It is necessary for the management of any organization to establish proper wage and salary structure for various jobs. For doing this in a scientific manner, it is necessary to determine the relative value of jobs and hence a job evaluation is done. Job evaluation is a technique of analysis and assessment of jobs to determine their relative value within the firm. It aims at providing a rational and equitable basis for differential salaries and wages for different classes of workers.
Objectives: Job evaluation has the following objectives.
a) It helps in developing a systematic and rational wage structure as well as job structure.
b) Job evaluation aims at removing the controversies and disputes relating to salary between the employers and employees. Thus the employees and also the employer remain satisfied.
c) Another important objective of job evaluation is to bring fairness and stability in the wage and salary structure so as to ensure full cooperation of workers in implementing various policies of the employers.
d) Job evaluation discloses characteristics and conditions relating to different jobs. This is very useful at the time of recruiting of workers as only suitable workers can be recruited.
Methods of Job Evaluation:
Methods of job evaluation are as follows.
1. Point Ranking Method: In this method each job is analyzed in terms of various job factors or characteristics. The characteristics are skills required, efforts involved, working conditions, hazards, responsibility and so on. In other words the job factors are the requirements needed for performing the job effectively. Each job factor is given weightage or points depending upon its value for the job. For example, for certain jobs, maximum value is assigned to experience while for some jobs, education may be the most crucial factor. Finally each job is ranked in the order of points or weights secured by them. The wage structure can be suitably designed according to the points assigned to each job.
2. Ranking Method: In this method, jobs are ranked in order of importance on the basis of skills required, experience requirements, working conditions etc. Jobs are rearranged in an order, which can be either from the lowest to the highest or in the reverse. Wage scales are determined in terms of ranks. Though this method is quite simple to operate and less costly as well as easy for understanding, it is suitable when the size of the organization is small and jobs are few and well defined. In a large organization, where jobs are quite complex, this method is not beneficial.
3. Grading Method: This method is an improvement over the ranking method. Under this method, each job is analyzed in terms of a predetermined grade and then assigned a grade or class. Grades are established after making an investigation of job factors, such as complexity in the job, supervision, responsibility, education etc.