Job Evaluation S&R FB 9/12/05 10:51 am Page 1 Michael Armstrong Ann Cummins Sue Hastings Willie Wood JOB EVALUATION A Guide to Achieving Equal Pay job evaluation S&R TP 9/12/05 10:51 am Page 1 JOB EVALUATION A Guide to Achieving Equal Pay Michael Armstrong Ann Cummins Sue Hastings Willie Wood London and Sterling,VA First published in Great Britain and the United States in 2003 by Kogan Page Limited Paperback edition 2005 Apart from any fair dealing for the purposes of research or private study, or criti- cism or review, as permitted under the Copyright, Designs and Patents Act 1988, this publication may only be reproduced, stored or transmitted, in any form or by any means, with the prior permission in writing of the publishers, or in the case of reprographic reproduction in accordance with the terms and licences issued by the CLA. Enquiries concerning reproduction outside these terms should be sent to the publishers at the undermentioned addresses: 120 Pentonville Road 22883 Quicksilver Drive London N1 9JN Sterling VA 20166–2012 UK USA www.kogan-page.co.uk © Michael Armstrong, Ann Cummins, Sue Hastings and Willie Wood, 2003 The right of Michael Armstrong, Ann Cummins, Sue Hastings and Willie Wood to be identified as the authors of this work has been asserted by them in accordance with the Copyright, Designs and Patents Act 1988. ISBN 0 7494 4481 9 British Library Cataloguing in Publication Data A CIP record for this book is available from the British Library. Library of Congress Cataloging-in-Publication Data Job evaluation : a guide to achieving equal pay / Michael Armstrong … [et al.]. p. cm Includes bibliographical references and index. ISBN 0-7497-3966-1 1. Job evaluation. 2. Job evaluation–Great Britain. I. Armstrong, Michael, 1928– HF5549.5.J62J634 2003 6758.3’06--dc22 2003016407 Typeset by Saxon Graphics Ltd, Derby Printed and bound in Great Britain by Clays Ltd, St Ives plc Contents Introduction 1 1 Fundamentals of job evaluation 3 Job evaluation defined 4; Purpose, aims and features of job evaluation 5; The incidence of job evaluation 7; The case for and against job evaluation 8; Conclusions 9 2 Types of job evaluation 11 Analytical schemes 12; Non-analytical schemes 18; Design and process criteria 26; Criteria for choice 28 3 Job evaluation now 29 Interest in job evaluation 29; Job evaluation schemes 30; Factor plans 30; Reasons for using job evaluation 31; Views about job evaluation 31; Tips from practitioners on the design, introduction and maintenance of job evaluation schemes 32 4 Equal pay for work of equal value 35 Background 35; Equal pay legislation in the UK 37; The impact of the legislation on job evaluation practice in the UK 38; Impact of equal pay legislation on job evaluation design 39; Impact of equal pay legislation on implementation of job evaluation 43 iv Contents–––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– 5 Equal pay reviews 47 Why conduct equal pay reviews? 48; Planning a review 51; The equal pay review process 52; Analysing pay 55; Conclusion 61 6 Planning a new job evaluation scheme 65 Overview 65; Choosing a job evaluation scheme 67; Project planning 70; Equal value considerations 77; Planning communications 77; The design timetable 80 7 Scheme design 83 Identifying and defining factors 84; Analysing jobs 92; Testing the draft factor plan 98; Deciding on factor weighting and the scoring model 103; Preparing for implementation 107 8 Computer-based job evaluation 109 The two stages of job evaluation 110; Computers in scheme design 110; Computers in the evaluation process 117 9 Grade and pay structure design 129 Grade and pay structures 129; Rationale for grade and pay structures 133; Criteria for grade and pay structures 133; Grade structure design considerations 134; The use of job evaluation in developing a grade structure and grading jobs 136; Developing pay structures 140; Equal value considerations 145; Conclusion 148 10 Introducing job evaluation 149 Implementation plan 150; Communication 151; Operating manual 155; Training 156; Scheduling the evaluation programme 157; Evaluating jobs 162; Review of results 170; Disclosure of results 172; Reviewing the evaluation or grading of a job 174; Finalizing pay ranges 177; Pay assimilation and protection 178; Ensuring equal value 183 11 Managing job evaluation 185 Annual individual evaluation/grading checks 186; Suggestions from practitioners on managing job evaluation 188 Appendix 1 A job evaluation scheme designed to comply with equal value principles: the local government NJC job evaluation scheme factor plan 193 Appendix 2 Suggested equal pay policy: the Equal Opportunities Commission 195 Appendix 3 Factors creating pay gaps and remedial actions 197 Appendix 4 Job evaluation scheme design: equal value considerations 200 Appendix 5 Illustration of job stacking exercise 202 Appendix 6 Examples of job evaluation factors 204 Appendix 7 Example role profiles 206 Appendix 8 AoC job evaluation scheme 208 Index 214 Introduction The aim of this