PM 6 JOB EVALUATION

Prof. Coen Bester

Dept. Industrial Psychology, UFS

Goals
After you have completed this module, you should be able to:
 explain the concept “job evaluation” and indicate the advantages that it holds for
organisations;
 describe the most important methods of job evaluation that are used most often;
 explain the most important systems of job evaluation used in South Africa.

1. Introduction
Job evaluation is the systematic process during which the value of each job, in relation to
the other jobs in an organisation, is determined. The goal of this process is to arrange jobs
in a hierarchy that indicates the relative importance or value of each job in an
organisation. Job evaluation applies to the relative value of jobs and not to the value of
the people in the jobs. The value of people in jobs is determined by means of
performance evaluation.
Job evaluation is basically a process of making comparisons. This includes comparisons
with other jobs, comparisons with defined standards or comparisons in respect of the
degree to which common factors occur in different jobs. These different comparisons
form the basis of the various methods of job evaluation.
Job evaluation implies that the value of a job can be measured and that employees in jobs
with greater responsibility should receive better remuneration. This approach follows
from a free market economic system. Therefore job evaluation is more common in
capitalist countries than in communist and socialist orientated economic systems. Job
analyses also usually form the basis for the determination of a fair and comparable
remuneration structure.
Any job evaluation system is based on remuneration factors. A remuneration factor is any
factor or combination of factors that is used as a basis for evaluating the value of a job in
comparison with all the other jobs in an organisation and to which consensus can assign a
common monetary value. The core of any remuneration policy is the identification of
certain factors that generally occur in all jobs in an organisation. To be usable, a
remuneration factor must generally occur in a large number of jobs.
There are particular benefits for an organisation which uses a formal job evaluation
system:
 Personal bias in the evaluation of the relative value of a job is reduced to a minimum.
 It makes it possible to set up a fair and comparable remuneration structure for all
employees.

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 It offers a logical hierarchy of jobs to which a set of employee benefits and employee
services can be linked.
 It provides an objective system on the basis of which negotiation with unions can
take place.
 It sets a healthy remuneration structure in place on which remuneration reviews can
be based.
 The hierarchy of jobs that has been set up can be used in organisational restructuring
and career planning.

2. Job evaluation methods

Organisations use four basic job evaluation methods, namely the ranking method, the
classification method, the factor-comparison method and the mark allocation method. An
organisation usually chooses one of the above-mentioned methods and modifies it to
provide for its particular needs. The ranking method and classification method are known
as non-quantitative methods, while the factor-comparison method and point method are
regarded as quantitative methods.

2.1 The job ranking method

This is the simplest of the four job evaluation methods, but also the method that is used
least. In this case the evaluators study the description of each job that must be evaluated
and arrange the jobs in a particular order based on the value they have for the
organisation. The fact that it is an inexpensive method, and that it is easy to understand
and apply, makes this a very attractive method, but it has a number of disadvantages
which result in it not being very effective.
The disadvantages associated with this method are the following:
 As the number of jobs being evaluated increases, this method becomes more tedious
and unreliable.
 There is a lack of specific criteria that can be used to determine rank.
 It does not indicate the degree of difference between various job levels.

2.2 The job classification method

This method requires developing criteria according to which jobs can be divided into
groups. A scale of values is constructed according to which jobs and their associated job
descriptions are compared with each other. The scale consists of grades and grade
descriptions which correspond to these. After this, individual jobs are placed with the
description they match best. Grade definitions are based on discernible differences in
respect of certain criteria, such as the level of decision making (Paterson method), or a
whole number of factors such as decision making, control over and contact with people,
etc.
The advantages associated with this method are that it is easy to understand and to
apply. It is also relatively inexpensive to use. The disadvantages that this method holds
are the following:
 The use of individual job factors to determine remuneration differences is a
simplification of the complexity of the problem.

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 There is a large amount of subjectivity present.

 Complex jobs seldom fit precisely into one category.

