Merits and Demerits of Job Evaluation

Everything you need to know about the merits and demerits of job evaluation. Job evaluation is a very useful technique. It is helpful for prevention and removal of interplant inequalities as also for execution of inter-plant inequalities.

A scientific system of job rating was also development of a sound and satisfactory wages framework can be based on it. It is said in business organisation that we pay ‘for jobs and not for man’ which very much holds good. Job evaluation helps to provide a framework of a fair and equitable wage structure.

Some of the merits of job evaluation are:-

1. Reduces Grievances 2. Better Recruitment and Selection 3. Harmonious between Labour-Management Relations 4. Helpful in Determining Wage and Salary 5. Ensures Fair Distribution of Rewards 6. Helps in Analysis and 7. Assist in Wage and Salary Negotiations.

Some of the demerits of job evaluation are:-

1. Lacks Accuracy 2. Problems Faced in Adjustment 3. Unrealistic 4. Unrealistic Assumptions 5. Limitations of Evaluator 6. Subjective 7. Faces Trade Union’s Opposition and 8. Increase in Cost.

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What are the Merits and Demerits of Job Evaluation?

Merits and Demerits of Job Evaluation: 4 Merits

Merits of Job Evaluation:

The major benefits offered by job evaluation are as varied as given in the following:

(1) Facilitates establishment of base/primary compensation of jobs – Job evaluation is the corner­stone of the compensation policy. It provides a rational basis for establishing base compensation for the whole hierarchy of jobs in an organization by ascertaining their relative worth.

(2) Helps in evolving and maintaining consistency in the compensation structure – Job evalua­tion is a valuable technique that the managements can use to evolve and maintain internal and external equity in its pay structure. Internal consistency is connected with maintenance of rela­tive remuneration rates within the organization, while external consistency establishes a desired relativity of an organizations wage structure with that of the industry.

(3) Useful in conducting several HR functions – Job evaluation invariably involves a systematic analysis of organizational jobs and generates a lot of data about the nature and duties of jobs and the knowledge, skills, and abilities needed to perform jobs effectively. The data so generated proves helpful in conducting programmes relating to recruitment, selection, placement, training, and promotion of employees.

(4) Improves industrial relations – By establishing wages rates for jobs in a scientific and rational manner, job evaluation tends to eliminate wage inequalities. This helps in reducing employee doubts and grievances arising out of wages. It increases employee satisfaction on wage differ­entials and makes employer-employee relations harmonious. Managements and unions find it easier to conduct wage negotiations and collective bargaining.

Demerits of Job Evaluation:

(a) Job evaluation is not concerned with the performance, potential or personal qualities of individual employees.

(b) It is impersonal, concentrating on measuring work input rather than work output.

(c) It is a time consuming process requiring specialized technical personnel to undertake it and thus too costly.

(d) It promotes increase in number of grievances concerning wages.

(e) It always creates doubt in minds of workers and trade unions because of the difficulty in understanding its techniques.

(f) It is susceptible because of human error and subjective judgment.

(g) This technique is not accurate because of lack of scientific basis about efficacy of methods of job evaluation.

(h) Job evaluation leads to frequent and substantial changes in wage and salary structure, which in turn creates financial budget on the organization.

(i) Job evaluation results may not exactly coincide with social evaluations, which in turn, result in employee dissatisfaction.

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7 Merits and 6 Demerits of Job Evaluation:

Merits of Job Evaluation:

Job evaluation leads to the following benefits:

(i) Job evaluation is a valuable technique in the hands of management by which a more rational and consistent (internal and external) wage and salary structure can be evolved. Internal consistency is concerned with the maintenance of relative wages within the firm and external consistency refers to a desired relativity of a firm’s structure to that of the industry or the region.

(ii) Job evaluation helps in bringing or maintaining harmonious relations between labour and management since it tends to eliminate wage inequities within the organisation and the industry.

(iii) Because of increasing mechanisation and automation in industry, it has become unrealistic to pay workers primarily on the basis of their output. In many cases, it is the machine that determines the rate of production, so job evaluation will be of much use in fixing the wages.

