informed by best practices · customized for you

Job evaluation is a process by which organizations objectively measure the ability of a job to contribute to the overall performance of the organization. This is essential to the success of a compensation program. Job evaluation overcomes the limitations relying purely on market data, such as:

  • How to pay employees in jobs that are unique or do not have good “matches” in market surveys
  • How much more or less to pay to jobs that have more or less responsibility than jobs in surveys
  • Establishing a monetary value for multiple functions or for jobs that are performed at different levels

Follow best practices

The goal is an unbiased methodology for determining the “worth” of a job independent of the type of person typically employed in the job. Well-managed job evaluation programs ensure that gender, race, or other factors do not enter into the decision-making process for establishing pay ranges. While using market data might currently provide a defense against discrimination claims, it does not make continuing discriminatory practices “right.” A program that completely removes such biases from compensation decisions is the way of the future. Whether or not it has yet been enshrined in law (as it has in Canada), it is a best practice method.

While methods of job evaluation vary in complexity, effectiveness and cost, we recommend you use “point factor job evaluation.” A point factor plan is a structured method that measures each job on a series of key job characteristics, most often these:

  • Knowledge and skills required
  • Problem solving
  • Judgment, discretion and authority
  • Communications
  • Impact of work performance

Using this method, jobs receive scores, and jobs with similar scores are assigned to the same pay grade. The number of pay grades an organization will have depends on the type and nature of its jobs. No particular number is standard.

A plan unique to your organization

We believe that your organization’s managers know their jobs better than even the most experienced, skilled outsider, so we don’t try to substitute our knowledge for those who really understand their jobs. Merces facilitates a committee of managers in the job evaluation process, leaving your organization with a program built through its own understanding and personal involvement. We have found that, while this approach might require some additional effort in the beginning, it is crucial to long term success.

Next, we apply labor market data to the job evaluation results, creating a “payline” that represents the midpoint for each range. While the pay structure will change from time to time, job evaluations need be revisited only when a job is changed or when new jobs are created. A Merces-designed job evaluation program does not need expensive software (or any software, for that matter), or ongoing administration fees.

You are left with a customized program that your organization helped to build and can administer on its own. Of course, Merces consultants remain available to help in tricky situations, or to provide outside eyes to ensure the program remains on track.