In the early 1880s when Frederick Taylor was working upon the ways to improve productivity of Midvale Steel Company, he formulated a systemic study of assigning pay to jobs. The result of this study came to be known as job evaluation.
Definition: Method, which helps to establish a justified rank order of jobs.
It is one of the starting points for establishing the relative differentiation of wage rates.
REASONS FOR JOB EVALUATION.
To establish an orderly, rational, systemic structure of jobs based on their worth to the organization.
To justify an existing pay structure or to develop one that provides for internal equity.
To assist in setting pay rates those are comparable with similar jobs in other organizations, to enable the organization to compete for the best talent.
To provide a rational basis for negotiating pay rates when bargaining collectively with a recognized union.
To identify future movement for all employees interested in improving compensation opportunities.
To comply with legislations, which demand, pay differences to be in accordance with the job content.
To develop a base for a merit or pay-for-performance program.
DECISIONS TO BE MADE BY AN ORGANIZATION IN CONTEXT TO JOB EVALUATION.
1.Which method(s) should be used?.
2. Does job evaluation accomplish the purpose?.
3. Is job evaluation useful in, minimizing unjust or illegal practices?.
Job evaluation methods can be based on judging .
The internal equity-by comparing jobs within the organization.
The external equity-by comparing the jobs in the organization with comparable jobs in other organizations.
COMPENSABLE FACTORS.
Before looking at job evaluation methods, let us understand that the evaluation is based on several aspects of the job. What are these aspects known as? How are these aspects identified and weighted?.
These aspects are known as compensable factors and the following paragraphs will give an understanding of how these factors are rated.