Creating a Job Evaluation Tool

How creating a job evaluation tool can support internal equity and retention at your organization

By Emily Toth, HR Consultant

Salary is a significant aspect of compensation. People, rightly so, want to be paid a fair wage for the work they do and the skills they offer. It seems like a simple concept — pay your employees fairly for what they do. However, if there is no structure around pay decisions, inconsistent practices can cause feelings of confusion, inequity, and more.

A job evaluation tool helps to provide a structure to base pay decisions while supporting transparent decision-making and internal equity.

What is a job evaluation tool?

Job evaluation is a piece of a total rewards program strategy which aids in eliminating bias when making pay decisions and promoting internal equity. Job evaluation reduces subjectivity and enables leaders to make rational, consistent, and transparent decisions about roles.

A job evaluation tool helps organizations create a job worth hierarchy structured around their values, culture, and business strategy, which can support transparency, career progression and succession planning conversations. 

How to create a job evaluation tool?

When creating a job evaluation tool, there are a few things to remember:

• The tool you implement needs to be clear, easy to administer, and updatable to reflect changes in org structure or business strategy.
• You need to follow compensation best practices when building the tool.
• Depending on the types of jobs in your organization and your level of comfort with administration, you may consider creating multiple tools to reflect the unique aspects of a specific job family/function.

When it comes to creating a job evaluation tool that meets your organization’s needs, there are several approaches you can use. People First HR specializes in the Point Factor Method of job evaluation, which “breaks down jobs into compensable factors identified during a job analysis. Points are assigned to the factors, and a pay structure is established for the position.” (SHRM)

Advantages of the point factor approach

• Easy to evaluate new or revised jobs
• Compensable factors can be tailored to your organization’s needs
• Differences in degrees between jobs are apparent
• Responsive to pay equity laws

Compensable factors

Compensable factors fall into four different categories:

• Skill
• Effort
• Responsibility
• Working conditions

Typical compensable factors frequently included in job evaluation tool development are:

• education,
• experience,
• mental or physical effort,
• independent judgment,
• impact of decision-making,
• travel requirements, and
• adverse working conditions.

The factors your organization selects must be reflected in all jobs the tool is meant to evaluate.

Job worth hierarchy

From the job evaluation process, you will create a job worth hierarchy, which lists the jobs in your organization from the highest weighted to the least weighted.

Keep in mind, the job worth hierarchy is not a reflection of individual worth. Leaders need to remember this and communicate it to staff. Job evaluation looks at positions independent from the person fulfilling the role. Using a job evaluation process ensures objectivity and removes subjectivity/bias from pay decisions.

Transparency to support career planning and succession planning

A job evaluation tool and job worth hierarchy provide clear steps for an employee to follow to achieve their next career step, which in turn helps an organization retain talent.

To keep employees engaged, competitive compensation needs to be a priority. Compensation plays a major role in employee retention. It’s critical to do the research and work — both internally and externally — to ensure that your employees are competitively compensated.

Compensation is about more than wages. If you want to leverage compensation to improve employee retention, you need to look at all the elements of your employee compensation structure and make changes and improvements as necessary.

How job evaluation tools support internal equity

Equity is a buzzword impacting organizations across industries right now. Employees are looking for equity in their organization. Whether or not an organization is deemed equitable can affect candidate attraction and retention efforts.

Depending on the level of transparency your organization is comfortable with, a job evaluation tool (inclusive of the compensable factors and degrees associated) and job worth hierarchy can be shared with employees.

Sharing this information allows your organization to assert that you offer equal pay for work of equal value. The information can also reduce inaccurate conversations and speculation around pay decisions.

Tips for creating a job evaluation tool

Ready to start making structured and equitable pay decisions? Before you get started, we suggest:

• Ensuring business and compensation strategies are current,
• Creating/updating your compensation philosophy, and
• Reviewing and updating job descriptions to include:
  • Job purpose
  • Reporting relationships
  • Responsibilities
  • Tasks
  • Education/designation minimum requirements
  • Experience minimum requirements

Ps. If your job descriptions are outdated or you don’t have a template for job descriptions you are confident in, contact us! People First HR can support the development of job information questionnaires, reviewing employee feedback, consulting with leadership on job purpose, and writing effective job descriptions.

Benefit from structured pay decisions

Every organization can benefit from making structured and consistent pay decisions.

To set your organization, and employees, up for success, contact us for strategic advice and support based on our extensive practical experience developing total rewards solutions.

Our consulting team strengthens your organization by providing customized total rewards solutions that align with your strategy and stakeholder interests.  

Contact People First HR