Job evaluation is a process or framework which is used to define the relative worth or size of jobs in an organisation. It enables organisations to understand where roles are similar or different to each other and where roles across different parts of the organisation are comparable.
There are a number of Job Evaluation methodologies on the market, with some more complex than others, but they are all seeking to analyse a role through a number of lenses including things like the complexity of the role, the experience needed to do the role, and the types of relationships and resources the role is responsible for. All these factors help to assess the value of the role, relative to other roles within the organisation. The outcome of a job evaluation assessment will normally result in a grade or level being assigned to the role, which places it in a hierarchy and overall structure of the organisation.
Job Evaluation ensures that you size your roles and put them in a hierarchy in a fair and objective way. This is really important – it stops a “gut feel” approach that can quite easily be biased. A good Job Evaluation framework can also provide the foundation for a number of pay and reward practices including pay frameworks, competency frameworks, performance management, and career pathways.
First and foremost, it provides a framework upon which to fairly and consistently apply reward and benefits policies, but what do we mean by this? Many organisations use pay frameworks to manage pay and pay progression, and these pay frameworks are typically structured around the grade or level that a role has been assigned. For example, an organisation might have five grades, each with an associated pay range – these are then used as the parameters for setting pay when recruiting, managing pay when promoting, and for calculating annual pay awards.
Applying this approach to pay and reward provides organisations with a robust and defensible process upon which to base pay and benefits decisions. For example, many organisations align their benefits levels and entitlements to their grade structure, although we are now seeing a trend towards a more universal approach and with perhaps some differentiation only at the most senior levels of the organisation. A grading structure is also frequently used to determine target bonus earnings by role level - for example, all roles evaluated at executive level might expect to receive a bonus equivalent to 50% of their salary subject to the achievement of performance metrics, whereas roles graded as senior management might expect to receive a bonus equivalent to 40 % of their salary. These numbers will of course vary according to organisation, but it is quite common to structure bonus schemes in this way.
Organisations that use job evaluation can demonstrate to their employees that their roles have been graded using a robust methodology, and therefore salaries have been set fairly within the parameters of the applicable pay range, and benefits have been consistently applied to all roles at the same level. Communicating this message can really help to allay concerns around any perceived equal pay issues. However even within the same grade it is quite normal to have different levels of pay for different roles, and it is crucial that pay decisions are justifiable. Reasons for a differentiation between individual salaries within a pay grade may include external market forces supported by pay benchmarking, for example an IT Manager and Finance Manager might both have the same pay grade but due to a premium in the market associated with a specific or scarce skillset required in the role of the IT Manager the salary may be positioned higher than that of the Finance Manager.
Another reason why the salaries of individuals in the same role may be different could be due to different levels of performance or competency, where higher performers have received a bigger pay award. This is where job evaluation levels can be used to underpin competency frameworks and performance management processes. Aligning the two can be useful to bring consistency across multiple people processes and can help build familiarity for employees by using similar language and terminology across different processes. For example, if a Finance Manager and IT Manager understand that they are positioned at the same grade, it then makes sense to them that the competencies relevant to their role are also aligned to this grade.
Having oversight of how all the roles have been graded not only provides HR and managers with hierarchy and structure but also lays the foundation for articulating career pathways to employees. This can provide employees with a sense of where they currently are in their career and what opportunities for promotion and development may be available to them. It helps them understand what they might need to do to move up and how big a jump that is, but also where there might be opportunities to move sideways as well.
Undertaking job evaluation also allows organisations to build a structural picture of their organisation beyond a standard organisation chart. Understanding the number of roles and types of roles at the different grades and levels across the organisation in relation to different departments or functions allows HR to shape and plan the organisational design to ensure they have the right roles, and crucially, at the right levels, for now and in the future.
If you would like more information about Job Evaluation frameworks, or if you would like to see our Job Evaluation tool, Evaluate, in action, please contact me. I can be reached via email at alastair.cole@innecto.com, or call our consultancy team on +44 (0)20 3457 0894.