(iv) Job evaluation standardizes the process of determining the wage differentials for various jobs. It means uniform standards will be applied to all jobs in the organisation to know their relative worth.

(v) Job differences should not be based on skill differences only. Job evaluation takes into account various other factors like risks and working conditions also to determine the worth of jobs. Jobs are no longer differentiated mainly by the degree of skills required as differences in other job characteristics such as responsibility, effort required arid nature of work have assumed greater importance for many jobs.

There is thus no justification for paying wages according to skill requirements only. Job evaluation takes all relevant factors into account to determine wages.

(vi) Job evaluation provides a rate for the job and not for the job-holder. Because of division of labour and specialisation any large enterprise may have hundreds or thousands of different jobs to be performed by a substantial number of workers.

Many workers work together on the same, similar or technically interdependent jobs. An attempt should be made to precisely define each job and fix wages accordingly. This is possible only by job evaluation.

(vii) Job evaluation helps in keeping down the costs of recruitment and selection of workers. It also assists in retaining the workers or, in other words, keeping down the rate of labour turnover because workers’ wages are determined systematically by the process of job evaluation.

Job evaluation involves job analysis which is of great use while recruiting new employees. Selection can be made objective by matching the qualifications of the candidate with the job specifications.

Demerits of Job Evaluation:

The demerits of job evaluation are as under:

(i) There is no standard list of factors to be considered for job evaluation. Moreover, all job factors can’t be measured accurately. Thus, job evaluation lacks scientific precision.

(ii) The wages fixed for a job on the basis of job evaluation might not retain workers who can make much money elsewhere because of law of demand and supply.

(iii) There is a strong feeling among the employees that individual merit should be rewarded as some kind of merit rating scheme has to be superimposed upon evaluated wage rates.

(iv) It presumes that jobs of equal worth will be equally attractive to the employees, but it is not true in real life. If a job offers no prospects of a rise, while another job rated equal to it has bright prospects, the latter will attract more people.

(v) It tends to be inflexible in so far as it does not place right deal of emphasis on the wage rates prevalent in the industry as a whole.

(vi) Trade unions often regard job evaluation with suspicion because some of the methods are not scientific and are difficult to understand. They fear that the job evaluation will do away with collective bargaining for settlement of wages.

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Merits and Demerits of Job Evaluation: 7 Quick Points

Merits/Advantages of Job Evaluation:

An I.L.O. publication claims following advantages for job evaluation:

1. Job evaluation is a logical and, to some extent, an objective method of ranking jobs relative to one another. It may help in removing inequalities in existing wage structure and in maintaining second and consistent wage differentiates in a plant or industry.

2. In the case of new jobs, the method often facilitates fitting them into the existing wage structure.

3. The method helps in removing grievances arising out of relative wages; and it improves labour management relations and workers morale. In providing a yardstick, by which workers complaints or claims can be judged, the method simplifies discussion of wages to be explained and justified.

4. The method replaces the many accidental factors, occurring in less systematic procedures of wage bargaining by more impersonal and objective standard thus establishing a clear basis for negotiations.

5. The method may lead to greater uniformity in wage rates, thus simplifying wage administration.

6. The information collected in the process of job description and analysis may also be used for the improvement of selection, transfer, and promotion procedures on the basis of comparative job requirements.

7. Such information also reveals that workers are engaged in jobs requiring less skill and other qualities than they possess, thereby pointing to the possibility of making more efficient use of the plant’s labour.

Demerits/Limitation of Job Evaluation:

Job evaluation suffers from the following limitations:

1. The job evaluation team in deciding the pay of employees based on scientific evaluation without consulting employees and union may cause dissatisfaction.

2. It is not a complete answer to the wage problem.

3. It is a time consuming and expensive process.

4. It does not take into account the supply and demand for employees.

5. When it applied for the first time in any organisation it may also disrupt the existing social and psychological relationships.

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Merits and Demerits of Job Evaluation Explained!

