Laci is the Global Senior HR Analyst at XpertHR, a division of LexisNexis Risk Solutions.
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Under today’s pay equity spotlight, companies need to answer a lot of questions. How does the HR department determine how much to pay different employees? Do employees feel they're underpaid? How are pay ranges determined when new roles are added to staff? Is one role more mission-critical than another? What level of complexity is inherent in this role? Is top performance in one role worthy of a larger bonus than top performance in a different role?
These are questions that can be answered through job evaluation. This is a fundamental process by which HR and business leaders jointly determine the value each role brings and what fair pay is for each role based on that value. It involves a structured assessment of job roles based on a set of predetermined criteria to assign each a consistent and objective value.
In the absence of job evaluation, employees in jobs of similar value may earn significantly different salaries, causing engagement and productivity issues leading to turnover and, potentially, a compromise or complete failure to achieve business goals. Without it, HR leaders and companies risk decisions that could lead to discrimination suits, compliance infractions and a poor employee experience. To create a fairer workplace, job evaluation must take place.
The Key Benefits Of Job Evaluation
The business drivers of job evaluation are plentiful among all areas of talent attraction, development and management. Here are some of the most valuable aspects.
Pay Equity
Job evaluation helps ensure that compensation is fair and equitable. By appraising jobs based on objective criteria like skills, responsibilities and work criticality, organizations can establish a fair compensation structure. This is vital for attracting and retaining top talent.
In many jurisdictions, pay discrimination based on gender, race or other factors is illegal. Job evaluation provides a defensible methodology to demonstrate that a company's compensation decisions aren't biased or discriminatory. This can protect an organization from costly lawsuits and fines.
Workforce Planning
Job evaluation assists in efficient resource allocation. It helps organizations identify which jobs are the most critical for getting high-priority work done. This is especially important for HR budgeting and salary planning as it helps ensure the most vital roles are adequately staffed and rewarded.
By evaluating jobs' relative worth to business, organizations can better plan for current and future workforce needs (registration required). They can identify areas where skill shortages may exist, understand the market competitiveness of their compensation packages and make informed salary and pay range decisions.
Talent Acquisition
Having a well-defined job evaluation system can be a powerful tool for recruitment. It allows organizations to clearly communicate job expectations and compensation to potential candidates. This transparency can attract candidates who are the best fit for the role and the organization.
Performance Management
Job evaluation can provide a clear, consistent framework for assessing employee performance by linking it to job requirements. This alignment of expectations can enhance the accuracy of performance appraisals among all managers. In addition to base salary ranges, job evaluation results can inform bonus and incentive structures. This directly links job performance to rewards and motivates employees to excel in their roles.
In each of these talent processes, job evaluation provides quantitative data about the value of different roles. This can help leaders make informed decisions about compensation and organizational structure. In today’s data-driven world with expanding employee expectations about trust, human-centrism and fair opportunities and rewards for all, such insights are invaluable.
Key Roles Involved In The Job Evaluation Process
Getting job evaluation right requires the collaboration of a cross-functional team of stakeholders. Here are some key team members.
• Job evaluation committee
• Senior/Executive leader
• Senior counsel
• HR, compensation and data analysts
• DEI officer
• Employee relationship, communication and learning and development specialists
Together, this team accomplishes a variety of tasks. It evaluates job descriptions, selects the job evaluation method and collects data. It also mitigates bias, ensures compliance with labor laws and makes strategic decisions on budget and overall advocacy. Finally, this team communicates the when and why of the evaluation to employees, addresses concerns about perceived inequities and designs training materials to support the rollout.
4 Methods Of Job Evaluation
HR leaders often talk about four different approaches to job evaluation.
Factor Comparison: Jobs are evaluated based on a set of key factors, and a monetary value is assigned to each factor. A benchmark job is used for comparison, and jobs are ranked accordingly.
Job Ranking: Jobs are ranked based on their overall worth to the organization. This method is simple and easy to understand, requires minimal training and offers a broad overview of the organization’s job hierarchy.
Market Pricing: A job’s salary is compared to external market benchmarks. This approach is particularly useful for understanding how an organization’s pay scale compares to industry standards.
Point Factor: Jobs are evaluated against specific factors such as skill, effort, complexity and responsibility. Each factor is assigned a point value, and the sum of the total points represents the job’s value.
While every job evaluation method has its merits, HR leaders seeking a fair approach to compensation planning may find the Point Factor method most useful. This method stands out for its objectivity, detailed analysis, comparative capabilities, consideration of market competitiveness, scalability, legal defensibility and flexibility. It's important to note that successful implementation requires effective communication, ongoing monitoring, leadership commitment to promptly resolving any identified pay disparities and a collaborative effort from multiple stakeholders.
What It All Means
Job evaluation isn’t a bureaucratic process. It's a strategic tool for closing pay gaps and advancing toward a fairer workplace for all. To realize these benefits, HR leaders should ensure their teams are well trained in job evaluation methodologies and principles, communicate the business benefits to leadership and the workforce, confirm job descriptions are in line with the business strategy and utilize technology to streamline the process.
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