2.3 The factor-comparison method

This method is a complex ranking method in which jobs are arranged on the basis of a
number of common factors. Four basic steps are followed in the development and use of
a factor-comparison scale:
 Choose and rank a number of key jobs (important jobs that are generally known and
that have a relatively stable job content).
 Allocate monetary values to the common factors of each key job.
 Initialise the factor-comparison scale on which the results of the second step are
shown.
 Evaluate non-key jobs by comparing these to the key jobs.
This method is very tedious, difficult to explain to employees and inflexible. Any job, and
thus also key jobs, changes in the course of time, and each time this happens the whole
process must be repeated.

2.4 The point method

The point method is probably the most commonly used job evaluation method. Although
there are many variations of this method, the point method is a quantitative method
according to which marks are allocated on the basis of the degree to which certain
identified common factors are required for a particular job. The following characteristic
steps are usually followed in the application of this method:
 Choose common job factors
A number of factors that appear in all jobs in the organisation are chosen and clearly
defined. Examples of such common factors are skills that are required,
responsibilities, degree of effort, working conditions, etc.
 Divide the factors into grades
The chosen factors are divided into different grades. The grades describe the degree
to which a factor is present in a particular job. Grades represent the number of
distinctive categories associated with a particular factor. Every grade must be clearly
defined. Suppose that working conditions are one of the chosen factors. Working
conditions can now be divided into different grades, for example:
 Grade 1: the task is completed in an air-conditioned private office from 09:00 to
16:30. It is not expected that the office holder works overtime or over weekends.
 Grade 4: Shift work with unstable, long working hours; stressful, noisy working
conditions; employees are expected to work over weekends.
The question is into how many grades each factor should be divided. This depends on
the job requirements. If a particular group of jobs require the same level of formal
education (for example a high school diploma) fewer grades will be appropriate than,
for example, in a case where some jobs in the group require more advanced
qualifications.
 Assign weights to factors and marks to grades
A decision must be made about the total number of marks that will be allocated (for
example 500 or 1000), as well as what weight or percentage of this total will be

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allocated to each factor; the more important the factor, the greater the weight that
will be assigned to it. Thereafter marks are allocated to each grade of every factor. An
example of the application of this method is set out in Table 1.

Grade of the factor

Job factor Weight 1 2 3 4 5

Education 50.00% 50 100 150 200 250

Responsibility 30.00% 30 70 110 150 -

Physical effort 12.00% 12 24 36 48 60

Working
8.00% 8 24 40 - -
conditions

Table 1: Overview of the point method (500 mark system)

From Table 1 it is clear that Education consists of five grades, Responsibility of four,
Physical effort of five and Working conditions of three. The maximum marks for each
factor are calculated by multiplying the maximum marks for the system, namely 500, by
the assigned weights. For Education the maximum mark is 250, for Responsibility it is 150,
for Physical Effort 60 and for Working Conditions 40. Marks for the lowest grade or grade
1 correspond to the percentage weight assigned to the factor. As the percentage weight
for Education is 50%, therefore the minimum number of marks for grade 1 must also be
50. The intervals between the grades must be proportionally the same and are calculated
by subtracting the minimum mark from the maximum mark and then dividing this by the
number of grades being used minus 1. For example: the interval for Education is 250
minus 50 divided by 5 minus 1 = 50.
Evaluate jobs in respect of each factor and determine the total number of marks.
Jobs are evaluated by an evaluation committee. The committee determines which grade
of each factor best represents the job and the marks which are linked with each
appropriate grade of each factor are added together to calculate the total. The total mark
indicates the value of the job in question. For example: in the light of the table, the job of
a general labourer will be evaluated as follows:
 Education: grade 1 = 50 marks
 Responsibility: grade 1 = 30 marks
 Physical effort: grade 3 = 36 marks
 Working conditions: grade 3 = 40 marks
 Total: 156 marks

A disadvantage of the point method is that it is complex and time consuming to develop
and maintain. It does, however, have the advantage of being more objective and has
greater validity than the non-quantitative methods. In addition it has the capability to
determine relative differences between jobs. This also enables organisations to develop
their own unique job evaluation systems that address their unique nature and needs.

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3. The most important job evaluation systems used in South Africa

A large number of job evaluation systems based on the above mentioned methods are
used in South Africa. The most important systems that will be covered are:
 The Paterson system.
 The Peromnes system.
 The Hay system.

