The role of job evaluation, also referred to as Job grading is still poorly understood in the corporate sector. Job evaluation gives companies the information they need to fairly, accurately and competitively determine the salaries of staff – amongst many other functions, says Janine O’Riley, Psychometrist & Reward Specialist at Remuneration Consultants.
“Job evaluation is the internal currency that a business uses to determine how they remunerate staff. All employers must implement very specific measures to achieve equal pay for equal work, according to section 6(4) of the Equity Act. Non-compliant employers are at risk of being liable for prosecution at the CCMA should they not be able to provide sufficient proof of compliance or have a plan in place to correct any inequalities. Companies are also legally required to have documentation of pay comparisons and explanations of pay differentials within their company,” says O’Riley.
Benefits of job evaluation
O’Riley says that job evaluation is crucial for internal and external parity and inform companies with everything from recruiting to remuneration. Job evaluation also assists with organisational design. This helps companies determine which jobs are needed and map out where these jobs will fit into their organizational chart. “Logistics surrounding recruiting needs and reporting are easy to plan and plot when employees’ jobs are evaluated. This information also enables companies to be proactive about succession planning and the career development of their staff,” says O’Riley.
When the jobs are evaluated, internal parity can be ensured by streamlining the various departments and business units for jobs on a similar level with similar grades. Once internal jobs have been evaluated, survey/market data (benchmarking data) can be obtained from a provider to compare internal salaries with the rest of the market, enabling a company to benchmark salaries in the industry, ensuring external parity. Benchmarking your employee salaries will inform employers whether individuals are underpaid, overpaid or paid according to market salaries. This in turn will inform employers how to go about their talent management and focus on top talent – how they are remunerated and planning on how to retain this key talent.
“Any successful business must have competitive PayScale’s that is comparable with the local labour market and fair to all employees,” says O’Riley. Your job evaluation and benchmarking data will serve as initial inputs for the development of the company pay scale and year on year updating thereof.
Job evaluation methodologies
Various job evaluation methodologies can be used. Some providers have their own inhouse job evaluation methodologies that can be purchased from them. Remuneration Consultants uses the Paterson evaluation methodology, which is easy for everyone involved in the job evaluation process to understand, non-discriminatory and public information – so in essence a more cost-effective option.
There are two ways to do job evaluation with the Paterson methodology. One is a desktop-based evaluation session that uses the job profile and other informative company documentation as input to the job evaluation. It is crucial the job profile is a 100% reflection of the job and its duties as this will be the only input to the evaluation session.
It goes without saying that this is a more cost and time effective option, but often companies are not comfortable using documentation as the only input to the process. The second option is an interactive process that includes interview sessions with relevant stakeholders such as line managers, HR managers and a union representative, in certain cases, as well as any informative company documentation such as organisational charts and job profiles.
By using this option, the relevant information can be extracted out of the session ensuring the jobs are evaluated accurately. This is however a more time and cost heavy option but guaranteed to yield accurate results.
“Both job evaluation options can give a business the insights they need to make smarter, more strategic decisions and comply with the Department of Labour’s requirements, concludes O’Riley.