Are We Looking at a Job Evaluation Revival in '09?

I know.  In many places, for many organizations, job evaluation - of the traditional factor-based type - has kept its place as a cornerstone of the base salary program.  In most organizations, however, the dominant method of valuing jobs has been a market-based approach. 

A WorldatWork poll, conducted in 2005 (the most recent research I've been able to find on the subject), confirms what I have found to be true in my own travels.  The responding 450 member organizations identified their "dominant" job evaluation method as:

• Market pricing - 61.0%

• Point factor - 23.0%

• Whole job (e.g., ranking or classification) - 8.8%

• Job component - 3.8%

• Do not use (formal) job evaluation - 3.4%

I've written about the choice of market versus factor-based (or internal job content based) job evaluation approaches before, and have done some hypothesizing of my own as to our strong preference (at least in the past decade or so) for the former over the latter:

Why is market trumping internal job content as a job evaluation approach in most organizations today?  Primarily because most organizations today do not have the same luxury of disregarding, or giving "second fiddle" status to the labor market in setting employee pay that they may have had in the past. 

Job evaluation approaches which focus on internal job content (like point factor plans, of which the Hay Group had the brand name product for many years) came into prominence in an era when people stayed with the same employer for years, often their entire career.  Most hiring was done at the entry level, after which employees typically progressed through the internal hierarchy as talent and opportunity permitted.  Sourcing and recruiting talent from the outside, while certainly important, was not nearly as widespread or critical as it is for today's organization. For these reasons, the most important pay relationships were the ones between jobs inside the organization and there was little risk if the internal job hierarchy that developed was out of sync with the external labor market.

So ... market pricing appears to dominate today.  I wonder, though, if that might be about to change.

Pay equity is becoming an increasingly hot issue, with Lily Ledbetter having been signed into law recently and the Paycheck Fairness Act still on deck in the Senate.  And many of the approaches touted for assessing the degree to which pay differences are influenced by protected class membership rely on internal-relative-comparison methods which strongly resemble traditional factor-based job evaluation.

Does this mean that the tide is about to turn?  Will pay equity pressure serve to unseat market-based job evaluation from the top spot and put factor-based job evaluation in its place?

Stay tuned, I guess.

Image: Creative Commons Photo "Measuring Time" by aussiegall

Comments

[E James (Jim) Brennan]

Yes, as new unique hybrid jobs are created and right-sizing spreads more work over fewer workers, Job Evaluation (JE) will become more important as traditional benchmarks fail to offer proper peer comparisons for the increasing number of "one-off" jobs. But the market will always rule.

The market always trumps any form of job evaluation that attempts to ignore it. Want to know how old a job evaluation plan is? Compute the lowest points possible for a real job... that will represent the minimum wage in the year the plan was originally designed. All job evaluation plans by definition must produce values that exceed the market-clearing point that permits effective hiring. JE is most popular/successful in enterprises that pay far above the norm and where internal equity can easily be used because it almost always exceeds the outside external competitive market rate for replacements. Companies typically dump JE not only because it becomes too complex, too subjective and too political but mostly because the periodic formula changes fail to keep up with pay market realities and you can't AR&M competent workers any more.

Pay equity get dragged in with job evaluation for a number of reasons. One is that JE permits simpler and easier comparisions of all jobs, not just benchmarks, and the value comparability is not always faithfully replicated in the pay comparability. Sure, equal work brings equal pay; however, not-quite but almost identical work can show dramatic pay differences when protected classes are involved. Then, JE can be a smoking gun if it seems to prove that comparable jobs do not receive comparable pay when a woman or minority holds it. THAT is the guts of scary comparable-worth pay equity logic: whatever your particular competitive market or your unique internal value system (not someone else's or one established by some outside force, just YOURS), your job value system must allow pay without regard to protected class status.

Pretending that the issue is "CW feminazis simply want a federal pay czar to make you pay secretaries like truck drivers" is ridiculous polemic cant believed only by the White Power types who repeat it to themselves reassuringly like a mantra. Although I'm a guy, I suspect the Secretary of State really ought to be paid more than her driver, though... and I believe the Federal General Pay Schedule and Executive Schedule do agree, in that case.

[Ann Bares]

Jim:

Your position seems to be that as long as we try to do the right thing and do it consistently, we have absolutely nothing to fear from comparable worth or any other pay legislation. Problem is, "right" can be a relative thing. So can "consistent" be. Well-intended, smart people can look at the same situation and draw vastly different conclusions about how "right" and "consistent" it is. Perhaps your faith in mankind is just greater than mine. But I hope you're right (no pun intended...)

[E James (Jim) Brennan]

Aw, being a grown-up, I know better than that. The optimal solutions to known pay equity problems are simply more subtle, more difficult and more sophisticated than claimed by those who would prefer to grossly mischaracterize and blithely dismiss them as "looney tunes."

Good intentions are not enough; they can lead you to many bad places. The highest court in the land used to unconsciously flaunt EEO law by discriminatory hiring practices, but they'd kill ME if I outed them today, now that we have Ledbetter extending the statute of limitations.

[Chris Kelley]

Ann,
great blog post on the evolution of the different job evaluation methods. To your question though of whether we are looking at a job evaluation revival, I think the answer is yes.

Longer winded response in my blog, but simply put, I think organizations are going to realize that having a hybrid approach to evaluating jobs is a more comprehensive approach. Legislation may force the change, but I would like to think that folks will recognize the value in having a comprehensive understanding of the work being done in their organizaitons will actually be a strategic competitive business advantage.

http://ckell23.wordpress.com/2009/02/17/internal-equity-v-external-competitiveness/

[Ann Bares]

Thanks for the comment and the link, Chris.