get quite tricky when that isn’t the case.

For example, how would you measure how well your janitor mops the floor? How would you measure if a software coder is doing enough to justify his cost to the company?

It is done through a process called job evaluation.

What is Job Evaluation?

Job evaluation is a structured way of measuring a specific job’s value compared to other positions within an organization. Job evaluation aims to create a framework to compare the value of the various jobs so that there is some foundation to how wages are calculated for different positions.

The Need for Job Evaluation

Why do you need to use these job evaluation methods in your organization?

A few reasons for carrying out job evaluation every so often are:

• Integrating new technology into your workflow
• Employees being given more responsibilities
• Restructuring of the organization
• Changes in policies and procedures
• Changes in job descriptions or workload
• Promotions
• New positions

The factors mentioned above can affect how a specific job is carried out and what value is attached to that job.

Advancements in technology could reduce the workload of your employees. It frees up time to direct other responsibilities, demanding a corresponding change in pay.

Increased tenure and responsibilities demand regular job evaluations to ensure employee satisfaction. If responsibilities and tenure continue, you’ve retained, and the person stayed for appreciable reasons.

In some cases, the entire organization goes through some restructuring. This can mean that some people are doing less than before while others are doing more work than before. All this calls for job evaluation to ensure that everyone gets what they deserve and that the company is also getting the most bang for its buck.

In some cases, employees may even request that their job be reassessed and that their pay grades be re-evaluated. For example, one of the reasons for a pay increase could be that the employee has taken on more duties. Another reason could be that they have been given more authority in that position and, thus, more responsibility.

Here are the 5  Best Job Evaluation Methods

1. Ranking Method

   This job evaluation method works by ranking jobs according to their perceived value compared to other jobs. It does not take into account the jobs’ market value. This method works for smaller organizations.

   Larger organizations, generally, have more positions and may require the jobs to be grouped. For example, this method could be applied if all level ‘A’ staff were grouped into one section and the same was done for level ‘B’ staff, irrespective of what their jobs require them to carry out.

2. Grading/Classification Method

   In this job evaluation method, jobs are grouped based on certain characteristics. The level of skill required to carry out the job is one aspect. The second aspect is an employee's responsibility while carrying out that job. This job evaluation method is relatively straightforward and does not take as much time to carry out as others on this list.

   The auditor creates a set of job characteristics. He then groups the jobs into grades or classifications. While this seems relatively straightforward, some of the jobs in an organization may not match the predetermined criteria.

3. Point-Factor Method

   This job evaluation method uses specific factors about the job to determine how much value they add to a job role. These factors are divided into different sectors, such as skills, responsibilities, and required effort.

   These factors are then assigned a numerical weightage. Finally, the overall factors or points for a specific job are added up and compared against other jobs to understand the value of the jobs.

   This method clarifies a job’s internal value without considering market value.

4. Factor Comparison Method

   This job evaluation method is similar to the point-factor method. However, instead of merely assigning a numerical weightage, a monetary value is assigned to each factor.

   Many organizations don’t employ this method as it can become very complex. It can also be challenging to communicate the job values assigned to employees as they tend to be subjective.

5. Competitive Market Analysis Method

   This job evaluation method relies on external information about a job’s value within an organization. This means that similar jobs in the market are considered, and the information could come via job postings. First, the job positions, roles, and duties involved are studied and compared to the job in question. Then the monetary value, in terms of compensation for those jobs, is researched, and the value of the specific position is determined.

   This particular job evaluation method also raises the question, “Where does our company position itself in the job market?”.

   Some companies within an industry may offer different remunerations for the same role, which means that deciding what your company offers as remuneration dictates where the job’s value stands. Using this method means that a company essentially measures itself against the competition and then decides where they stand.

Conclusion

Job evaluation methods help organizations understand each role’s requirements and what is involved in maintaining employee pay satisfaction. From the employee’s perspective, they are getting paid for what they are doing.

The goal is to balance job responsibilities and effort and compensatory value. If a company takes the effort to try and determine how much value an employee brings, and over time, increases an employee's pay based on an increase in their effort or skill, the employee is sure to appreciate it.

Such practice leads to employees feeling more recognized and rewarded for their effort, which, in turn, leads to more satisfied workers. Consequently, productivity is bound to rise.

While many of these job evaluation methods may be used, the goal is to make sure that the company and the employee are happy.

What are the methods of job evaluation?

Which method is also known as V job evaluation method?

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What is the best known job evaluation method?