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Chapter
5
McGraw-Hill/Irwin
Evaluating Work:
Job Evaluation
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
Learning Objectives
5-2
After discussing Chapter 5, students should be able to:
1.
2.
3.
4.
5.
6.
Discuss the relationship between internal
alignment, job analysis, job evaluation, and job
structure.
Identify the major decisions involved in job
evaluation.
Compare the advantages and disadvantages of the
most common job evaluation methods.
Explain the six (6) steps in a point plan, the most
commonly used job evaluation method.
Describe the key roles of managers, employees, and
committees in the job evaluation process.
Understand the necessity of balancing tight control
versus flexibility related to the use of techniques to
achieve internal alignment.
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Chapter Topics
 Job-Based
Structures: Job Evaluation
 Defining Job Evaluation: Content,
Value, and External Market Links
 Ranking
 Classification
 Point
Method
 Who Should be Involved?
 The
Final Result: Structure
 Balancing Chaos and Control.
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Exhibit 5.1: Many Ways to Create Internal
Structure
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What Is Job Evaluation?
Process of systematically
determining the relative worth of
jobs to create a job structure for
the organization. Evaluation is
based on a combination of job
content, skills required, value to
the organization, organizational
culture and the external market.
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Defining Job Evaluation
Content
Linking
and value
content with the external market
“Measure
for measure” vs. “Much ado
about nothing”
 Exhibit
5.2: Assumptions Underlying
Different Views of Job Evaluation
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Exhibit 5.2: Assumptions Underlying
Different Views of Job Evaluation
Aspect of Job Evaluation
Assumption
Assessment of job
content
Content has intrinsic value outside external market.
Assessment of
relative value
Stakeholders can reach consensus on relative
value.
External market link
Value cannot be specified without external market.
Measurement
Honing instruments will provide objective measures.
Negotiation
Puts face of rationality to a social / political
process; establishes rules of the game and invites
participation.
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Exhibit 5.3: Determining an Internally
Aligned Job Structure
Internal
alignment
Job analysis
Job description
Job evaluation
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Job structure
Work relationships
within organization
Some Major Decisions in Job Evaluation
• Establish purpose of evaluation
• Decide whether to use single or multiple plans
• Choose among alternative approaches
• Obtain involvement of relevant stakeholders
• Evaluate plan’s usefulness
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Major Decisions
 Establish
purpose
 Supports
organization strategy
 Supports work flow
 Fair to employees
 Motivates behavior toward
organization objectives
 Single
vs. multiple plans
 Choose among methods
 Exhibit
5.4: Comparison of Job Evaluation
Methods
 Obtain
involvement of relevant stakeholders
 Evaluate plan’s usefulness
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5-10
Exhibit 5.4: Benchmark Job
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Characteristics of Benchmark Job
 Contents
are well-known and
Job is common across several
different employers
 Supply
and demand relatively stable over
time
 Sizable
proportion of work
force employed in job
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Exhibit 5.5: Comparison of
Job Evaluation Methods
Advantage
Disadvantage
Ranking
Fast, simple, easy to explain.
Cumbersome as number of
jobs increases. Basis for
comparisons is not called out.
Classification
Can group a wide range of
work together in one system.
Descriptions may leave too
much room for manipulation.
Point
Compensable factors call out
basis for comparisons.
Compensable factors
communicate what is valued.
Can become bureaucratic
and rule-bound.
McGraw-Hill/Irwin
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Ranking Method
 Orders
job descriptions from highest to
lowest based on a global definition of
relative value or contribution to the
organization’s success
 Two
approaches
 Alternation
 Paired
McGraw-Hill/Irwin
ranking
comparison method
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5-14
Exhibit 5.6: Paired Comparison Ranking
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Classification Method
 Uses
class descriptions that serve as the
standard for comparing job descriptions
 Classes
include benchmark jobs
 Outcome
 Series
of classes with a number of jobs in each
 Examples
 Exhibit
5.7: Classifications
for Engineering Work
 Exhibit
5.8: General
Schedule Descriptions
for Federal Government
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Point Method
 Three
common characteristics of point
methods
 Compensable
 Factor
factors
degrees numerically scaled
 Weights
reflect relative
importance of each factor
 Most
commonly used approach
to establish pay structures in U.S.
 Differ
from other methods by making explicit
the criteria for evaluating jobs -compensable factors
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Designing a Point Plan:
Six Steps
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1. Conduct job analysis
2. Determine compensable factors.
3. Scale the factors.
4. Weight the factors according to
importance.
5. Communicate the plan, train users,
prepare manual.
6. Apply to nonbenchmark jobs.
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Step 1: Conduct Job Analysis
Point
plans begin with job analysis
A
representative sample of jobs benchmark jobs - is drawn for analysis
Content
of these jobs is basis for
 Defining
 Scaling
compensable factors
compensable factors
 Weighting
McGraw-Hill/Irwin
compensable factors
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Step 2: Determine Compensable Factors
Compensable
 Reflect
factors play a pivotal role
how work adds value to organization
Example
- Exhibit 5.9
Characteristics
 Based
on strategy and values of organization
Exhibit
 Based
of compensable factors
5.10
on work performed
 Acceptable
to stakeholders affected by
resulting pay structure
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Generic Compensable Factors
Skill
Effort
Responsibility
Working
conditions
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Generic Factor - Skill
Skill: Experience, training, ability, and
education required to perform a job
under consideration - not with skills
an employee may possess
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Generic Factor - Skill

