Reward
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Section X
Rating and ranking jobs
Definition and scope of JE
One of the most, arguably the most, important issue organizations have to cope with in
terms of reward is to establish the most adequate and appropriate rate of pay for each
member of staff. Although more recently employers are mainly focused on designing and
developing suitable and consistent variable pay and incentives schemes, an appropriate
and systematic approach to basic pay determination is clearly important too, not least to
avoid possible disputes and discrimination claims.
Job evaluation, enabling reward managers to assess the worth, size and significance of
the jobs performed within an organization, is the method of pay determination which can
help employers to successfully cope with pay and all of the issues associated with its
correct, or rather, most appropriate identification (Longo, 2011). This approach is
essentially based on the assessment of each job carried out within a business in order to
establish the relevance and significance of each of these and place them in a hierarchical
order accordingly.
Job evaluation definitely represents a consistent and structured approach (ACAS, 2005)
by means of which jobs are usually ranked according to the degree of responsibility,
knowledge, assertiveness, experience and expertise these require in order to be properly
and effectively carried out.
The British Standards Institution (BSI) defines job evaluation (definition 32529) as “any
method ranking the relative worth of jobs which can then be used for a remuneration
system.” We are hence essentially looking at a comparative approach (Edgel, 2010),
very much concerned with internal relativities which are thus benchmark-determined.
Once each job has been placed in a fair and consistent grading structure, not only can
employers develop an equitable grade and pay system, but can also effectively make
comparisons with the market rates for similar, even though complex, jobs. Last but not
least, the established link between salary range and grade on the one hand and type and
importance of the job performed on the other hand will also clearly enable employers to
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meet equal pay requirements and avoid gender pay discrimination. It is in fact
particularly important taking into due consideration that compensation’s equity also falls
amongst the matters object of legal protection (UK: Equal Pay Act 1970, amended in
1984 – USA: Equal Pay Act 1963, amended in 2003).
Fairness, transparency and objectivity should hence represent the founding pillars on
which job evaluation has to be based and consequently carried out within an
organization. Human capital budged will thus be divided amongst staff, or rather,
amongst the job holders according to the size and weight of each role and the
contribution each job is supposed to make, according its assessment findings, to the
attainment of the organization aims and objectives (Longo, 2011).
Determining the right salary for a job holder and trying to find out how much more or
how much less this should earn in comparison with the other individuals is actually the
conundrum employers are continually called to cope with in order to determine the right
pay for each member of staff.
In general, factors coming to play in this circumstance are actually three: performance,
market rates and fairness (Torrington et al, 2008). Although the assessment of each of
these factors, of its own, will not be sufficient to solve the pay determination riddle, it is
most likely that their combined synergetic use would enable employers to attain better
results and more reliable outcomes from their salary determination procedures.
Performance is associated with the activity carried out by individuals, it refers to the way
these execute a task and to the consequent results their activity produces. Put it another
way, performance is not linked to a job or role but to the way it is carried out. Looking at
one specific job, results produced by its fulfilment could clearly be different according to
the way each individual executes the tasks associated with this. The assessment of an
employee performance, hence, when linked to the individual’s salary determination
process, is linked to each individual knowledge, capabilities, skills, motivation and
ultimately capability to produce appreciable results for the organization, but it has
nothing to do with the performed job’s size and relativity.
As we have seen earlier, gaining a thorough knowledge and understanding of the local
(and eventually national and international) labour market rates is certainly of pivotal
importance too, but mostly in order to attract and retain individuals. This can basically
enable businesses to stay competitive in the labour market and to be aware of and stay
in contact with, the external environment and its latest trends and development. Market
rates, however, do not necessarily have proper links with the size and scope of jobs and,
let alone, with internal relativities. These should hence eventually used with extra care to
the extent of the job evaluation exercise.
Applying fairness and equity in salary determination processes clearly represents a
crucial factor, not only for its potential legal implications, but also because it enables
employers to determine the right pay for people carrying out the same type of job. A
thorough investigation of these factors clearly put employers in the position to gain
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relevant information in order to effectively cope with the issue of salary determination.
Notwithstanding, this analysis does not help companies to determine the importance,
worthiness and contribution of each job for the achievement of a business objectives. Let
alone such an approach can turn to be useful to establish a structured and hierarchical
order of jobs or a grading structure, and that is exactly why the assessment of each role,
namely by means of the job evaluation exercise, can turn to be particularly useful to
provide the basis for a consistent and fair salary structure duly considering the
importance and weight of internal relativities (Longo, 2011).
The introduction of Equal Pay legislations has had a remarkable impact on the need to
introduce and design job evaluation techniques within organizations; but the introduction
of such an approach has revealed to be particularly useful also during organizations
restructuring procedures like mergers and acquisitions.
