Glossary Term: Job Evaluation

Definition

Job evaluation, not to be confused with job analysis (the process of gathering details about a certain role),  refers to the process of evaluating the relative worth of a job/position in comparison to other jobs/positions. Organizations practice job evaluation as a means to build effective compensation structures.

What are the 4 job evaluation methods?

Four commonly applied job evaluation methods are:

  • Ranking Method: Jobs are ranked in order of their perceived importance in relation to other positions.
  • Point-factor method: Elements of a job that add value and worth to the position are identified and separated into different categories, such as skill, responsibility and are given a numerical point value.
  • Classification method: Characteristics of a job are grouped together to reflect their level of skill and responsibilities on the basis of predefined grade classifications.
  • Market analysis: External benchmarking data is used to inform the decision making regarding the value of a job in a given organization.

Why is job evaluation important?

The formal evaluation of a job reduces subjectivity and allows organizations to build data-driven, evidence-based, and transparent compensation structures.

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