book is to provide a guide to good practice in the design, development and use of job evaluation schemes with par- ticular reference to equal pay considerations. It makes extensive use of the practical experience of its authors in job evaluation, especial- ly in dealing with equal pay issues. A special survey conducted by E-Reward in late 2002 provided valuable information on what is happening currently to job evalua- tion in the UK. One of the most important findings of this survey is that interest in job evaluation is growing – it is not declining, as many people believed in the 1990s. The recent national focus on equal pay matters has contributed to its greater popularity but in the experience of the writers of this book, as confirmed by the sur- vey, many organizations increasingly believe that job evaluation is an essential tool for the development and management of a logical and defensible grade and pay structure as part of an overarching reward strategy. The book starts with a review of the basic features of job evalua- tion and a summary of the survey findings. It then deals with equal value considerations and the conduct of equal pay reviews. The 2 Job evaluation ––––––––––––––––––––––––––––––––––––––––––––––––––––––– next four chapters contain guidance on the planning and design of job evaluation schemes, the use of computers and the design of grade and pay structures. The book ends with guidelines on the introduction and management of job evaluation. 1 Fundamentals of job evaluation In this introductory chapter: ឣ job evaluation is defined; ឣ the purpose, aims and features of job evaluation are explained; ឣ the extent to which job evaluation is used is described; ឣ the arguments for and against job evaluation are summarized; ឣ conclusions are reached about the future of job evaluation. The main types of job evaluation schemes are described in Chapter 2. 4 Job evaluation ––––––––––––––––––––––––––––––––––––––––––––––––––––––– JOB EVALUATION DEFINED Job evaluation is a systematic process for defining the relative worth or size of jobs within an organization in order to establish internal relativities and provide the basis for designing an equitable grade and pay structure, grading jobs in the structure and managing rel- ativities. Job evaluation can be analytical or non-analytical. Analytical job evaluation schemes These are schemes in which decisions about the value or size of jobs are based on an analysis of the extent to which various defined fac- tors or elements are present in a job. These factors should be pres- ent in all the jobs to be evaluated and the different levels at which they are present indicate relative job value. The Equal Pay (Amendment) Regulations (1983) refer to ‘the demands on a work- er under various headings, for instance, effort, skill, decision’. The most common analytical approach is a points-factor scheme where there is a ‘factor plan’ which defines the factors and their lev- els and attaches scores to each level. Following job analysis, scores for each factor are awarded and then totalled. On completion of an evaluation programme, the total scores for jobs indicate their rank order. This type of scheme can meet the requirements of equal value law as long as it is not in itself discriminatory either in its design or application. To ensure that equity considerations are catered for in an organization, it is preferable to use only one scheme which must therefore be designed to cover the key features of each category of job at every level. Non-analytical job evaluation schemes These are schemes in which whole jobs are described and com- pared in order to place them in rank order or in a grade without analysing them into their constituent parts or elements. The most common non-analytical approach is to ‘match’ roles as defined in role profiles to definitions of grades or bands (this is often referred to as job classification), or to the role profiles of jobs that have already been graded. When designing grade structures, however, the initial step may be to rank the jobs in order of perceived value –––––––––––––––––––––––––––––––––––––––– Fundamentals of job evaluation 5 (job ranking). Non-analytical schemes do not meet the require- ments of equal value law. PURPOSE, AIMS AND FEATURES OF JOB EVALUATION Purpose Job evaluation, especially analytical job evaluation, enables a frame- work to be designed which underpins grading and therefore pay decisions. It is particularly important as a means of achieving equal pay for work of equal value. In its Good Practice Guide – Job Evaluation Schemes Free of Sex Bias, the Equal Opportunities Commission (EOC) emphasizes that: ‘Non-discriminatory job evaluation should lead to a payment system which is transparent and within which work of equal value receives equal pay regardless of sex.’ This statement only refers to equal pay ‘regardless of sex’ but job evaluation is just as concerned with achieving equal pay regardless of race or disabil- ity or indeed age.