Also in these types of circumstances, nonetheless, employers should be aware of the
importance of effectively, openly, clearly and constantly communicate with their staff. As
warned by Torrington et al (2008), the inevitable failure of this approach can sorely also
depends on the lack of communication. This is what actually happened in 2002 when the
local career services of Coventry, Solihull and Warwickshire merged into the Coventry,
Solihull and Warwickshire Partnership (CSWP). According to the new payment system
devised during the restructuring plan, formed by 18 grades and 66 steps, the majority of
employees concerned would have received a higher salary and a pay rise of 3.5 per cent
upon acceptance of the deal. Nevertheless, since trade unions officials were unhappy
with some details of the new pay terms and conditions proposed by the partnership, they
refused to support the vote in favour of the new package. When the package was
balloted in 2003 it was therefore overwhelmingly rejected. After two years of
negotiations during which senior managers also consulted with staff and gave employees
the opportunity to express their views, the new terms and conditions, despite some
concessions were made, were finally accepted, mostly thanks to the communication
channel opened by the Partnership with its staff.
As it clearly emerges from this example, having recourse to the job evaluation exercise
does not entail the suppression of collective bargaining practices with trade unions. This
should not actually take anyone by surprise, it just takes to refer to what job evaluation
is for, that is, identify gaps between the different levels of salary and not define the
salary itself. This point is clearly stressed by the ACAS (2005) which points out that “job
evaluation does not determine actual pay”, which is and remains a separate activity
resting on managers and employers and eventually unions representatives.
Job evaluation, which cannot however be considered as a scientific approach in that it is
essentially based on human judgement and appreciation, is not and has not by extension
to be intended as:
• A means to allot pay levels and determine annual rises;
• An exercise to use in order to make decisions on variable components of reward,
such as bonuses and incentives (Torrington et al., 2008);
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• An approach concerned with the determination of the volume of work each job
requires;
• A tool helping employers to rightsizing departments or units within an
organization (ACAS, 2005);
• A method helping organizations to plan work scheduling (ACAS, 2005);
• A method to which employers can have recourse to in order to assess job holders’
performance (ACAS, 2010).
Probably on account of the increasing relevance and importance reward has acquired
within any organization and of the risks of dispute associated with its misuse, the
recourse to this technique has reportedly (Thompson and Milsome 2001, IDS 2003, e-
reward 2007, CIPD 2004 and 2007) registered during the last decade a steady growing
trend in the UK.
All in all, albeit as posited by Edgell (2010) the pace at which organizations develop and
the roles within these evolve might pose a threat to the job evaluation exercise existence,
it can, at least at the moment, be concluded that it still supportable the dictum according
to which “job evaluation is the one management tool that refuses to go out of fashion.”
Circumstances under which JE can reveal to be particularly useful
The circumstance that the job evaluation exercise basically aims to rank jobs within an
organization, on the basis of their perceived value, in order to devise a consistent and
equitable reward system, contributes to consider it as an unquestionably helpful and
beneficial tool.
Job evaluation can hence reveal to be a particularly valuable ally of reward professionals
either that these are involved in the process of designing and developing new or
reviewing existing grade structures. Yet, having recourse to this technique can also help
employers to build and gain internal credibility in terms of salary fairness and equity,
ultimately making the overall pay system more defensible.
Putting in place a properly and accurately devised grading system within an organization
can also enable employers to promptly and relatively easily introduce new salary grades
within the existing rank, in case some new types of jobs should be introduced within the
business. Additionally, having a structured pay grade system within the firm will surely
turn to be useful also when performing external comparisons, making it easier to match
internal with external similar jobs and ensure that the grade attributed to each job more
widely reflects the importance attached to each of them; even though it should be
assumed as a general rule that external benchmarking has to be treated with caution.
Employers over reliant on the indications coming from the external environment and
submissively structuring internal relativities on the basis of these, would seriously risk
implementing inconsistent and even unfair and unequal grade systems.
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Amongst the wide implications of the job evaluation exercise, should not be overlooked
the legal benefits which employers can attain by using this structured and systematic
approach. The recourse to job evaluation in fact can also help organizations to sensibly
reduce the number of disputes and grievances based on salary claims (ACAS, 2005).
Employers should pay particular attention to the eventually increasing number of claims
lodged by employees on the ground of alleged salary inequalities; this could, in fact,
means that their grading structure might no longer be adequate and appropriate. In this
case, job evaluation, helping organizations to settle the issue, could also enable
employers to re-establish trust and confidence in their pay systems, ultimately
increasing trust, motivation and commitment amongst staff.
The list of opportunities and benefits offered by this approach is rather long and
overarching. The introduction of a new technological system and the consequent change
of the way job is approached and carried out within an organization, which could also
imply a rebalancing of the use of physical and mental efforts carried out by staff, very
often also require a new review and assessment of the jobs concerned. This definitely is
another case in which the job evaluation exercise could reveal to be particularly
beneficial to employers.
Job evaluation has to be intended as a valuable approach not only for the employers
aiming at introducing consistent and sound grade hierarchies within their businesses, but
also for organizations aiming to put existing jobs grade in order. Whenever a certain
degree of inconsistency amongst grades should be perceived or too many or too a few
grades should be identified within the business, having recourse to the job evaluation
exercise can definitely help (ACAS, 2010).
