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JOB evaluation is the process of determining the relative worth of jobs in an organisation. It establishes the relative sizes of jobs, patterning them into a pecking order.
Job evaluation provides the foundation for other organisational practices such as crafting career paths for employees in the organisation and establishing equitable and competitive pay structures. This instalment is dedicated to addressing common misconceptions surrounding job evaluation.
First principles
There are many job evaluation systems currently in use such as Paterson, Hay, Peromnes, JEasy, JExpert, ReMeasure, Castelion, JE Manager. Despite the multiplicity of job evaluation systems, all, with the exception of the Paterson system, assess the relative worth of each job based on three principal factors; input, process and output.
What is brought to the job is called input. Input factors specify the basic requirements that are needed for the job to be done. The gamut of input factors covers skills, knowledge, behaviours, experience, and training. Skills and knowledge are the technical competencies. HR experts distinguish between competencies (technical skills) and competences (attitudes and behaviours).
Process factors reflect how inputs to the job are converted to outputs. Output factors show the end result of the job. Different job evaluation systems will have specific input, process and output factors to suit different industries. For instance, Peromnes uses four input factors namely; knowledge, comprehension, educational qualifications, and training /experience. It has two process factors; problem solving and pressure of work. Peromnes has two output factors; job impact and consequences of errors of judgement.
The Paterson system has just one factor, decision making. Due to this single factor, many organisations face a high incident of job evaluation appeals. We shall develop this idea within the fabric of our text. Four nuances surrounding job evaluation are the source of frequent misunderstandings, siring avoidable disgruntlements.
First, job evaluation measures the job characteristics, not the job incumbent’s attributes and achievements. This is a common misconception especially in those organisations using the Paterson system. In a typical case, some managers queried the Paterson grades they were placed into, arguing that they were more experienced and held better qualifications than some managers in the same grade. This is irrelevant. Let’s assume a job requires a minimum of five years’ experience and a minimum of a college diploma.
The value of the job will be based on this minimum input. A person with 10 years’ experience and a Master’s degree qualification doing this job cannot be placed into a higher grade. The same strand of thinking is prevalent when employees obtain advanced qualifications and become testy when they are not automatically placed into a higher grade. Their personal attributes do not change the requirements of the job. Often the chief reason for this bitterness is that they expect a pay rise.
The thinking is that the higher the grade the higher the pay. This is faulty reasoning. It is possible to earn higher than an individual in a higher grade. A consultancy firm I worked for in the region recommended a number of employees in a subsidiary to earn higher than the CEO of the group! The board
adopted the recommendations wholesale.
By extension, when an organisation employs an underqualified person into a job, they should pay the person what the job requires. For example, during a merger in the public sector, there were to be no lay-offs. A group of employees had to placed into jobs for which they did not have minimum qualifications, though they could do the job. A terrible decision was made. It was decided to pay these at a lower grade. We suggested two options: either downgrade the requirements of the job or pay the employees the rates for the job. These employees could have easily won a pay discrimination legal challenge.
Second, for senior executive jobs, more weighting is given to output factors than other factors. In other words, the impact of the executive’s job is more important than qualifications and experience. A case in point happened not so long ago, involving a chief executive’s job in a newly-formed public entity. The job evaluation team which had assessed the chief executive’s job made a big omission. The evaluation failed to take into account the assets spread over the country, worth millions of dollars, for which the job was accountable.
One savvy board member pointed this out, resulting in a re-evaluation and the subsequent upgrading of the job. Had this on-the-ball board member not raised this point, the chief executive’s remuneration would have been wrongly benchmarked in the pay market, raising the risk of low retention. Broadly speaking, when the content of a job changes by at least 20% it must be re-evaluated. The current best practice is to update job profiles every 12 months. Many employees who are not au fait with the job evaluation principles erroneously think that the more the tasks they do, the bigger should their job be and thus the bigger their pay. In fact the more tasks you do, the more likely that your job is lower down the pecking order.
Third, some employees claim that they do the work of their superiors and thus should be paid higher for these extra duties. If these become regular duties, perhaps the supervisee should negotiate that their job be redesigned and re-evaluated. It is very unlikely that this will change the grade. You cannot be in the same grade as your supervisor. However, in broad band pay structures, the supervisor and supervisee can be in the same band. A broad band combines several grades.
Fourth, many people think that the Paterson system is universally suitable. This is not true. For instance, universities are better off using Peromnes. This is what most South African universities use. Financial institutions could be better off using JExpert. The Castelion system is now considered a legacy system in South Africa, meaning it is rarely used.
Executive job sizes falling
One often overlooked point by boards and remuneration committees is that whenever there is an organisational restructuring, the sizes of the jobs of senior managers and executives are bound to change significantly.
Many organisations are downsizing and rationalising operations in the face of a difficult business environment. That has a direct bearing on the chief executive’s job size. Downsizing and rationalisation of operations means that the resources under the stewardship of the chief executive are diminishing. Since the bulk of the job weighting for the chief executive comes from output factors, a significant fall in their job size is inescapable.
This spectre means that the benchmarks for remuneration may need to fall too. Logically, the chief executive’s remuneration should either be cut or at least remain static, from an external competitiveness point of view. Those are decisions remuneration committees should debate thoroughly before making decisions.
Ironically, downsizing and rationalisation of operations may occasion the consolidation of some jobs, resulting in some jobs’ process and output factors increasing. That means some jobs will be inevitably upgraded while the chief executive’s is being downgraded. When using the Paterson system this is not apparent since the decisions to be made by senior executives will not change much. Hence, the Paterson system can obscure the fact that in our current economic environment senior executives’ jobs could be overvalued while lower tier jobs are undervalued.
Remuneration committees should be seriously debating these issues. For instance, the majority of our banks have either heavily retrenched or closed down branches. Have the jobs in the realigned set-ups been re-evaluated? It is within the remit of a remuneration committee to order re-evaluations. Perhaps, remuneration committees should be renamed performance management committees to reflect this overarching mandate.
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