Job Evaluation · Job Grading
Job Evaluation & Job Grading
What is job evaluation?
- Evaluate the value of the position, not the person
- Job description quality determines the outcome
- Review the change procedures before tying it to pay
Once job evaluation is in place, the questions asked in HR meetings change. Instead of 'This person is in year 8, so how far should we move them up?', the first questions become 'How much can this position decide on its own, and what would the company owe if it gets it wrong?' When the focus of evaluation shifts from the person to the position, promotion paths, the requirements in job postings, and comparisons with external market pay are all discussed on the same framework. A position keeps its grade no matter who holds it. Establish that principle first, or the design that follows will not hold.
In practice, the dividing line is whether the method is quantitative. Ranking and classification methods take each job as a whole, either putting jobs in order or fitting them into grade definitions written in advance. They are fast, but once someone asks 'Why is this job above that one?', the answer gets thin. The point-factor method applies weights to 4–6 evaluation factors such as knowledge and skill, problem solving, accountability, and working conditions, then scores each factor on a 3–7 level scale. Rather than running every job at once, it is more realistic to first evaluate 20–30 benchmark jobs that represent the organization to set the axes, then slot the remaining jobs in around them.
Job evaluation and performance appraisal are clearly distinct. Performance appraisal looks at how much the person in a position achieved this year; job evaluation looks at what the position itself is worth. Mix the two results in a single table and job grades start to read as performance rankings. Grades are usually set at 6–10 levels, and overlapping the pay ranges of adjacent grades by 20–30% leaves room for pay to rise with skill even without a promotion. Slicing grades finer does not make the system more precise.
The most common mistake is leaving the job description to the current job holder alone. The wording gets inflated, and if you evaluate on that inflated document, the grades simply copy the ranking of people. The transition is even riskier. Some employees will always be paid above the cap of their new grade, and cutting their pay then counts as an unfavorable change to the rules of employment, which requires consent from a majority of employees and can raise individual-consent issues as well. Freeze the difference as a protection allowance and let later raises absorb it. Settle this design before the evaluation begins.
Kyungtae KimHR expert · Organizational culture and HR strategy consultant
Inwoo LeeLeadership, communication, and performance management expertIt developed in the early 20th century as a technique for giving pay decisions a rational basis. Its methods (ranking, classification, point factor, and factor comparison) are now well established and serve as the foundation for designing job-based pay.
Company A is a precision-parts manufacturer with 320 employees. It has run a seniority-based pay system for over 20 years, but after hiring 14 experienced professionals in the past two years, it keeps finding that a fifth-year employee who joined straight out of school earns less than a new experienced hire. The CEO ordered a move to job-based pay, and a five-month job evaluation project is now under way. (Hypothetical example)
- When the head of HR opened the 87 job descriptions, they were still in the format from three years earlier, and half ended with 'other duties assigned by supervisor.' They brought in 12 line managers and rewrote every one over 6 weeks.
- They narrowed the evaluation factors to four (knowledge, problem solving, accountability, and working conditions) and weighted them 35, 25, 30, and 10. The head of production asked, 'If equipment fails, the line stops, and accountability is only 25%?' So they raised the accountability weight to 30%.
- They evaluated 24 benchmark jobs first. Six of the 9 committee members came from the business units, and for the 5 jobs whose first-round scores differed by 3 or more levels, the committee reread the job descriptions and voted again.
- When the score bands were cut into 8 grades, four current deputy general managers landed two levels lower than expected. In one-on-one meetings, the head of HR explained, 'The grade belongs to the position, and your current pay will not change.'
- They designed a pay range for each grade and froze the difference for the 7 employees above their grade’s cap as a protection allowance. After explaining the plan twice to the labor-management council, they won majority consent and amended the rules of employment.
- Nine months after rollout, salary negotiations for experienced hires dropped from 3 weeks on average to 5 days, and grievances like 'We do the same work, so why is the pay different?' fell from 11 per quarter to 2.