Job Evaluation

The four main job evaluation methods

Ranking. Evaluators line jobs up from most to least valuable, usually by comparing pairs. Quick for a small organization with 20 or 30 jobs. It does not show how much bigger one job is than another, and it becomes unreliable past about 50 jobs.

Classification (job grading). The organization writes grade descriptions in advance and matches each job to the best-fitting description. The US federal General Schedule is the best-known example. Easy to explain, but broad descriptions leave room for argument on borderline jobs.

Factor comparison. Benchmark jobs are broken into factors and each factor is given a dollar value; other jobs are priced by comparing factor by factor. Rarely used today because it is complex and ties internal value directly to past pay rates.

Point factor. Each job is scored on several defined factors and levels, then points are totaled (see the formula above). This is the most common analytical method for larger employers and the easiest to defend, because every score has a written reason. Several consulting firms sell proprietary point-factor plans, and many organizations build their own.

Job evaluation vs market pricing

Most US companies now set pay mainly by market pricing: look up what the market pays for each job and build the salary structure around that. Job evaluation answers a different question: how big is this job compared with our other jobs?

In practice, the two work together. Benchmark jobs with good survey matches are placed by market data. Jobs with no clean market match, such as hybrid or company-specific roles, are slotted by job evaluation against benchmarks. Job evaluation also catches cases where the market rate for a job is distorted by a temporary shortage.

Job evaluation sits naturally alongside a job architecture, which defines job families and levels. The evaluation sizes each job; the architecture organizes them.

Running a job evaluation project

1. Get accurate job content. Current job descriptions or job analysis questionnaires. Evaluating outdated descriptions produces outdated grades.
2. Pick and define factors. Four to eight factors with clear level descriptions. Pilot them on 10 to 15 jobs before rolling out.
3. Form an evaluation panel. Three to six people from different functions who know the work, trained to score the job and not the person currently doing it.
4. Evaluate benchmark jobs first, then slot the rest.
5. Check the results. Sort jobs by score and ask whether the order makes sense. Look for jobs dominated by one gender scoring systematically lower on similar content.
6. Set an appeal and re-evaluation process for when jobs change materially.

A compensation team usually runs this; see the compensation specialist job description for typical responsibilities.

Job evaluation and pay equity

Job evaluation is one of the strongest tools for pay equity because it compares jobs by content rather than by title or history.

In the US, the Equal Pay Act of 1963 requires equal pay for men and women doing jobs that require substantially equal skill, effort and responsibility under similar working conditions in the same establishment. Those are the same four building blocks most point-factor plans use, which is why a documented evaluation is useful evidence when pay differences are challenged.

Outside the US, the bar is often higher. The UK Equality Act 2010 allows equal pay claims for work rated as equivalent under a job evaluation study, and the EU Pay Transparency Directive requires employers to use gender-neutral criteria, including skills, effort, responsibility and working conditions, to assess work of equal value. Requirements vary by country and state.

Common mistakes

• Evaluating the person, not the job. A strong incumbent makes a job look bigger than it is.
• Factors that favor one kind of work. Weighting physical effort highly but ignoring emotional effort, for example, tends to undervalue care and customer-facing roles held mostly by women.
• Too many factors. Beyond eight, extra factors add effort without changing results.
• Letting titles drive grades. Inflated titles granted during negotiations should not inflate grades.
• Evaluating once and never again. Jobs change. Re-evaluate when duties change significantly.