JOB EVALUATION AND PRICING:THE APPRAISAL PERIOD, Ranking method,

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Human Resource Management (MGT501)

Lesson 27

JOB EVALUATION AND PRICING

After studying this chapter, students should be able to understand the following:

A. The Appraisal Period

B. Job Evaluation

LESSON OVERVIEW

This lecture discusses the career management concepts and their application in detail.

A. THE APPRAISAL PERIOD

Performance evaluations are typically prepared at specific intervals. In most organizations these evaluations

are made either annually or semiannually. The appraisal period may begin with each employee's date of hire,

or all employees may be evaluated at the same time.

I. The Line Manager and Performance Appraisal:

Line managers have the following responsibilities in appraising the performance.

· Complete the ratings: Line managers facilitate the overall rating process, initially by providing

goals to be achieved than comparing those goals with actual performance and finally providing

the feedback to make the corrective actions if required.

· Provide performance feedback: Performance always requires feedback, if it is positive than

feedback will act as a positive reinforcement factor that will lead to more improvement and if

the performance is poor, it again requires feedback so that the poor performance can be

improved by taking corrective steps. This task of providing feedback is carried out and

facilitated by line managers.

· Set performance goals: Performance to b evaluated requires set standards, goals or

benchmarks against which it can be compared for evaluation purpose these goals are provided

by the line mangers.

II. Role of HRM Department in Performance Appraisal:

HRM department performs the following functions during performance appraisal process.

· Develop the appraisal system: HRM department plays important role in formulating the

performance appraisal systems, it facilitated different departments in setting performance

standards and acquiring appropriate appraisal performance method according to the

requirements of particular department it also provides monitoring in appraising the

performance of employees and hence are necessary for developing effective performance

appraisal systems.

· Provide rater training: Evidence indicates that the training of appraisers can make them more

accurate raters. The raters are bothered to be trained because, a poor appraisal is worse than no

appraisal at all. Training can help raters to avoid and eliminate the basic appraisal errors. Raters

are provided with the training opportunity through HRM department.

· Monitor and evaluate the appraisal system: Any system to be run and implemented

effectively requires continuous monitoring. Performance appraisal is very important in any kind

of organization both for employee as well as employer because many decisions are supposed to

be made on data and result provided by the performance appraisal like, promotions, demotions

and some times termination etc . To achieve more authentic and fair results through

performance appraisal systems it requires monitoring and supervision which is performed by

the HRM department.

III. Performance Appraisal Failures:

Some times performance appraisal process do not satisfy the purpose for which it is conducted, that means

it is faced with some failures and there are certain reasons, these reasons are as under:

1. Manager lacks information

2. Lack of appraisal skills

3. Manager not taking appraisal seriously

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Manager not prepared

Employee not receiving ongoing feedback

Manager not being honest or sincere

Ineffective discussion of employee development

Unclear language

Insufficient reward for performance

IV. Strategies for Improving Performance:

If performance appraisal process indicates the poor performance of the employees than the following

strategies can be used to improve the performance of the employees and even for good performance these

strategies can be used to keep on the trend. These strategies are as under:

a. Positive Reinforcement:

Applying a valued consequence that increases the likelihood that the person will repeat the behavior that led

to it is termed as positive reinforcement. Examples of positive reinforcement include compliments, letters

of recommendations, favorable performance appraisal, and pay raises. Equally important, Jobs can be

positively reinforcing.

b. Punishment:

Punishment means administering an aversive consequence. Examples include criticizing or shouting at an

employee, assigning an unappealing task, and sending a worker home without pay. Punishment strategy can

be used to improve the performance of employees.

c. Self Management:

Many companies empower their employees to take responsibility for the day to day functions in their areas.

Accordingly, these employees may now work without direct supervision and take on the administrative

responsibilities that were once performed by their supervisor.

d. Employee Assistance Programs (EAPs):

Specific programs designed to help employees with personal problems. No matter what kind of

organization one works in, one thing is certain. Whether that problem is job stress, legal, marital, financial,

or health related, one commonality exists: if an employee experiences a personal problem, sooner or later it

will manifest itself at the work place in terms of lowered productivity, increased absenteeism, or turnover.

To help employees deal with these personal problems, more and more companies are implementing

employee assistance programs.

V. Characteristics Of An Effective Appraisal System (Designing An Appraisal System)

Validation studies of an appraisal system may be the most direct and certain approach to determining

whether the system is satisfactory. It is unlikely that any appraisal system will be totally immune to legal

challenge. However, systems that possess certain characteristics may be more legally defensible.

a. Job-Related Criteria--The criteria used for appraising employee performance must be

job related. The Uniform Guidelines and court decisions are quite clear on this point.

b. Performance Expectations--Managers must clearly explain their performance

expectations to their subordinates in advance of the appraisal period.

c. Standardization--Employees in the same job categories under a given supervisor should

be appraised using the same evaluation instrument.

d. Trained Appraisers--Responsibility for evaluating employee performance should be

assigned to the individual(s) who have an opportunity to directly observe a representative

sample of job performance. In order to ensure consistency, appraisers must be well trained.

e. Open Communication--A good appraisal system provides highly desired feedback on a

continuing basis.

f. Employee Access To Results--Employees will not trust a system they do not

understand.

g. Due Process--A formal procedure should be developed--if one does not exist--to

permit employees the means for appealing appraisal

Effectiveness of the appraisal can be created by considering following steps.

