FAQ: Why Do Employers Perform Job Evaluations?

Job evaluations have many purposes within business organizations. While they may be perceived as focusing only an individuals performance, they actually help the organization take a look at its structure, allowing it to make changes to improve its competitiveness or efficiency. Internally, businesses can perform job evaluations to ensure that the jobs are still relevant and that the employees are still living up to expectations.

One of the primary purposes of a job evaluation is to analyze the needs of the organization. Job evaluations allow managers to perform a “physical” on the health of the business. The evaluation can be company-wide, looking at the needs of the organization as a whole or specific to one position within it, where a business seeks to add or eliminate job duties from a particular position.

Certain jobs in an organization are absolutely critical to the success of the business while others could be classified as collateral. One of the common methods of job evaluation is to compare, contrast and rank the positions in a company against each other, according to resources on Managers-Net.com, an Internet archive of management articles. From a budgetary standpoint, this can be extremely helpful for determining areas where more money or manpower are needed as against those areas that can be cut back or even dropped to save company resources.

Job evaluations permit employers to assess the employees responsible for each particular position. Once a company has ranked and ordered the positions within the company, individual evaluations can provide the information necessary to create or eliminate positions. Also, by evaluating an employee’s job performance, the company can determine if additional compensation or bonuses are needed. In “Conduct a Job Evaluation,” Susan Heathfield of Microsoft argues that employees need “clarity about their roles and responsibilities” within the organization in order to know what is expected of them; defining these roles helps improve the evaluation process.

To assist the employee recruiting process by having in place job responsibilities that help with the development of job postings, the assessment of applicant qualifications, suitable compensation, and salary negotiation, and other factors related to recruiting employees.

HR Basics: Job Evaluation

Why do employers perform job evaluations?

Understanding why employers perform job evaluations may help you better understand the unique value of your position. There are several reasons employers may perform job evaluations, including:

Defining hierarchy

By evaluating different positions within an organization, employers may be able to more effectively define the hierarchy or chain of command. When determining hierarchy, employers may look at the scope of responsibility of each position and rank them from most influential to least influential.

For example, when evaluating the positions of manager, sales associate and administrative assistant, employers may determine that managers have the most influence over important decisions, sales associates have the second most influence over important decisions and administrative assistants have the least amount of influence over important decisions.


Evaluating positions within an organization can help improve staffing processes. This is because it provides information about how many team members are necessary for success in various departments. For example, if an organizations primary source of income is providing a service, they may hire more employees for the customer service department than the accounting department.

Determining pay scale

Job evaluations can provide valuable information that helps employers determine pay scale. Depending on a positions place within the hierarchy of an organization, the salary may fluctuate. Its important for employers to understand fair wages for each position within their organization to ensure they are appropriately compensating their employees.

Creating security measures

Job evaluations are an important part of creating security measures and implementing protocol. This is especially true for organizations that handle sensitive information or include secure locations. By understanding which employees have access to sensitive information or secure locations, employers can more effectively implement security clearances.

What are job evaluations?

Job evaluations are a type of analysis organizations use to understand the role and value of each position within their organization. This information may be helpful when making decisions about staffing, pay scale and business structure. Job evaluations may exist in many forms and often categorize positions based on a variety of factors, such as pay, responsibilities, skills and relevance to daily operations.

Employers may perform job evaluations during any phase of business development, but most commonly, job evaluations take place in the early stages of an organization or during restructuring, rebranding or mergers.

How are job evaluations different from job audits?

Job evaluations tend to focus on the responsibilities and processes of individual positions within an organization in order to make decisions about company structure and development. Alternatively, job audits are evaluations of a position in order to determine the compliance of its functions with predetermined company policies. During a job audit, employers may compare the current practices with company policies, legal requirements and safety policies in order to ensure that all processes comply with these standards.

What are the methods of job evaluations?

There are several different methods of performing job evaluations, including:

Ranking method

The ranking method of job evaluation ranks jobs in ascending order based on each positions value in relation to others. This method typically works well for smaller organizations because it doesnt use market compensation rates when determining pay scale. For larger companies, the ranking method may work best by grouping positions into categories or departments. The ranking method is one of the simplest ways to determine hierarchy, scope of responsibility and pay scale within an organization.

Classification method

In the classification method, employers group together positions with similar characteristics. They do so to compare their level of skill and responsibilities with predetermined standards. In order to complete this method, employers may compare individual positions with generalized job characteristics and then match the positions with predetermined categories that determine responsibility, pay scale and value to the organization.

Point-factor method

The point-factor method of job evaluation identifies specific job factors that add value to a position. These factors may include skills, responsibilities and effort needed to complete daily tasks. Employers then assign these combinations of these factors with a number or weighted form of measurement. Positions with high point values tend to be the most valuable to an organization, hold the most responsibility and require the greatest amount of effort and skill.

Factor comparison method

This method is similar to the point-factor method because it also uses factors in order to categorize and rank positions within an organization. However, the factor comparison method assigns these positions with a dollar amount instead of using a point system. The dollar values of positions are then ranked from most valuable to least valuable, and employers make decisions about staffing and pay scale based on this data. This method can be complex and difficult to communicate to employees, so may not be as common as other methods of job evaluation.

Competitive market analysis method

The competitive market analysis method uses market research to collect data about the relative value of positions within an organization. Employers may research job postings similar to their own positions to compare jobs in the external marketplace. Specific data about salary and benefits may also be useful in determining fair wages for certain positions. In order to attract employees, its important for organizations to understand the average salary of positions similar to their own.

Competitive market analysis may also provide employers with insight into the common education and experience requirements for various roles and align their recruitment efforts accordingly.


What is the main objective of job evaluation?

Job Analysis plays an important role in recruitment and selection, job evaluation, job designing, deciding compensation and benefits packages, performance appraisal, analyzing training and development needs, assessing the worth of a job and increasing personnel as well as organizational productivity.

Why do companies do job evaluations?

The main objective of job evaluation is to determine relative worth of different jobs in an organisation to serve as a basis for developing equitable salary structure.

What are the three major purposes of job evaluation?

Evaluations can help identify the high-achieving employees and help raise company productivity. By using the results of job evaluations, an executive team can determine where pay raises are necessary and where it may also be necessary to adjust pay downward based on employee performance.

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