HR Toolkit


Compensation & Benefits

Job evaluation (Internal equity)

Job evaluation is the systematic process for assessing the relative worth of jobs within an organization. A comprehensive analysis of each position’s tasks, responsibilities, knowledge, and skill requirements is used to assess the value to the employer of the job’s content and provide an internal ranking of the jobs. It is important to remember that job evaluation is a measurement of the internal relativity of the position and not the incumbent in the position. This analysis can also contribute to effective job design by establishing the organizational context and value of the job, and to hiring and promotion processes by providing job analysis on skill and competencies required to successfully meet job requirements.

Job evaluation provides a rational and consistent approach for determining the pay of employees within an organization. Paying fairly based on internal relative worth is called Internal Equity. Job evaluation can be used independently, although it is usually part of a compensation system designed to provide appropriate salary ranges for all positions. This process will ensure an equitable and defensible compensation structure that compensates employees fairly for job value.

When to conduct job evaluation

The job evaluation process should be conducted after completing a job analysis but before creating a compensation programcompensation program. Job evaluation should be conducted for every new position in order to ensure the organization is hiring the correct level based on expected tasks, qualifications and responsibilities of the job. Job evaluations should also be conducted when a job has changed substantially in order to reflect the current role, which is known as reclassification or re-evaluation.

The goal is to identify what is required to ensure satisfactory performance and/or progression. Therefore, the same criteria should be used when hiring a new employee, during the establishment of goals and expectations, in recognizing achievement, or in promotion of an employee.

Legal requirements for job evaluation

While establishing a job evaluation policy and procedure is not a legal requirement, job evaluation is an effective tool organizations use in meeting requirements of pay equity legislation. For example, the Pay Equity Act in Ontario requires organizations’ the job evaluation systems to measure work in terms of Skill, Effort, Responsibility and Working conditions. Furthermore, provincial human rights codes require employers to treat employees equitably and fairly, without discrimination. A comprehensive job evaluation policy and process can serve to both ensure, and demonstrate, objective and fair decision-making regarding compensation structures, staffing and promotion.

Job evaluation systems

There are a number of job evaluation approaches or methods that organizations can use to evaluate jobs. In order to ensure equity, transparency and process efficiency, organizations should choose one approach or method for job evaluation and apply it to all jobs in the organization.

Approaches or methods to job evaluation include:

  • Whole Job Ranking –(simplest method) Job to job comparison used to rank jobs in order from highest to lowest.
  • Job Classification – Groups similar positions into job classes based on pre-defined class specifications.
  • Point Factor –(most widely used) Job descriptions are compared to compensable factors (defined factors and degrees). Points are assigned to the various factors that derive a total score and determine the appropriate pay level.
  • Factor Comparison – Benchmark positions are identified and ranked based on compensable factors. The factors are assigned monetary values based on market rates. Pay for benchmark positions are determined based on the total monetary value of the factors. Other jobs in the organization are compared to the benchmark positions and the monetary values of the factors are summed to determine the pay for each job.

The intent for each of the job evaluation methods is the same. In choosing an approach to job evaluation, organizations need to consider the costs associated with each method, the ability of the organization to access all the information required for the method, and the value derived from a simple versus a complex system.

It may be prudent to involve a job evaluation specialist in helping to determine the most appropriate method for your organization.

For some organizations the ranking is based on hierarchical responsibilities or a point factor system, and for others the ranking is directly linked to market–based pay. Based in this analysis, a compensation matrix or comparative chart can be developed to track comparatives. With either approach, the goal is to identify what is required to ensure satisfactory performance and/or progression. Therefore, the same criteria should be used when hiring a new employee, during the establishment of goals and expectations, in recognizing achievement, or in promotion of an employee. Even if the factors used to differentiate between levels are based on academic or technical requirements, the importance is on actually achieving the target or receiving the credentials.

Whether your philosophy is to compare to other roles within your organization or against the broader sector/market, clearly established criteria allows for fair and consistent evaluation and compensation.

Important

Pay an employee less than the defined rate or hiring them conditionally for a job if they are working on attaining qualifications required for the position. Once the qualifications are obtained generally within a reasonable time period set by the employer, the employee’s salary can be adjusted accordingly.



Links and Resources
  • Your organization requires employees with a degree in social work, psychology or some type of human services discipline.
  • You group the roles together into a “case-worker” job class.
  • You then create an evaluation scale that starts with
    • Entry level, then progresses to
    • Intermediate, then
    • Senior, then
    • Supervisory
  • Once the levels are established, a written description is developed outlining the tasks, responsibilities, competencies, and authority for each level of caseworker.

