In a world where wages are often set based on "what the market pays," job evaluation may seem absolute. Analyzing an organization’s jobs in order to arrive at a hierarchy for setting pay could be considered more trouble than it’s worth, especially when labor market data is so readily available. Today job evaluation is found most often in international compensation, particularly in the European Union and Latin America. It is useful for multi-country compensation programs, because it creates a common model with which individuals from different cultures can define jobs, values, and salaries paid.
Definition
Job evaluation is the process of classifying jobs based on their content and requirements. The end goal is a job hierarchy that will assist in pay level decisions.
When did job evaluation begin?
The process of setting pay through job evaluation is over 100 years old. The United States Civil Service Commission first used job evaluation to classify jobs in 1871. Unions then encouraged the spread of job evaluation, by forcing employers to give more attention to rationalized wage structures. During World War II, the United States War Labor Board further encouraged the expansion of job evaluation as a way to reduce wage inequities.
Bureaucracies rely on job evaluation
Following World War II, the use of job evaluation spread rapidly in both U.S. industry and government. This was a time when the size of organizations in the United States increased rapidly, and the need for a comprehensive approach to paying wages became important. It was also a time in which workers stayed with the same company for most of their working years, because organizations provided them with lifelong career paths. Organizations grew into bureaucracies that tended to promote from within. This insulated the organization from the labor market, and required an internal method of setting wages – job evaluation
Job Evaluation Worldwide
The use of job evaluation has been expanding across the world. This is especially true for countries with centrally controlled economies or with income control policies
Holland has used a national job evaluation plan since 1948, as a basis for its national wages and incomes policy.
Great Britain, like the United States, usually employs job evaluation at the plant or company level. The British military uses job evaluation to compare pay for military jobs with what civilian jobs earn.
Canada has used job evaluation extensively in government.
In Australia, job evaluation is an integral part of a compensation process. Government bodies even establish "awards" for job classifications that set wage rates.
Sweden and Germany have a number of industry-wide plans. In Sweden, job evaluation has been used to prove wage discrimination.
South America is also turning to job evaluation, sometimes using plans installed by U.S. compensation consultants.
Russia and some Eastern European countries make wide use of job classification.
Job Evaluation in the United States
Job evaluation is losing ground in the United States thanks to the "New Economy." Job evaluation works best in large bureaucratic organizations; yet in the past 20 years, these behemoths of the U.S. economy have faced increasing problems remaining competitive. The result is downsizing and the disappearance of middle management. Vertical movement within organizations has slowed down, causing employees to jump ship, rather than stay with their current employer.
New companies gaining a foothold are smaller and more organizationally flexible.
The demise of unions has reduced employers' reliance on job evaluation.
Now individuals bargain for their own wages.
Organizations are placing more emphasis on employee skills and performance.
In smaller companies where many employees multi-task and have greater responsibility, it is especially true that the job is becoming less important than the person.
U.S. Job Evaluation Today
All this does not mean that organizations ignore the job when setting wages. Instead, wage systems are becoming more flexible and weight skill and performance more heavily.
Job evaluation systems are becoming simpler, less formal.
