Job Evaluation

What is a job evaluation?

Job evaluation is a systematic process for determining the relative worth of jobs within an organization, by comparing what each job requires in skill, effort, responsibility, and working conditions, so that jobs can be placed in a pay structure. It evaluates the job, not the person in it, which is what separates it from performance appraisal.

Key facts

• Also called: Job grading, job worth evaluation; point-factor evaluation is a common method
• Evaluates: The job as designed, not the incumbent's performance
• Inputs: Job analysis and the job description
• Outputs: A job hierarchy, grades or bands, and the basis for salary ranges
• Main methods: Ranking, classification, point-factor, factor comparison
• Owned by: Compensation or HR, with a cross-functional evaluation committee

What job evaluation measures

Many methods score a job on a small set of compensable factors, the features of the work that the organization has decided to pay for. The classic four are skill, effort, responsibility, and working conditions. Many organizations break these into sub-factors such as knowledge required, problem solving, scope of decisions, budget or people managed, and physical or environmental demands.

The evaluation reads those factors from the job description and the job analysis behind it. A job description that overstates the scope of a role will produce an inflated evaluation, which is why the two documents should be kept honest and current. The uRecruits entries on job analysis and job description cover the inputs.

The four main job evaluation methods

Methods divide on two lines: whether they compare whole jobs or score factors, and whether they rank jobs against each other or against a fixed scale.

Ranking orders whole jobs from most to least valuable. It is quick and suits a small organization, but it gives no measure of how far apart two jobs are.

Classification, or grading, defines a set of grades in advance, each with a written description, and slots every job into the grade whose description fits best. The uRecruits entry on job classification covers grade structures.

Point-factor scores each job on each compensable factor, with points weighted by how much the factor matters. Total points place the job in a grade. It is a widely used method because it is explicit and repeatable.

Factor comparison ranks jobs factor by factor against benchmark jobs with known pay, then builds pay from the factor rankings. It is the most detailed of the four and the least common in practice.

Market pricing is sometimes listed as a fifth method. Strictly, it measures external pay rather than internal worth, so many practitioners treat it as a complement to job evaluation rather than a method of it. Many organizations combine the two.

Worked example

The numbers below are an illustration, not a benchmark.

A company uses four factors with these maximum points: knowledge 300, problem solving 250, accountability 300, working conditions 150, for a total of 1,000. A Senior Accountant job is scored at knowledge 210, problem solving 150, accountability 180, and working conditions 30.

Total = 210 + 150 + 180 + 30 = 570 points

If the company's grade structure places jobs scoring 500 to 599 in Grade 7, the Senior Accountant job sits in Grade 7, and the Grade 7 salary range becomes the range for the job.

From job evaluation to salary ranges

Job evaluation produces a hierarchy; it does not produce dollar amounts. The compensation team then attaches a salary range to each grade, usually with a minimum, midpoint, and maximum, and checks the midpoints against market data. The uRecruits entries on salary range and compensation range describe that step. Where an organization shows a pay range on a posting, the range shown is normally the one the evaluation and the grade structure produced, which is one reason the evaluation needs to be defensible. The uRecruits entry on pay transparency covers the posting requirements.

How to run a job evaluation

A standard evaluation runs in five steps.

• Choose the method and, for point-factor, the compensable factors and their weights.
• Collect current job descriptions, confirmed by job analysis, for every job in scope.
• Score or slot each job through an evaluation committee, with the reasons recorded.
• Group the results into grades and attach salary ranges to each grade.
• Communicate the structure, handle appeals, and record the final hierarchy.

Many organizations review grades on a fixed cycle, and re-evaluate a job whenever its content changes.

Why job evaluation matters for recruiting

The requisition carries a grade, and the grade sets the range the recruiter can offer. A role that is hard to fill at its grade is a signal to revisit the evaluation or the market match, not to improvise. The job title and the level words in it should agree with the grade, or candidates will read one thing in the posting and another in the offer. And when a hiring manager asks for a more senior title to attract candidates, the evaluation is the reason the answer may be no: the title would place the job in a grade its content does not support.

General information, not legal advice.