Merits of Job Evaluation:

(1) It Facilitates Selection, Training and Placement of Employees:

Job evaluation is based on job analysis which consist of job description and job specification, which helps in scientific recruitment, selection, and training of the employees.

(2) Minimisation of Employee Grievances:

Job evaluation is a systematic and orderly process for wage and salary fixation. Therefore employees feel that the wage rates and salaries offered to them by their employees are just, fair and equitable, therefore it minimizes the employee grievances.

(3) It Enhances Job Satisfaction:

One of the major causes of employee dissatisfaction is wage and salary related problems and issues. When the employees are fully convinced that their wages and salaries are based on job evaluation technique, automatically their wage and salary related issued comes to an end. Moreover they will get the job satisfaction also in the sense whatever they are earning is just fair and equitable to the services rendered by them.

(4) Objectivity in Ranking:

Job evaluation is based on objectivity not on subjectivity, therefore it removes all sorts of wage inequality and establishes a rational and consistent wage and salary structure for their employees.

(5) Cordial and healthy Industrial Relation:

The rationality and consistency in wage and salary structure help to develop and establish cordial healthy relations between employees and employer ultimately resulted into the healthy industrial relations.

(6) No Scope for Personal Bias and Prejudice:

This technique leaves no scope for favouritism and nepotism simply because it is based on objectivity and not on subjectivity. Moreover it has relevance in scientific rating of the jobs and not of the job holder.

(7) Simplification of Wage Determination:

This technique assists the management in the task of wage and salary administration. Moreover it is an ongoing process therefore it assists in updating the wage structure whenever it becomes obsolete. Moreover it helps to simplify the wage determination.

(8) Standardization of Wage and Salary Structure:

Job evaluation facilitates a comparison of wage rates for similar jobs within the company as well as those prevailing in the industry. Therefore it is possible to adopt a standardize wage and salary structure for their employees which reduces the rate of absenteeism and labour turnover rate and employees will get similar pay scales for similar jobs. At National level it is possible to establish a standard wage and salary structure for identical jobs also.

(9) It Enhances Goodwill and Reputation of the Company:

The companies who adopt the job evaluation technique for wage and salary fixation and gives just fair and equitable wage or salary to their employees, such companies goodwill and reputation will be automatically enhanced.

Limitations/Criticism of Job Evaluation:

(1) Job evaluation is a systematic and orderly technique but it is not scientific.

(2) No standardized list of job factors. Too many rating factors are used.

(3) All factors and degrees on it are not accurately measured, it gives a false sense of accuracy.

(4) There is strong feeling among the workers that their merit should also be rewarded which is totally ignored by the job evaluation technique.

(5) Job evaluation may be inflexible if the prevailing wage rates in the industry or region is not considered.

(6) It is not suitable to managerial jobs. Because these jobs involve decision making skills, planning, supervision and leadership etc. which are not possible to measure accurately in quantitative terms.

(7) The methods of job evaluation are very complicated which cannot be understood by average workers so they may develop suspicion, doubt about the rating and may resist this technique.

(8) Job evaluation is a time consuming technique and some of the methods are expensive too.

(9) It presumes that jobs of equal worth will be equally attractive to the employees but it is not true in real life.

Thus it may be concluded that though job evaluation have these limitations, still it is very useful in determination and fixation of wage and salary structure for various employees in as business enterprise. All the modern complicated, progressive organization have preferred this technique after initiating the cost benefit analysis.

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Merits and Demerits of Job Evaluation – 10 Quick Points

Merits of Job Evaluation:

The main advantages or merits of job evaluation are as follows:

1. Management may control the labour cost since the pay is fixed on the basis of the nature of job.

2. Ranking of jobs is very easy.

3. Management can fix the same wages for similar jobs. In other words, equal pay for equal job principle is easily applied by the management.

