Armstrong's Job Evaluation Handbook

A Guide to Achieving Fairness and Transparency in Pay and Reward

Michael Armstrong

• Publisher: Kogan Page
• Year: 2018
• ISBN:
  9780749482435
• Edition: 1
• Topic: Business
• Subtopic: Human Resource Management
• Index: Business

Job evaluation is key to ensuring that employees are compensated fairly for their work. It is therefore essential that HR professionals have a robust process in place so that pay and reward are transparent and defensible within teams and across departments. Armstrong's Job Evaluation Handbook gives HR professionals all the tools they need to assess which approach to job evaluation is most suitable, how to implement it and how to maintain it. Packed with case studies from leading organizations such as Microsoft, Vodafone and the NHS, this guide will provide HR professionals with the ability to answer key questions such as how can we decide what is fair to pay our staff, how can we make sure that work of equal value receives equal pay and how can we make sure that our salaries remain competitive in the market? Armstrong's Job Evaluation Handbook covers everything needed to put effective job evaluation processes in place, including analytical matching and market pricing, developing job grades and defining pay structures. There is also coverage of the latest trends and issues in job evaluation, such as the decline in points-rated systems and the use of levelling by consultants. Underpinned by original research, this is a book that no HR department can afford to be without.

PART ONE

The process of job evaluation

01

Job evaluation fundamentals

The aim of this chapter is to provide a conceptual framework for the process of job evaluation. It covers the following topics:

• definition;
• purpose;
• the meaning of value;
• features of job evaluation;
• the basis of job evaluation methodology.

A glossary of job evaluation terms is provided in Appendix A.

Job evaluation defined

Job evaluation is a systematic process for establishing the relative worth of jobs within an organization. The summary in Table 1.1 of what job evaluation is and what it is not was provided by ACAS (2014).

Table 1.1 What job evaluation is and is not

Job evaluation is	Job evaluation is not
• Systematic • Consistent • A good basis for a fair pay system • A way of getting a hierarchy of jobs on which to base a grading structure	• Scientific • An exact measurement of duties or tasks performed • A way of judging a job holder’s performance • A way of allocating pay rates

Purpose of job evaluation

Job evaluation aims to generate the information required to provide, in the words of Elliott Jaques (1961), ‘equitable pay’ by using fair, sound and consistent judgements to develop and maintain an internally equitable grade and pay structure. This means paying particular attention to the provision of equal pay for work of equal value.

An alternative view was provided by Gupta and Jenkins (1991) who argued that the basic premise of job evaluation is that certain jobs ‘contribute more to organizational effectiveness and success than others, are worth more than others and should be paid more than others’. This is all right as far as it goes but it neglects the need for internal equity or comparable worth.

The meaning of value

The Concise Oxford Dictionary defines value as ‘worth’ and worth as ‘of value equivalent to’. Value, like beauty, can be said to be in the eye of the beholder. And it has a number of different meanings, namely the concepts of intrinsic value, relative value, the labour theory of value and market value.

Intrinsic value

The belief that jobs have intrinsic value that belongs naturally to them because of what they are has strongly influenced traditional job evaluation methods. This particularly applies to schemes in which the value of jobs is measured by scoring them, thus indicating that the worth or ‘size’ of a job is so many points. But job evaluation points have no meaning in themselves and therefore cannot be used in absolute terms to define the value of a job. The leading pragmatist John Dewey (1916) did not accept intrinsic value as an inherent or enduring property of things. Intrinsic value, he claimed, is always relative to a situation.

Relative value

The value of anything is always relative to the value of something else. It is this notion that governs the comparative nature of job evaluation which aims to establish the relative value (comparable worth) of jobs to one another so that internal equity can be achieved. The rates of pay for jobs within the organization are also compared with those outside the organization (market rate comparisons) so that pay levels can be competitive. A grade structure (a sequence or hierarchy of grades, bands or levels into which roles of comparable worth are placed) can signify that the roles grouped into one grade are of greater value than the grade below and of lower value than the grade above. But it can also define levels of responsibility in an organization, thus producing a career structure. A pay structure, which will be influenced by market comparisons, attaches financial values to roles and, where appropriate, pay ranges to grades.

Labour theory of value

The labour theory of value originated by Karl Marx (1867) treats labour as a commodity and states that the value of a product depends on the amount of labour required to produce it. Nielsen (2002) argues that ‘job content’-based evaluation methodology, ie valuing jobs by reference to the duties carried out by job holders, is a Marxist approach and is no more relevant today than most of the other views expressed by Marx on political economy. This, he claimed, is because valuing jobs according to their content ignores market considerations.

Market value

The rate of pay for a job or a person is a price like any other price and rates in the external market (market rates) are affected by demand and supply considerations operating in what is likely to be an imperfect market. These affect rates of pay within organizations (the internal market) because they influence the ability of those organizations to attract and retain the sort of people they need. This is the argument used by Nielson (2002) to support market pricing:

Typical job evaluation systems set the prices of jobs by looking at factors that bear no relation to and are abstractions from the jobs themselves. Thus they abrogate the laws of supply and demand that set the prices of goods and services in the marketplace.

Implications

The meanings attached to value can be complementary (intrinsic value, labour theory) or cont...