JOB EVALUATION AND PRICING
After studying this chapter, students should be able to understand the following:
A. The Appraisal Period
B. Job Evaluation
This lecture discusses the career management concepts and their application in
A. THE APPRAISAL PERIOD
Performance evaluations are typically prepared at specific intervals. In most
organizations these evaluations
are made either annually or semiannually. The appraisal period may begin with
each employee’s date of hire,
or all employees may be evaluated at the same time.
I. The Line Manager and Performance Appraisal:
Line managers have the following responsibilities in appraising the performance.
• Complete the ratings: Line managers facilitate the overall
rating process, initially by providing
goals to be achieved than comparing those goals with actual performance and finally
the feedback to make the corrective actions if required.
• Provide performance feedback: Performance always requires
feedback, if it is positive than
feedback will act as a positive reinforcement factor that will lead to more improvement
the performance is poor, it again requires feedback so that the poor performance
improved by taking corrective steps. This task of providing feedback is carried
facilitated by line managers.
• Set performance goals: Performance to b evaluated requires
set standards, goals or
benchmarks against which it can be compared for evaluation purpose these goals
by the line mangers.
II. Role of HRM Department in Performance Appraisal:
HRM department performs the following functions during performance appraisal
• Develop the appraisal system: HRM department plays important
role in formulating the
performance appraisal systems, it facilitated different departments in setting
standards and acquiring appropriate appraisal performance method according to
requirements of particular department it also provides monitoring in appraising
performance of employees and hence are necessary for developing effective performance
• Provide rater training: Evidence indicates that the training
of appraisers can make them more
accurate raters. The raters are bothered to be trained because, a poor appraisal
is worse than no
appraisal at all. Training can help raters to avoid and eliminate the basic appraisal
are provided with the training opportunity through HRM department.
• Monitor and evaluate the appraisal system: Any system
to be run and implemented
effectively requires continuous monitoring. Performance appraisal is very important
in any kind
of organization both for employee as well as employer because many decisions
are supposed to
be made on data and result provided by the performance appraisal like, promotions,
and some times termination etc . To achieve more authentic and fair results through
performance appraisal systems it requires monitoring and supervision which is
the HRM department.
III. Performance Appraisal Failures:
Some times performance appraisal process do not satisfy the purpose for which
it is conducted, that means
it is faced with some failures and there are certain reasons, these
reasons are as under:
1. Manager lacks information
2. Lack of appraisal skills
3. Manager not taking appraisal seriously
4. Manager not prepared
5. Employee not receiving ongoing feedback
6. Manager not being honest or sincere
7. Ineffective discussion of employee development
8. Unclear language
9. Insufficient reward for performance
IV. Strategies for Improving Performance:
If performance appraisal process indicates the poor performance of the employees
than the following
strategies can be used to improve the performance of the employees and even for
good performance these
strategies can be used to keep on the trend. These strategies are as under:
a. Positive Reinforcement:
Applying a valued consequence that increases the likelihood that the person will
repeat the behavior that led
to it is termed as positive reinforcement. Examples of positive reinforcement
include compliments, letters
of recommendations, favorable performance appraisal, and pay raises. Equally
important, Jobs can be
Punishment means administering an aversive consequence. Examples include criticizing
or shouting at an
employee, assigning an unappealing task, and sending a worker home without pay.
Punishment strategy can
be used to improve the performance of employees.
c. Self Management:
Many companies empower their employees to take responsibility for the day to
day functions in their areas.
Accordingly, these employees may now work without direct supervision and take
on the administrative
responsibilities that were once performed by their supervisor.
d. Employee Assistance Programs (EAPs):
Specific programs designed to help employees with personal problems. No matter
what kind of
organization one works in, one thing is certain. Whether that problem is job
stress, legal, marital, financial,
or health related, one commonality exists: if an employee experiences a personal
problem, sooner or later it
will manifest itself at the work place in terms of lowered productivity, increased
absenteeism, or turnover.
To help employees deal with these personal problems, more and more companies
employee assistance programs.
V. Characteristics Of An Effective Appraisal System (Designing An Appraisal System)
Validation studies of an appraisal system may be the most direct and
certain approach to determining
whether the system is satisfactory. It is unlikely that any appraisal system
will be totally immune to legal
challenge. However, systems that possess certain characteristics may be more
a. Job-Related Criteria—The criteria used for appraising
employee performance must be
job related. The Uniform Guidelines
and court decisions are quite clear on this point.
b. Performance Expectations—Managers must clearly explain
expectations to their subordinates in advance of the appraisal period.
c. Standardization—Employees in the same job categories
under a given supervisor should
be appraised using the same evaluation instrument.
d. Trained Appraisers—Responsibility for evaluating employee
performance should be
assigned to the individual(s) who have an opportunity to directly observe a representative
sample of job performance. In order to ensure consistency, appraisers must be
e. Open Communication—A good appraisal system provides highly
desired feedback on a
f. Employee Access To Results—Employees will not trust a
system they do not
g. Due Process—A formal procedure should be developed—if
one does not exist—to
permit employees the means for appealing appraisal
Effectiveness of the appraisal can be created by considering following steps.