The need for a review of job grading can also sometimes be associated with internal
restructuring processes, which may call employers and reward specialists for reviewing
the overall grading system in order to ensure that this fits the new emerged
circumstances and work organization needs. Not least, job evaluation can also help
organizations to tackle and settle organizational issues linked to roles duplication and
gaps, which can enable in turn employers to save a lot of money and improve efficiency.
The circumstance that the job evaluation exercise necessary entails scrutinizing all of the
jobs carried out within a firm, enables employers to achieve some additional and
valuable side benefits, such as enabling managers to be more effective and skilled at
redesigning their direct reports jobs and working activities and identifying potential
health and safety risks (ACAS, 2010).
As suggested by Armstrong (2006), one of the most remarkable benefits of job
evaluation is represented by the circumstance that it can be relatively easily aligned with
an organization values system and competency framework, enabling firms to reinforce
the values behind these and foster integrity.
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Inconveniences of the JE exercise
It can hardly be hypothesized that an approach or a method used to achieve a specific
and particularly remarkable feat might be completely bereft of drawbacks or could it
have no flip side at all; the job evaluation exercise makes no exception.
One of the most recurrent criticisms addressed to job evaluation is of being inflexible,
bureaucratic and out of date. The inconveniences usually associated with the job
evaluation exercise are linked to the nature of the approach: “systematic rather than
scientific”, which account for the system not being completely considered bullet proof in
that essentially based on human judgment. This, despite it is usually carried out by
experienced and competent professionals (Torrington et al, 2008).
Some Authors also stress the circumstance that job evaluation can lead to grade
systems manipulated by the people in charge of their design and implementation, which
accounts for the final result being affected by bias and personal judgement with the
obvious negative consequences this will produce (Armstrong, 2006).
In order to avoid these side effects, which can influence or even completely spoil the
final results produced by the exercise, a felt-fair test can be used, that is, a type of
analysis enabling businesses to evaluate the acceptability of the jobs assessment and
review made by the reward specialists in charge of the procedure. It is indeed widely
acknowledged that the success of job evaluation relies on employee acceptance of the
final outcome produced by the exercise.
All of these kinds of criticisms, however, clearly refer to the risks associated with the
way job reviews are carried out, but not with the job evaluation idea and the method
itself. Misuse and manipulation, unfortunately, are not just typical of job evaluation,
many other management tools, in spite of their unquestionable usefulness and
effectiveness, may potentially be exposed to and be the object of manipulation.
A different type of criticism has been made by Nielsen (2002), who disparages the
circumstance that this technique does not take into consideration the growing relevance
of external comparisons and relativities which instead, to his appreciation, is what should
matter the most. As appropriately argued by Armstrong (2006), however, in the light of
the scope of job evaluation, which is that of ranking jobs in a structured way and not to
establish the amount of money which should be paid to job holders, this criticism
immediately falls short of meaning.
Another particular and, indeed, expensive-to-settle issue linked to job evaluation is
represented by the likely possibility that on completion of the exercise it could emerge
that some people within the organization are actually incorrectly paid.
In general, employers could be prompted to deal with two different situations, either
individuals are receiving more than they should, or they are receiving less. Whatever the
case, emerging issues are typified by the characteristic that the easier the problem is to
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set, the higher the cost which will be required by the employer to settle the problem.
Whether at the end of the job evaluation exercise should emerge that some individuals
are underpaid it will be absolutely straightforward to promptly increase their salary
accordingly, either immediately or within a given length of time depending on the
relevance of the pay increase. The problem is that, for easy it may be doing so, the
move will surely turn to be costly for an organization in that it implies an immediate
personnel budget increase to which the organization might not, very likely, be prepared.
Some budget adjustments will consequently be obviously required.
On the other hand of it, according to the findings of the job evaluation procedure, some
employees could result to be overpaid, in this case employers should red-circling the job
position(s) concerned in their chart. The current job holder will continue to earn that
given amount of money, whereas individuals who will occupy that position in the future
will receive the correct salary level as identified by means of the exercise.
Notwithstanding, these kinds of occurrences cannot be linked by any means to job
evaluation. Should such circumstances emerge in fact these might possibly be due to
prior confusion, improper reward management practices or whatever else. The job
evaluation exercise, especially in such cases, would rather reveal to be a valuable and
effective way to identify and tackle problems and, for financially painful it might be, fix
them.
Albeit it should emerge from the exercise that some employees are receiving higher pay
than they should, employers could not promptly adjust, that is, reduce these in that it
would clearly constitute a breach of their contract of employment (Torrington et al,
2008). They can just either continue to pay the higher level of salary, do not granting to
the individuals concerned any further salary increase until the individuals’ salary have
reached their right level or agree with these employees the payment of a lump sum (in
general a fairly large amount of money) in order to legally adjust, that is, reduce their
pay level to the correct salary rate identified by means of the job evaluation exercise.
Devising a job evaluation system and developing all of the activities usually associated
with it, definitely requires time and resources and very often the length of time between
its development and its actual implementation is rather considerable.
Additionally, the effectivene