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Job evaluation is in a state of flux. The issues and trends that affect its use and future are assessed in this chapter.
Issues
The main issue in job evaluation today is ‘Why should we use it at all?’ In the United States the answer has on the whole been ‘We don’t need it’. Market pricing predominates. As the 2013 WorldatWork survey revealed, market pricing continues to well outpace all other methods as the dominant form of job evaluation with between 67 and 73 per cent prevalence, depending on job category.
It is different in the United Kingdom. XpertHR’s 2013 job evaluation survey revealed that 71 per cent of UK organizations used a formal job evaluation scheme and 76 per cent of the respondents to the 2017 e-reward survey had one. And as Brown and Dive (2009) commented:
By evolving to meet the needs of organizations for more fluid structures, more market- and person-driven pay and more talented leaders – as well as performing its traditional function as a foundation for fair pay management – job evaluation seems to be securing its place in the HR professional’s toolkit for the foreseeable future.
However, The Institute for Employment Studies (Brown et al, 2016) noted: ‘The persistence of job evaluation can largely be attributed not to the need to set internal pay levels and underpin pay surveys, but to the requirement to comply with equal pay law.’ XpertHR’s survey found that 69 per cent of organizations stated that the need to be equal pay compliant was behind their reason for using job evaluation. But the respondents to the 2017 e-reward job evaluation survey had different views. Their two top objectives for job evaluation were to help manage internal job relativities and to provide a basis for the design and maintenance of rational and defensible pay structure.
However, as the 2016 research by The Institute for Employment Studies found:
In some sectors such as technology and parts of financial services there is very limited evidence of any job evaluation at all and in generally flatter organizations with more skills- and performance-based pay progression, pay determination is heavily external-market driven and market surveys play the key role in determining job worth.
In the UK there are two other issues. First, should a scheme be analytical or non-analytical? Second, what can be done about traditional methods of point-factor evaluation, which many believe to be over-complex and bureaucratic? The response to the first question is a preference for analytical schemes, because they are perceived to be more accurate but also, importantly, because they can provide a defence in an equal pay claim. The second question has been answered by a move away from point-factor rating as discussed below.
Trends
Job evaluation still exists, although Brown et al (2016) suggested that its role has declined in prominence, acting as a defensive barrier to equal pay claims rather than being a strong determinant of pay levels in detailed multi-graded structures. They noted:
Contemporary developments have seen a shift towards more externally driven pay determination approaches informed by market pay surveys. These highlight a growing divergence across external markets in how and how much employers reward particular skill sets and occupations at an equivalent job size and level.
Large employers are devoting proportionately more resources to external market surveys and data and relatively less to job evaluation. They are taking more account of external data and ‘vertical’ divisions and variations in this for different functions and occupations and are less concerned with internal relativities. As Brown and Munday (2016) observed: ‘Job evaluation operates in a supportive role, establishing a framework for pay management rather than controlling pay levels.’
The overall trend is for more pragmatic adaptation rather than revolution; for simplification rather than complexity. Analytical matching or levelling schemes are becoming popular – they were used by 68 per cent of the respondents to the 2017 e-reward survey. Point-factor schemes may be relegated to an underpinning role or abandoned completely. This development has been caused by the desire to simplify the process and to reduce the time-consuming nature of point-factor schemes applied to all jobs. Brown and Munday commented:
Points factor evaluation may still be undertaken for difficult or controversial jobs, but most jobs are simply slotted into the appropriate level, and then the focus is on developing people’s skills and contribution, which drives their pay progression up clearly communicated career pathways. Managers understand and accept banding decisions, while employees are engaged by the clarity and links between their pay progression and development of their skills and talents.
As Brown et al pointed out, pay consultants are also increasingly referring to job ‘levelling’ rather than job evaluation. Job levelling involves the definition of the levels in an organization using a standard set of descriptors, often including competencies.
Changes to existing job evaluation systems were planned by 28 per cent of the respondents to the 2017 e-reward survey. Many of these were moving to levelling or job slotting. Proposed changes included:
· ‘Considering other options for ranking and sizing roles rather than just points based.’
· ‘In midst of switching from full Hay JE to using Hay job mapping.’
· ‘Introducing job levels so roles are not specifically matched to individual job match codes.’
· ‘Moving to a career framework and job evaluation will be done using levelling.’
· ‘Looking to introduce job slotting.’
· ‘Likely to move to work levels. Our current points methodology may still be used to underpin the new scheme, however.’
· ‘We are changing our grading structures and will define anchor jobs at each new level, which we can then benchmark new jobs against to align them to the appropriate level.’
· ‘Improve job matching to survey jobs of main vendors and correlation of internal levels to vendor levels.’
This move away from a total reliance on point-factor schemes to the use of matching or levelling is the most important development in recent years. Organizations such as the NHS and some universities often start with a point-factor scheme but rely mainly on job matching or slotting after the initial benchmark evaluations have taken place. Point-factor evaluation is only used when matching is difficult. Others may do without an underpinning point-factor job evaluation scheme altogether, relying on analytical matching or levelling.
References
Brown, D and Dive, B (2009) Level pegging, People Management, 15 January, pp 26–29
Brown, D and Munday, S (2016) Stability rhymes with agility, pay structure needs to go with flexibility, Opinion Paper 26, Institute for Employment Studies
Brown, D, Bevan, S and Rickard, C (2016) A review of pay comparability methodologies, Institute for Employment Studies [Online] https://www.gov.uk/government/publications/a-review-of-pay-comparability-methodologies [accessed 1 May 2017]
e-reward (2017) Job Evaluation Survey, Stockport, e-reward
XpertHR (2013) How to select, devise, and use a job evaluation scheme [Online] http://www.xperthr.co.uk/how-to/how-to-select-devise-and-use-a-job-evaluation-scheme/155642/ [accessed 30 September 2017]