3.1 The Paterson system

The Paterson decision band method is a system of job evaluation based on the method of
job classification. The method was developed by Professor TT Paterson in Scotland as an
alternative for the time-consuming point systems which, at that stage, considered a large
number of factors. His research led him to the conclusion that a single factor, namely
decision-making, occurred in all jobs and that this was sufficient to distinguish job levels.
The Paterson system is built on the assumption that the most important function of an
employee is his/her ability to make decisions. Decision-making is a common factor of
remuneration that is present in all jobs and which makes it possible to group jobs in
general, uniform categories.
According to the Patterson system all jobs can be grouped in six decision-making bands
based on the level of complexity of the decisions job incumbents are required to make.
The levels range from the completely defined decisions of band A to complex policy
forming decisions in band F. Thereafter the decision-making bands are subdivided
according to a coordinating factor. There are two grades for each of the bands, with the
exception of uneducated workers: a lower grade for mechanical execution of decisions
and an upper grade for the supervisors who have to make the decisions. Grades are
further subdivided into sub-grades, usually restricted to a maximum of two in the upper
grade of each band. There are eleven grades which can be further subdivided into sub-
grades to fit the specific needs of the organisation. There are twenty eight sub-grades
that can be used, with the upper grades and lower grades which have two and three sub-
grades respectively.
When the Paterson system is applied, one must first determine the band that the job best
fits into by comparing the job description with the definitions of the various bands (A to
F). Thereafter one determines which grade within that band is most applicable to the job,
for example whether the job belongs in the top grade or the bottom grade. The next step
is to determine which sub-grade is most applicable based on the number of decisions and
the complexity of the decisions that must be taken.
The Paterson system is used in various overseas countries, as well as in many South
African organisations. It is a simple system that is easy to understand and implement. In
addition it is cost effective and internationally recognised. The most important
disadvantages associated with it are:
 Only one factor is used to evaluate all jobs.
 There is a lack of uniformity of procedures for interpreting and applying sub-grades.
 Problems are experienced in grading complex management hierarchies.

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Decision making band Job grades Sub-

grade
F. Policy making (Top management) Upper F- -11 F5
Coordinating
Lower F – -10
Policy forming
E. Programming (Senior management) Upper E- -9 E5
Coordinating E4
-8 E3
Lower E-
E2
Programme formulation
E1
D. Interpreting (middle management) Upper D- -7 D5
Coordinating D4
-6 D3
Lower D-
D2
Interpreting
D1

C. Routine (Skilled labour & supervisory Upper C- -5 C5

personnel) Coordinating C4
-4 C3
Lower C-
C2
Routine
C1
B. Automatic (Semi-skilled labour) Upper B- -3 B5
Coordinating B4
-2 B3
Lower B-
B2
Automatic
B1
A. Defined (Unskilled labour) Only Lower A- -1 A3
Defined A2
A1

Table 2: Paterson's job grading system

3.2 The Peromnes system

The Peromnes system was developed for SA Breweries by Professor Simon Biesheuvel as
a simplified version of the Castellion method. The system was later taken over by FSA
which now has the sole right to market it in South Africa.
The Peromnes system (the Latin words “per omnes” mean for everyone) is based on the
mark allocation method and evaluates jobs on the basis of eight factors of which the first
six are job content factors and the remaining two are job requirement factors. The eight
factors entail the following:
 Problem-solving
The nature and complexity of decision-making processes, including decision-making
processes required in the formulation of recommendations.

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 Consequences of judgements
The consequences of firm decisions on the organisation or any of its components
after considering control measures that may exist to hinder the implementation of
judgments, especially measures that are detrimental.
 Work pressures
Pressure that is inherent to a job as reflected in the variety and type of work that
must be completed within the available time. This also refers to the need to
determine priorities in an effective manner, as well as the interruptions and
disturbances as a result of interactions with other jobs.
 Knowledge
The level of knowledge that is required in terms of operational qualifications (not
formal qualifications) that are necessary to do effectively the tasks associated with
the job.
 Impact of the job
The degree of influence that the job has on other activities inside and outside the
organisation.
 Understanding
The level of understanding of written and spoken communication that is continually
required during normal performance of tasks.
 Educational qualifications needed for the job
The minimum qualifications necessary must be taken into consideration and not the
desired qualifications.
 Training or experience needed
The time needed to acquire the necessary competence required by the job using the
shortest possible reasonable route.

