As your small business grows, so will your staffing needs. A formal compensation plan is needed to support this avenue of growth. A job evaluation is a prerequisite to developing such a plan. This process allows you to determine the relative value of the jobs in your organization. It can also serve as an aid in lessening the perception of bias as it relates to pay. The job evaluation ranking method is one of four commonly used approaches, according to Michael Armstrong's “A Handbook of Human Resources Management."
The job evaluation ranking method is best suited to smaller organizations. It is simple and relatively quick to implement. The job-evaluation process follows the steps of a standard job analysis framework as outlined in Kenneth H. Pritchard's "Introduction To Work (Job) Analysis"--gather data, analyze data, job ranking/reporting.
Let's create a small fictional company. Ima Fictional Company was established in the first quarter of 2007. Ima Fiction, the company president, immediately brought on her friend as the director of operations. As of the fourth quarter of 2008, they have added four additional jobs to support their growth. Fiction has been advised to create a compensation plan to support her strategic plans for the company’s future.
The Ima Fictional Company job titles are listed according to operating group. The operations administrator and the customer service representative report to the director of operations. The finance manager reports to the director of sales. • President • Director of operations • Operations administrator • Customer-service representative • Director of sales • Finance manager
Fiction needs to determine the contribution level (value) of each Ima Fictional Company job title. She uses the following organizational drivers for her assessment: difficulty; essential to the Organization; post-revenue-generation support; and external-relationship builder.
Overall contribution-level results: • President, 19 • Director of operations, 15 • Operations administrator, 9 • Customer-service representative, 11 • Director of sales, 17 • Finance manager, 12
Order ranking is a very basic job-evaluation ranking method approach. The Ima Fictional Company job titles are ranked according to the overall contribution level results. The ranking begins with the highest contribution level and ends with the lowest.
Order/Ranking/Results 1. President, 19 2. Director of sales, 17 3. Director of operations, 15 4. Finance manager, 12 5. Customer-service representative, 11 6. Operations administrator, 9
Paired comparison ranking is a more detailed approach. Each Ima Fictional Company job title is paired. The pairs are evaluated to determine the dominate/subordinate reporting relationship. The comparisons result in a reporting hierarchy for the company. The job titles are ranked according to reporting level.
Paired comparison ranking results 1. President 3. Director of sales 3. Director of operations 4. Finance manager 6. Customer-service representative 6. Operations administrator
Note: Job titles with the same ranking have the same or similar dominant/subordinate reporting level results.
When conducting the job-evaluation ranking method, remember that you are assessing the job. You are not assessing the person in the job or how the job-holder performs the tasks that are required for the role. The organizational drivers should reflect the objectives and strategic plans of your company.