4. There is a possibility of improving morale among the employees.

5. Management can adopt the adequate promotion policy.

6. Job evaluation helps the management in the selection, placement and training of employees.

7. It provides a basis for justifying different rates of pay for different jobs.

8. It improves relations between employee and employer and among employees.

9. Wage for a new job is fixed by the management without much difficulty.

10. Management can prepare proper incentive schemes.

11. Job evaluation minimises the labour turnover.

Demerits of Job Evaluation:

The main disadvantages or demerits of job evaluation are discussed below:

1. Job evaluation studies the job but not the individual doing the job.

2. Uniformity in pay adversely affects the workers who are above average.

3. Job evaluation is also one of the factors responsible for fixing a wage rate just like other factors.

4. It is very difficult to convert all the factors in terms of money for job evaluation.

5. Points awarded for each characteristic of a job are purely subjective.

6. Job evaluation ignores the labour market condition which is also responsible for wage rate fixation.

7. Job evaluation may not be understood by the workers. So, the workers may suspect the intention of the management.

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11 Merits and Demerits of Job Evaluation

Merits of Job Evaluation:

1. Job evaluation helps in removing inequity in wage structure by objective evaluation of each and every job in the organization.

2. It links pay to demands of the job.

3. It provides a systematic procedure for ascertaining the relative worth of each job. Each and every job is measured in terms of rational criteria like education, experience, hazards, responsibilities, etc.

4. It helps in bringing out the equitable wage structure by placing jobs, which require similar job requirements.

5. Job evaluation helps in reviewing job role in line with change in the job control brought about by change in technology.

6. It provides a strong base for bonus schemes and helps in job classification and work simplification.

7. Information collated for job evaluation can be used for taking decision regarding transfer of manpower.

8. It provides a clear and objective base for wage revision and collective bargaining.

9. It helps in ushering better industrial relations by reducing employee scepticism and grievances arising out of wages.

10. Where the worker cannot be paid in terms of output, job evaluation provides a realistic basis for wage fixation.

11. It helps in fitting new jobs into appropriate places in the existing wage structure.

Demerits of Job Evaluation:

1. Job evaluation is not fully objective and scientific. There is considerable scope for subjective judgement. Absence of standard job evaluation factors does not allow accurate measurement of job.

2. Job evaluation may not consider some factors which may influence the value of a given job from worker’s angle like demand and supply of particular skill, security of service, career prospects, social status, nature of supervision and so on.

3. Job evaluation renders wage and salary structure inflexible by freezing wage differentials among the jobs. It does not provide for altering wages according to changing conditions in the environment.

4. Workers and trade unions oppose job evaluation as they fear that it will displace collective bargaining mechanism under practice in many organizations for settlement of wage agreement.

5. Job evaluation is not suited to evaluation of managerial jobs as those jobs involve considerable planning, decision making and supervision of others. The executive skills cannot-be measured precisely in quantitative terms.

6. Job evaluation is time consuming and an expensive process.

7. The criteria used for job evaluation may have to be changed thanks to technological changes. Therefore, the factors chosen will not remain valid, forever.

8. Job evaluation may create unnecessary apprehension in the minds of employees about imposition of additional workload, job security, etc.

9. There may arise conflict about the factors to be selected for job evaluation. Workers are likely to pressure the management to include certain factors favourable to them, while they may object to certain factors which they feel are unfavourable to them.

10. The factors selected for job evaluation may overlap. This affects the weightage given to them and thereby making the evaluation unreliable.

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Merits and Demerits of Job Evaluation in Detail

Merits of Job Evaluation:

The main advantages of job evaluation are stated under:

1. Reduces Grievances – The process involved in job evaluation programme can be utilised to reduce the disputes or grievances of workers regarding the calculation of each job’s worth as it involves a logical sequence of different steps.

2. Better Recruitment and Selection – Job evaluation renders help in proper recruitment and selection of employees. The reason is job analysis has to be done to find the worth of a job.

3. Harmonious between Labour-Management Relations – Since job evaluation tends to eliminate wage inequalities within the organisation, it helps in bringing and maintaining harmonious employer-employee relations.

4. Helpful in Determining Wage and Salary – Job evaluation renders helpful the management in establishing a rational and consistent wage and salary structure by providing criteria for fixing wage and salaries. The job evaluation process lays-down the foundation for wage incentive plans.