When evaluating a specific role, you need to determine which level the skills and competencies are best aligned with. If the tasks align with a specific level, then the compensation for that role is applied. Compensation is based on the appropriate level of skill and responsibility.

 

 

Example: Case Worker Job Class and Factor Chart

Factors

Level 1
Entry

Level 2
Intermediate

Level 3
Senior

Level 4
Supervisory

Organizational Awareness

Learns working knowledge of organizational structure

Quickly develops working knowledge of organizational and relationships for problem solving

Possess strong knowledge of organization and relationships (formal and informal)

Possess in-depth knowledge of organization and relationships (internal and external) affecting team and organizational success.

Communication skills

Demonstrates an understanding of basic communication skills. Able to present ideas in a clear structure both verbally and written.

Demonstrates ability to acquire, interpret and communicate information. Able to clearly define task/job requirements. Demonstrates ability to present ideas clearly in written and verbal forms

Able to select appropriate information and best method or format for presentation in written and verbal forms. Able to clearly convey ideas on non-routine subjects

Capable of using persuasion and negotiation to build cooperation and consensus towards decisions. Able to translate advanced technical issues into understandable terms for non-technical users.

Team Work

Works collaboratively with people both inside and outside of the agency recognizing his/her role in relation to the team to complete work

Demonstrates competence to work with and share responsibilities while modeling positive interactions within the team

Capable of planning, managing and working on shared or joint projects as applicable. Coordinates with others to achieve agreed upon outcomes.

Leads team efforts and assessing and integrating the skills and strengths of individuals and teams for project and organizational success.

A compensation matrix or salary range can be developed for the job class to reflect its relative worth in the organization. Based on this analysis of the job, it can be placed within the compensation matrix or salary range for this job class.

Job evaluation process

The process for completing job evaluation includes the following components:

  • The job evaluation approach or method the organization will use to evaluate jobs.
  • The process that will be used to evaluate jobs.
  • The expected outcomes of job evaluation (in a unionized organization the policy and approach to job evaluation may be stipulated in the collective agreement).

Regardless of the approach or method used for job evaluation, the process for job evaluation should be clearly established and designed to ensure transparency and objectivity in job evaluation. The job evaluation process should include:

  • Identifying who conducts the job evaluation:
    • The Is there use of for a job evaluation committee?. If there is a committeet its is important that they committee isbe trained in conducting the evaluations and is are made up of senior employees who understand the functions of most of the jobs in the organization. but They do not evaluate the individual incumbent instead ofthey are responsible for evaluating the job.
    • There are also specialists that will conduct job evaluation on behalf of the organization which adds less bias and more fairness, but this is an expensive option beyond the funds of many voluntary sector organizations.
    • Job evaluation is a subjective process; therefore, whether job evaluation is conducted internally or externally it is important the evaluator is consistent.
  • Writing and updating job descriptions: job evaluation needs to be based on current up to date job descriptions.
  • Identify, collect, and make available the relevant documents to be used in the evaluation process; in addition to job descriptions, documents could include organization charts, benchmark or comparison job descriptions.
  • Outlining the steps in the actual evaluation: these will be largely dictated by the job evaluation system or approach used by the organization.
  • Developing an employee appeal process.

The role of the job evaluation committee

The job evaluation process is by and large a subjective one, demanding close cooperation between supervisors, compensation professionals and employees. Establishing a job evaluation committee ensures representation of the points of view of the people who are familiar with the jobs being evaluated. This may include employees, HR staff, managers and in the case of a labour relations environment, union representatives. To establish a committee the organization should first identify a need for the program, obtain cooperation, choose committee members who know the organization, and finally carry out the actual job evaluation in an objective and gender neutral manner.

The first task of the committee is identifying key benchmark jobs that serve as anchors in which to compare the relative importance of all other jobs. At this point the committee then turns to the actual evaluation method, likely using either the classification or point method.

Results of a job evaluation process

Note that in a unionized organization the policy and approach to job evaluation may be stipulated in the collective agreement. Results of a job evaluation process can be used for:

  • Establishing a salary range for a new position
  • Creating a position hierarchy in the organization
  • A basis for salary increases and/or promotion of an employee in the position
  • Reclassifying the position to a higher or lower grade with or without a change in salary of the position incumbent Note: reducing an employee's salary can be considered constructive dismissal - an alternative is to red-circle (freeze) or green circle (limit increases to cost of living increases) an employee's base salary to accommodate a change in salary range
  • Confirming that positions are properly classified

For more information on job evaluation visit our sample policies section.

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