Technical know-how

Specialized knowledge

Organizational awareness

Educational levels

Specialized training

Years of experience required

Interpersonal skills

Degree of supervisory skills
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Generic Factor - Effort
Effort:
Measurement of
the physical or
mental exertion
needed for
performance of a
job
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Generic Factor - Effort
Diversity
of tasks
Complexity
of tasks
Creativity
of thinking
Analytical
problem solving
Physical
Degree
McGraw-Hill/Irwin
application of skills
of assistance available
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Generic Factor - Responsibility
Responsibility: Extent to which an
employer depends on employee to
perform job as expected, with emphasis
on importance of job obligation
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Generic Factor - Responsibility
Decision-making
authority
Scope
of organization under control
Scope
of organization impacted
Degree
of integration of work with others
Impact
of failure or risk of job
Ability
to perform tasks without
supervision
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Generic Factor – Working Conditions
Working Conditions:
Hazards
Physical
surroundings
of job
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Generic Factor – Working Conditions
Potential
hazards inherent in job
Degree
of danger which can be exposed
to others
Impact
of specialized motor or
concentration skills
Degree
of discomfort, exposure, or
dirtiness in doing job
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Exhibit 5.11: The Hay System



Know-How
 Scope
 Depth
 Human relations
skills
 Exhibit 5.12: Hay
Guide Chart for
Know-how
Problem Solving
 Environment
 Challenge
Accountability
 Freedom to Act
 Scope
 Impact
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Compensable Factors - How Many?

“Illusion of validity” - Belief that factors
are capturing divergent aspects of a job

“Small numbers” - If even one job has it,
it must be a compensable factor

“Accepted and doing the job” - 21, 7, 3

Research results

Skills explain 90% or more of variance

Three factors account for 98 - 99% of variance
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Step 3: Scale the Factors



Construct scales reflecting different degrees
within each factor
 Most factor scales consist of 4 to 8 degrees
 Exhibit 5.13: Factor Scaling - NMTA
Issue - Whether to make each degree equidistant
from adjacent degrees (interval scaling)
Criteria for scaling factors
 Limit to number necessary to
distinguish among jobs
 Use understandable terminology
 Anchor degree definitions with benchmark job
titles
 Make it apparent how degree applies to job
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Step 4: Weight the Factors
 Different
weights reflect differences in
importance attached to each factor
 Determination
 Advisory/JE
 Statistical
McGraw-Hill/Irwin
committee
analysis
 Criterion
 Exhibit
of factor weights
pay structure
5.14: Job Evaluation Form
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Exhibit 5.14: Job Evaluation Form
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Overview of the Point System
Degree of Factor
Job Factor
Weight
1
2
3
4
5
1. Education
50%
100
200
300
400
500
2. Responsibility
30%
75
150
225
300
3. Physical
effort
12%
24
48
72
96
4. Working
conditions
8%
25
51
80
McGraw-Hill/Irwin
120
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AAIM National Position Evaluation Plan
Points Assigned to Factor Degrees
Factor
1st
2nd
3rd
4th
5th
Degree Degree Degree Degree Degree
Skill
1. Knowledge
2. Experience
3. Initiative and Ingenuity
Effort
4. Physical Demand
5. Mental or Visual Demand
Responsibility
6. Equipment or Process
7. Material or Product
8. Safety of Others
9. Work of Others
Job Conditions
10. Working Conditions
11. Hazards
McGraw-Hill/Irwin
14
22
14
28
44
28
42
66
42
56
88
56
70
110
70
10
5
20
10
30
15
40
20
50
25
5
5
5
5
10
10
10
10
15
15
15
15
20
20
20
20
25
25
25
25
10
5
20
10
30
15
40
20
50
25
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Job Evaluation Example
Job
A
B
C
D
E
F
Clerk
Acct Clerk
Accountant
HR Mgr
Ass’t Adm
Office Mgr
McGraw-Hill/Irwin
Points
45
55
75
85
80
85
Reference
Wage
$12/hour
$16
$22
$25
$26
$28
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Step 5: Communicate Plan and Train Users
Involves
development of manual
containing information to allow users to
apply plan
 Describes
 Defines
job evaluation method
compensable factors
 Provides
information to permit users to
distinguish varying degrees of each factor
Involves
training users on total pay
system
Include
McGraw-Hill/Irwin
appeals process for employees
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Step 6: Apply to Nonbenchmark Jobs
Final
step involves applying plan to
remaining jobs
 Benchmark
jobs were used
to develop compensable
factors and weights
Trained
evaluators will evaluate
new jobs or reevaluate jobs
whose work content has changed
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Who Should be Involved?

Committees, task
forces, or teams of key
representations

Design process matters

Appeals/review
procedures

“I know I speak for
all of us when . . .”
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Final Result: Structure
Outcome
 Ordered
list of jobs based on
their value to organization
 Hierarchy of work
 Structure supporting a
policy of internal alignment
Information
provided by hierarchy
 Which
jobs are most
and least valued
 Relative amount of
difference between jobs
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