Posted by Nick Setser and Allegra Krajci on October 14 2022

What is Job Evaluation?

Job evaluation is the process of determining the value, also known as comparable worth, of a job by comparing it to other jobs within the organization. The main goal of this process is to create an equitable compensation structure. To determine comparable worth, every job is objectively compared, either through ranking or ratings, on the different skills and duties that are required to be successful. This means that the job is being evaluated irrespective of the person currently holding the position. Once the comparable worth of each job is determined, those values are used to place the positions into different pay groupings, usually referred to as pay grades.

Using only market data to determine the worth of a job can actually perpetuate some pay inequities. Oftentimes, jobs that are historically female or minority-dominated are consistently paid lower than historically male/non-minority dominated positions even though they might require the same level of skills and duties and have similar impact on the organization. Using Job Evaluation in conjunction with market analysis can help reduce this bias in market data and create a more equitable compensation structure.

For example, while looking at market data for HR Generalist positions, typically female-dominated roles, have lower average pay in market data than Accountants, which are typically male-dominated. However, previous job evaluations on these two roles have found that they tend to be of similar comparable worth to their organizations. These previous studies have concluded that gender bias is the reason for the discord between these positions that has lasted for decades. This demonstrates the importance of Job Evaluation in the process of pricing jobs accurately and fairly.

Common Job Evaluation Methods:

Point Factor- The quantitative method of selecting compensable factors (such as education, autonomy, and physical demands) that are important to the jobs at the organization and assigning points to each factor. Every job is then rated on each factor to determine overall comparable worth.

Job Ranking- A qualitative method of placing jobs in a hierarchy of value. A compensation specialist should assist in this ranking process to reduce bias.

Factor Comparison- This quantitative method is a combination of the Point Factor method and the Job Ranking Method. Compensable factors and benchmark jobs are selected, then the benchmark jobs are ranked on each of the compensable factors. The market value of the benchmark jobs is used to help assign monetary values to each of the compensable factors. Then, all jobs are compared to these benchmark jobs.

Job Classification- This qualitative method involves creating different job groups and then placing those job groups into a grading system. Each grade is determined by the job characteristics and their worth to the organization.

Selecting the right method for your organization is important because you need to be able to legally defend your job evaluation method. Once a method is selected, the organization should use the same method for new jobs or jobs that change in scope. Reviewing and potentially updating the system is crucial to ensure accurate evaluation.

Job Evaluation and Pay Equity

“Equal pay for equal work” is still a prominent saying today, especially throughout the Great Resignation and the fight to lower the pay gap. Job Evaluation is a great method for determining what jobs are considered equal work because you are defining the comparable worth of every job. This makes it easier to establish your similarly situated employee groupings (SSEGs). Since job evaluation is a method of looking at only objective job characteristics, a lot of racial and gender biases can be reduced which can lead to a decrease of pay inequities and help to create a more equitable compensation structure. Having a strong grouping method will help with evaluating your compensation philosophy and overall pay equity.

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