Question: As a Human Resources Manager, I would like to implement a Job Evaluation Plan in my company to grade all of our job classifications. But my CEO says it’s not necessary. He said that the ultimate objective is to price our jobs, and therefore all we have to do is use a pay survey to determine what we should pay. This doesn’t seem right to me, but I’m not sure I know how to counter argue. Why should we use a Job Evaluation Plan?
You’re right! Everything will be okay until you have an internal employee relations issue. A common way that these issues develop is that an employee will ask how you “priced” his or her job in the marketplace (but they don’t actually say this… they will ask how you determined the grade level of their job.). You will probably tell them that the company used a pay survey to determine the market value for the job. At that moment, he or she will probably ask “How do you know what I do in my job?” This is where it all begins to go seriously downhill!
The implication of the question is that the company hasn’t undertaken a serious internal evaluation of the job and what makes it more or less important to the company than other jobs. This type of a study is called “Job Evaluation.” The omission of job evaluation is the fallacy with respect to the CEO’s argument. Market pricing is only external. It omits the internal evaluation of the job needed to ensure that the job, its content, responsibility and difficulty level, and its relative value to other jobs in the company, is fully understood.
But here is the real “coup de grace!” What about “non-benchmark” job classifications? Guess what! Non-benchmark jobs are not in pay surveys and can’t be “market priced!” This emphasizes why job evaluation is so important. Job evaluation methods evaluate all jobs, not just benchmark jobs.
For these reasons, companies would be wise to incorporate job evaluation methods into the design of their Compensation programs.
In future blogs we will also describe how job evaluation technology will be vitally important for coping with the emphasis in the marketplace upon pay transparency and gender pay equity.