03

Reviewing job evaluation

Job evaluation reviews are needed to establish the extent to which the arrangements are fit for purpose, ie how far they provide a clear, logical, fair and generally acceptable basis for developing and maintaining an equitable and competitive grade and pay structure that fits the organization’s aims and context without imposing unacceptable costs or administrative burdens. The analysis should identify any specific problems and be followed by a diagnosis of the causes of the problems to indicate a course of action – to replace or revise the present approaches or to retain them. A choice can then be made of the approach to be adopted, as described in Chapter 4. This chapter covers the points to be considered with regard to the three main approaches – formal job evaluation, informal job evaluation and extreme market pricing. Consideration is also given to the objectives and specification of a formal scheme if that is required.

Formal job evaluation schemes

Formal job evaluation schemes can decay. The factors may no longer be appropriate, job descriptions can be inflated and scores may be manipulated, which can lead to inequities and ‘grade drift’ (unjustifiable upgradings). Schemes can be bureaucratic, time-consuming and expensive to operate. The checklist in Table 3.1 contains questions relating to these and other typical problems that can arise in established job evaluation schemes, especially if they have been functioning for some time.

TABLE 3.1 Checklist for reviewing the effectiveness of a formal job evaluation scheme

Informal approach

If an informal approach exists, the checklist in Table 3.2 can be used to review its effectiveness.

TABLE 3.2 Checklist for reviewing the effectiveness of an informal approach

Extreme market pricing

The effectiveness of extreme market pricing, ie relying entirely on market rate data to determine competitive rates of pay and, in effect, internal relativities, depends largely on the validity of the data. Questions need also to be asked about how it impacts on internal equity. A checklist is set out in Table 3.3.

TABLE 3.3 Checklist for reviewing the effectiveness of extreme market pricing

Decide whether to retain, modify or replace

The answers to these checklists will provide guidance on whether the formal scheme, the informal approach or reliance on market pricing should be retained with, possibly, some modifications, or whether it needs to be replaced.

Retain, possibly with modification

The analysis of the present arrangements may indicate that they are perfectly satisfactory, but there will be few situations in which no improvements can be made, at least to the process of operation if not the approach itself.

Improving a formal job evaluation scheme

Improvements to a formal job evaluation scheme can be made by giving more guidance and training to managers and evaluators, monitoring the inputs to job evaluation (role profiles) and outcome of evaluations more carefully, exercising closer control over upgradings following job evaluations, streamlining job evaluation procedures, spending time on communicating how the scheme works, using analytical matching as the main process for evaluating roles (relegating the basic point-factor scheme to a support role), or making minor amendments to the factor plan (replacing a considerable part of it would constitute a new scheme).

It may also be decided that introducing a computer-aided system would diminish administrative burdens and provide for more consistency in judgements of value.

Possible improvements to an informal approach

Improving an informal approach probably means adding a degree of formality to decision making. Arrangements can be made for internal comparisons to be made by comparing specially prepared role profiles for the role under consideration with role profiles for benchmark roles – this could be described as internal benchmarking. External comparisons with market rates can be based on a more systematic review of data – going beyond reference to advertisements to scanning published survey material. These actions would mean in effect that a semi-formal approach has been adopted.

Improving extreme market pricing

Possible improvements to extreme market pricing include:

· ensuring that a representative sample of jobs is used to benchmark against external comparisons;

· reviewing existing and potential sources of market data to ensure that it is valid and reliable (see also Chapter 10);

· reviewing methods of interpreting and presenting data so that it gives clear guidance on any actions necessary;

· reviewing methods of pricing non-benchmark jobs for which no market data is available.

Replace present approach

It may be decided that tinkering with the present arrangements will do little good and the approach should be replaced. The choice will be between replacing an existing formal job evaluation scheme with a new scheme, moving from formal job evaluation to market pricing or vice versa, or changing from formal arrangements to informal ones or vice versa. The factors affecting this choice will be the organization’s context, including its values, size and complexity, the national or international nature of its operations, and the degree to which it is competing for high-quality people. These are discussed in Chapter 4.

If it is also believed that a revised grade structure is required, for example reducing the number of grades, this is a further argument for introducing a new scheme. But this decision should not be taken lightly. New schemes can take a lot of time, trouble and money to develop and install and can cause disruption and dissatisfaction.

Points for consideration – formal job evaluation

A checklist of the points to be considered when deciding whether to retain or introduce formal job evaluation is given in Table 3.4.

TABLE 3.4 Checklist of points to be considered when deciding whether to introduce a formal job evaluation scheme

Points for consideration – extreme market pricing

The questions affecting the choice of extreme market pricing are simply:

1. Is our main concern the need to be competitive in the job marketplace?

2. Do we believe that formal job evaluation schemes are a waste of time and money?

3. Are we certain that we can get good market rate data?

4. Do we believe that market pricing will produce an internally equitable pay structure?

5. Do we care whether pay is internally equitable or not?

Question 5 may not be posed as crudely as this, but a negative answer, even if not stated explicitly, may underpin the decision to go for market pricing. It may be felt that such an answer is deplorable in terms of achieving equal pay for work of equal value within the organization, but it represents the approach adopted by many businesses that use market pricing.

Points for consideration – informal approach

The questions to be answered when reviewing how well an informal approach suits the organization’s needs are:

1. Are we satisfied that we can price jobs without a formal scheme?

2. Do we believe that our informal approach will enable us to offer competitive rates of pay?

3. Does our informal approach create internal inequities and would it matter if it did?

Define objectives

If it is decided that a new or revised formal approach is required, it is necessary to be clear about what is to be achieved from the new scheme before producing a specification of requirements.

A guide to the possible objectives that might be set was provided by the respondents to the 2017 e-reward survey of job evaluation. The most common objectives in order of popularity were:

· help manage internal job relativities;

· provide basis for design and maintenance of rational and defensible pay structure;

· compare internal pay levels with market rates;

· ensure equitable pay structure;

· ensure the principle of equal pay for work of equal value;

· assimilate newly-created or changing jobs into existing structures;

· harmonize pay structures as a result of merger or acquisition;

· facilitate lateral career moves and internal mobility.

Other objectives not mentioned by the respondents were to provide a basis for career planning or to enable the better analysis of the organization’s structure by levelling, ie defining levels of responsibility and how roles fit into them.

Specification

A specification for a formal job evaluation scheme provides the basis for evaluating the different approaches and for briefing consultants.

It flows from the objectives and has to fit the circumstances and culture of the organization. The specification should set out what the scheme is intended to achieve, the type of scheme required (eg analytical), whether it should be a computer-aided system, and any concerns of management, staff or trade unions that may affect it. An example of a specification drawn up for a large local authority is given in Table 3.5.

TABLE 3.5 Example of job evaluation scheme specification

Reference

e-reward (2017) Job Evaluation Survey, Stockport, e-reward