• Gain support for the system
• Choose the appropriate rating instrument
• Choose the raters
• Determine the appropriate timing of appraisals
• Ensure appraisal fairness
B. Job Evaluation
Job evaluation means systematically determining relative worth of
jobs to create job structure. An attempt
to identify inputs that are most valuable to the organization & to develop job
hierarchy based on which jobs
have more or less of those dimensions
Job Evaluation Methods:
The essence of compensation administration is job evaluation and the establishment
of the pay structure.
Let’s now turn our attention to the topic of job evaluation. By job evaluation
we mean using the
information in job analysis to systematically determine the value of each job
in relation to all jobs with in the
organization. In short, job evaluation seeks to rank all the jobs in the organization
and place them in a
hierarchy that will reflect the relative worth of each. There are four general
job evaluation methods.
a. Ranking method:
Raters examine the description of each job being evaluated and arrange the jobs
in order according to their
value to the company. This method requires a committee – typically composed of
both management and
employee representative – to arrange job in a simple rank order from highest
to lowest. No attempts are
made to break down the jobs by specific weighted criteria. The committee members
merely compare two
jobs and judge which one is more important, or more difficult to perform. Then
they compare the other job
with the first two, and so on until all the jobs have been evaluated and ranked.
The most obvious limitation to the ranking method is its sheer inability to be
managed when there
are a large number of jobs. Other drawbacks to be considered are the
subjectivity of the method- there
are no definite or consistent standards by which to justify the rankings- and
the fact that because jobs are
only ranked in terms of order, we have no knowledge of the distance between the
b. Classification method:
A job evaluation method by which a number of classes or grades are defined to
describe a group of jobs is
known as Classification method. The classifications are created by identifying
some common denominatorskills,
knowledge, responsibilities –with the desired goal being the criterion of a number
of distinct classes
or grades of jobs.
Once the classifications are established, they are ranked in an overall order
of importance according to the
criteria chosen, and each job is placed in its appropriate classification. This
later action is generally done by
comparing each position’s job description against the classification description
and benchmarked jobs.
The classification method shares most of the disadvantages of the ranking approach,
plus the difficulty of
writing classification descriptions, judging which jobs go where, and dealing
with jobs that appear to fall
into more than one classification.
c. Factor comparison method:
Raters need not keep the entire job in mind as they evaluate; instead, they make
decisions on separate
aspects, or factors, of the job. A basic underlying assumption is that there
are five universal job factors: (1)
Mental Requirements, (2) Skills, (3) Physical Requirements, (4) Responsibilities,
and (5) Working
Conditions. The committee first rank each of the selected benchmark jobs on the
relative degree of
difficulty for each of the five factors. Then, the committee allocates the total
pay rates for each job to each
factor based on the importance of the respective factor to the job. A job comparison
rankings and money allocations, is developed next. The raters compare each job,
factor by factor, with those
appearing on the job comparison scale. Then, they place the jobs on the chart
in an appropriate position.
d. Point method:
Raters assign numerical values to specific job components, and the sum of these
values provides a
quantitative assessment of a job’s relative worth. The point method requires
selection of job factors
according to the nature of the specific group of jobs being evaluated. After
determining the group of jobs to
be studied, analysts conduct job analysis and write job descriptions. Next, the
analysts select and define the
factors to be used in measuring job value and which become the standards used
for the evaluation of jobs.
Education, experience, job knowledge, mental effort, physical effort, responsibility,
and working conditions
are examples of factors typically used. The committee establishes factor weights
according to their relative
importance in the jobs being evaluated, and then determines the total number
of points to be used in the
plan. A distribution of the point values to job factor degrees is made, with
the next step being the
preparation of a job evaluation manual.
Hay guide chart-profile method: A highly refined version of the point
method that uses the
factors of know-how, problem solving, accountability, and, where appropriate,
Job Evaluation: Job evaluation means systematically determining relative
worth of jobs to create job
Point Method: Raters assign numerical values to specific job components,
and the sum of these values
provides a quantitative assessment of a job’s relative worth.
Classification Method: A job evaluation method by which a number of
classes or grades are defined to
describe a group of jobs is known as Classification method.
Ranking Method: Raters examine the description of each job being evaluated
and arrange the jobs in order
according to their value to the company.
EAPs: Specific programs designed to help employees with personal problems.
Positive Reinforcement: Applying a valued consequence that increases
the likelihood that the person will
repeat the behavior that led to it is termed as positive reinforcement.
Punishment: Punishment means administering an aversive consequence.