All eight factors are inherent aspects or requirements of a job and characteristics such as
physical working conditions are excluded as these can vary from place to place and from
time to time. Factors must thus be constant.
During the job evaluation process each remuneration factor is indicated according to
prescribed definitions on a progressive scale of complexity. In each case the aim is to
provide the best definition of the highest level of activity or the greatest point value is
assigned to every job. As soon as the total point value is determined for a job, the job is
graded on a fixed scale of conversion. There are nineteen grades in the Peromnes system,
of which 1 is the highest. Each grade covers a range of values on the scale. The meaning
of the grades is shown in the following table:

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Grades Description

1-3 Top management, most senior professionals and specialists

4-6 Senior management, high-level professionals and specialists

7-9 Middle management, superintendents and low-level professionals and

specialists
10 - 12 Supervisors, high-level skilled workers and clerical personnel

13 - 16 Low-level labourers and clerical personnel

17 - 19 Less skilled and unskilled workers

Table 3: The Peromnes rank classification and grade description

The Peromnes system does not use job descriptions during the evaluation process which
makes it unique in this sense. Information about key aspects of the job that must be
evaluated is provided by a number of specialists with in-depth knowledge of the job on
the panel of reviewers.
One of the advantages of the system is that it makes provision for external comparison.
This implies that a job with a particular grade in one organisation has the same intrinsic
value as a job with the same grade in any other organisation.
The system also has certain disadvantages:
 The fact that formal written job descriptions are not used detrimentally affects the
quality of the description of job content that must be evaluated;
 As a result of the fact that the evaluation process is unstructured, appropriate
information is not gathered in a systematic manner and there is no formal manual,
there is often a lack of information that can lead to subjectivity.

3.3 The Hay system

This method was developed in the early fifties by the Hay group of consultants in
Philadelphia, USA. The system is currently used by more than 40 000 companies and
organisations in approximately thirty countries. Although the roots of the system are
anchored in the factor comparison method, the current form of the system also has
strong elements of the point method.
The Hay system measures three shared factors that make provision for eight dimensions.

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Dimensions
Factors
1. Knowledge 1.1 Depth in respect of skills education
The sum of every type of skill that is and training requirements
necessary for acceptable job 1.2 Breadth of knowledge of
performance management
1.3 Interpersonal skills
2. Problem solving 2.1 The environment in which reasoning
This entails the reasoning ability takes place
required by the job to solve problems, 2.2 The challenge presented by the
It includes evaluation, reasoning and required thinking
reaching conclusions
3. Accountability 3.1 Freedom to act
Accountability for actions and 3.2 Impact on final results
resulting consequences of these form 3.3 The extent of the impact
the bases of this factor (usually in financial terms)

Table 4: The Hay system

Each of the three above-mentioned factors is measured as a matrix and the evaluation of
these factors in a particular job is done in the light of a complex quantitative system.
There is copyright on the details of these.
Points for each factor are derived from guide-cards that are developed for different
organisations and a profile of the particular job being evaluated is put together. This
indicates the nature and level of the job. The total point for the job places the job in an
organisation-specific hierarchy of evaluation ranging from 0 to 4000 marks. The point
score for each job is used to determine a monetary value for the job using regular Hay
market surveys. Using this as basis, the number of Rand per Hay-mark can be determined.
Guide-cards are adapted to the unique circumstances of specific client companies and
jobs are not divided into grades. This in particular makes it very difficult to make
comparisons with other evaluation systems in respect of salary surveys.
Although the conceptual merit of the system, as well as the thoroughness and validity of
the evaluation process are well established, the system is complex and time consuming,
which makes it difficult to apply.

4. Summary
In this module the meaning and importance of job evaluation, as well as the advantages
that it holds for the organisation, are explained. The most important job evaluation
methods that are commonly used, namely the job ranking method, the job classification
method, the factor comparison method and the point method, are described. Thereafter
the focus is on the most important job evaluation systems used in South Africa, namely
the Paterson system, the Peromnes system and the Hay system. Job evaluation forms the
basis of remuneration management.

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