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.

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.

 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 1Level 2Level 3Level 4
Entry Intermediate Senior Supervisory

Organizational Learns working Quickly develops Possess strong Possess in-depth

Awareness knowledge of working knowledge of knowledge of
organizational knowledge of organization and organization and
structure organizational and relationships relationships
relationships for (formal and (internal and
problem solving informal) external) affecting
team and
organizational
success.

Communication Demonstrates an Demonstrates Able to select Capable of using

skills understanding of ability to acquire, appropriate persuasion and
basic interpret and information and negotiation to
communication communicate best method or build cooperation
skills. Able to information. Able format for and consensus
present ideas in a to clearly define presentation in towards decisions.
clear structure both task/job written and Able to translate
verbally and requirements. verbal forms. advanced technical
written. Demonstrates Able to clearly issues into
ability to present convey ideas on understandable
ideas clearly in non-routine terms for non-
written and verbal subjects technical users.
forms

Team Work Works Demonstrates Capable of Leads team efforts

collaboratively competence to planning, and assessing and
with people both work with and managing and integrating the
inside and outside share working on skills and strengths
of the agency responsibilities shared or joint of individuals and
recognizing his/her while modeling projects as teams for project
role in relation to positive applicable. and organizational
the team to interactions within Coordinates with success.
complete work the team others to achieve
agreed upon
 outcomes.

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