Many organizations still have "point-factor" job evaluation plans. While most businesses don´t have the time to maintain them anymore, they take on a life of their own. The objective of job evaluation is to create a fair and equitable relationship between jobs of the same value to the company. Once this is accomplished, the goal is to make sure the entire results of the job evaluation are reasonably competitive in the appropriate labor market. So the goal is equality in pay and most often what else goes with pay.

It may be time to see whether your job evaluation plan is doing real damage to your organization. Often it´s hard to change a job evaluation plan that has been around a long time. It becomes "the way things are done around here" so making the change requires powerful reasons for change.

1.      Underpay Essential Skills. What critical skills are not competitively paid? Most job evaluation plans can give the same number of "points" to jobs of essential value to the business and to jobs of less essential value to the organization. For example, jobs in programming and systems design can be paid the same as jobs in accounting and finance. Now that is fine if the organization believes that systems analysis and finance jobs are of similar essentiality to the organization. But if they are not, it is likely the organization will pay jobs of the same internal value but different essential value such that critical skills are underpaid.

2.      Overpay Non-strategic Skills. Are any less critical skills overpaid in the marketplace? The reverse of paying too little for essential skills is paying too much for skills that have a lower value in terms of business needs and market value. The result of this can be hiring the best people for unessential jobs and the poorest people for more critical jobs. While having excellent clerical people is important, it may be more important to have excellent technical people and job evaluation does not make this difference a reality.

3.      Ignore Contemporary Skills/Competencies. Does job evaluation reflect an economy and workplace of future? Most job evaluation plans were developed in the 1940s. They value jobs based on what organizations valued in the 1940s. Since that time the computer was invented, men and women landed on the moon, females and other minorities became a force in the workforce, and the workplace has changed dramatically. Unless the job evaluation elements have been redefined several times, organizations are paying for jobs that were important during a time when business was conducted by manual typewriters and carbon paper.

4.      Inflate Fixed Pay Costs. Does pay cost increase each year without the benefit of improved organizational performance? Job evaluation was developed when base salary was the critical element of pay. And, base pay is the foundation for other workforce costs such as benefits. Job evaluation creates base pay to increase year after year without stopping. No job evaluation solution is able to focus on elements of incentives or variable pay. So, whether it adds value to the business or not, job evaluation creates increased fixed payroll costs year after year.

5.      Pay for "Levels and Layers".  Are more and more organizational layers created as a by-product of job evaluation? Job evaluation pays more for jobs that report higher than lower in the organization. Thus, it is important to have your job report to the highest possible "square" in the organization chart. This rewards creating multiple levels and layers during a time when the streamlined organization is the best way to emphasize effectiveness and operational excellence. 

6.      Create Titling Inflation. Do jobs have levels I through IV with only minor semantics determining value differences? Paying for levels in layers creates title inflation to correspond with the many levels the organization ends up with. It creates many titles with little difference in scope and responsibility between and among the jobs. This creates a situation where employees negotiate for higher sounding titles and then compare their inflated title jobs with jobs having the same title, but perhaps more accountability, in a flatter and more streamlined organization.

Most organizations now use the external market to determine the value of work in the organization. Others reach compromise solutions that mix internal and market value. Still others focus on the competency and skill needed to perform the work employees do. Once an organization decides traditional job valuing is doing more damage than good other attractive alternatives are worth considering.