5. Ensures Fair Distribution of Rewards – Employees want to be rewarded fairly in relation to others in the company the job evaluation helps to ensure that rewards are allocated fairly between jobs.

6. Helps in Analysis – Job evaluation can be an effective tool in the analysis of a company and can help to make identification of any gaps or overlaps in responsibility.

7. Assist in Wage and Salary Negotiations – Job evaluation provides a rational basis for discussions with the trade unions at the time of wage and salary negotiations.

Demerits of Job Evaluation:

The main disadvantages and shortcomings or draw backs of job evaluation are as under:

1. Lacks Accuracy – Job evaluation is not a scientific technique of estimating the job. Job evaluation backs in scientific precision because all factors cannot be measured accurately.

2. Problems Faced in Adjustment – Though there are a number of ways of applying the job evaluation techniques yet rapid changes in technology and in the supply and demand of particular spills have given rise to problems of adjustment.

3. Unrealistic – Substantial differences exist between job factors and the factors emphasised in the market. These differences are wider in those cases wherein the average pay offered by a company is lower than that prevalent in other companies in die same industry or in the same geographical area.

4. Unrealistic Assumptions – It is presumed that jobs of equal worth are equally attractive to all workers. However the reality is not so. If a job offers bright prospects, it will attract more people.

5. Limitations of Evaluator – In case evaluator is not well-versed in techniques and principles of job evaluation then the results of die job evaluation will be quite inconsistent. Again evaluator is biased to a particular job, it will be assigned more weightage.

6. Subjective – A great number of factors are used in job evaluation, moreover there are no understanding list factors to be considered. Definitions of factors vary from organisation to organisation. Many researches present that the factors used are not independently be valued at all. Further it gives more reliance on internal standards and evaluation of fixing wage rates.

7. Faces Trade Union’s Opposition – The workers trade unions regard this job evaluation with suspicion because it is made on certain principles and results are generally ignored. Some of the methods of job evaluation are not easily understood by workers. Workers fear that job evaluation will do away with collective bargaining.

8. Increase in Cost – A job evaluation takes a long time to install. It requires specialised personnel and it is costly.

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Merits and Demerits of Job Evaluation

Job evaluation is a very useful technique. It is helpful for prevention and removal of interplant inequalities as also for execution of inter-plant inequalities. A scientific system of job rating was also development of a sound and satisfactory wages framework can be based on it. It is said in business organisation that we pay ‘for jobs and not for man’ which very much holds good. Job evaluation helps to provide a framework of a fair and equitable wage structure.

Merits of Job Evaluation:

1. Reduction in Inequalities in Salary Structure:

It is found that people and their motivation is dependent upon how well they are being paid. Therefore the main objective of job evaluation is to have external and internal consistency in salary structure so that inequalities in salaries are reduced.

2. Specialization:

Because of division of labour and thereby specialization, a large number of enterprises have got hundred jobs and many employees to perform them. Therefore, an attempt should be made to define a job and thereby fix salaries for it. This is possible only through job evaluation.

3. Helps in Selection of Employees:

The job evaluation information can be helpful at the time of selection of candidates. The factors that are determined for job evaluation can be taken into account while selecting the employees.

4. Harmonious Relationship between Employees and Manager:

Through job evaluation, harmonious and congenial relations can be maintained between employees and management, so that all kinds of salaries controversies can be minimized.

5. Standardization:

The process of determining the salary differentials for different jobs become standardized through job evaluation. This helps in bringing uniformity into salary structure.

6. Relevance of New Jobs:

Through job evaluation, one can understand the relative value of new jobs in a concern.

Procedure of Job Evaluation – IIPM:

1. Analyse and Prepare Job Description

2. Select and prepare a Job Evaluation Plan

3. Classify Jobs

4. Install the Programme

5. Maintain the Programme

Demerits or Pitfalls of Job Evaluation:

Encourages employees on how to advance in position when there may be limited opportunities for enhancement as a result of downsizing. It promotes internal focus instead of customer orientation. Not suitable for forward looking organizations, which has trimmed multiple job titles into two or three broad jobs.

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