· Gain support for the system

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Choose the appropriate rating instrument

Choose the raters

Determine the appropriate timing of appraisals

Ensure appraisal fairness

B. Job Evaluation

Job evaluation means systematically determining relative worth of jobs to create job structure. An attempt

to identify inputs that are most valuable to the organization & to develop job hierarchy based on which jobs

have more or less of those dimensions

Job Evaluation Methods:

The essence of compensation administration is job evaluation and the establishment of the pay structure.

Let's now turn our attention to the topic of job evaluation. By job evaluation we mean using the

information in job analysis to systematically determine the value of each job in relation to all jobs with in the

organization. In short, job evaluation seeks to rank all the jobs in the organization and place them in a

hierarchy that will reflect the relative worth of each. There are four general job evaluation methods.

a. Ranking method:

Raters examine the description of each job being evaluated and arrange the jobs in order according to their

value to the company. This method requires a committee typically composed of both management and

employee representative to arrange job in a simple rank order from highest to lowest. No attempts are

made to break down the jobs by specific weighted criteria. The committee members merely compare two

jobs and judge which one is more important, or more difficult to perform. Then they compare the other job

with the first two, and so on until all the jobs have been evaluated and ranked.

The most obvious limitation to the ranking method is its sheer inability to be managed when there

are a large number of jobs. Other drawbacks to be considered are the subjectivity of the method- there

are no definite or consistent standards by which to justify the rankings- and the fact that because jobs are

only ranked in terms of order, we have no knowledge of the distance between the ranks.

b. Classification method:

A job evaluation method by which a number of classes or grades are defined to describe a group of jobs is

known as Classification method. The classifications are created by identifying some common denominator-

skills, knowledge, responsibilities with the desired goal being the criterion of a number of distinct classes

or grades of jobs.

Once the classifications are established, they are ranked in an overall order of importance according to the

criteria chosen, and each job is placed in its appropriate classification. This later action is generally done by

comparing each position's job description against the classification description and benchmarked jobs.

The classification method shares most of the disadvantages of the ranking approach, plus the difficulty of

writing classification descriptions, judging which jobs go where, and dealing with jobs that appear to fall

into more than one classification.

c. Factor comparison method:

Raters need not keep the entire job in mind as they evaluate; instead, they make decisions on separate

aspects, or factors, of the job. A basic underlying assumption is that there are five universal job factors: (1)

Mental Requirements, (2) Skills, (3) Physical Requirements, (4) Responsibilities, and (5) Working

Conditions. The committee first rank each of the selected benchmark jobs on the relative degree of

difficulty for each of the five factors. Then, the committee allocates the total pay rates for each job to each

factor based on the importance of the respective factor to the job. A job comparison scale, reflecting

rankings and money allocations, is developed next. The raters compare each job, factor by factor, with those

appearing on the job comparison scale. Then, they place the jobs on the chart in an appropriate position.

d. Point method:

Raters assign numerical values to specific job components, and the sum of these values provides a

quantitative assessment of a job's relative worth. The point method requires selection of job factors

according to the nature of the specific group of jobs being evaluated. After determining the group of jobs to

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be studied, analysts conduct job analysis and write job descriptions. Next, the analysts select and define the

factors to be used in measuring job value and which become the standards used for the evaluation of jobs.

Education, experience, job knowledge, mental effort, physical effort, responsibility, and working conditions

are examples of factors typically used. The committee establishes factor weights according to their relative

importance in the jobs being evaluated, and then determines the total number of points to be used in the

plan. A distribution of the point values to job factor degrees is made, with the next step being the

preparation of a job evaluation manual.

Hay guide chart-profile method: A highly refined version of the point method that uses the

factors of know-how, problem solving, accountability, and, where appropriate, working

conditions.

Key Terms

Job Evaluation: Job evaluation means systematically determining relative worth of jobs to create job

structure.

Point Method: Raters assign numerical values to specific job components, and the sum of these values

provides a quantitative assessment of a job's relative worth.

Classification Method: A job evaluation method by which a number of classes or grades are defined to

describe a group of jobs is known as Classification method.

Ranking Method: Raters examine the description of each job being evaluated and arrange the jobs in order

according to their value to the company.

EAPs: Specific programs designed to help employees with personal problems.

Positive Reinforcement: Applying a valued consequence that increases the likelihood that the person will

repeat the behavior that led to it is termed as positive reinforcement.

Punishment: Punishment means administering an aversive consequence.

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