- Many organizations do not conduct job evaluation due to the perception that it is too complex and time consuming to produce a return on investment (ROI).
- Instead, these organizations use a compensation-setting model that relies exclusively on market pricing – showing unjustified confidence in its reliability and an overreliance on external equity.
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Our Advice
Critical Insight
- Job evaluation and market pricing need to be treated as complements to one another, not substitutes.
- A job worth hierarchy reflects the characteristics of an organization, is aligned to strategy, and is critical to determining internal equity, making job evaluation a key component of developing successful compensation programs.
Impact and Result
- Identify the best-fit method of job evaluation, customize the method to the organization, then conduct job evaluation to create a job worth hierarchy.
- Overcome the challenges of job evaluation by focusing on ensuring the process is strategically aligned, flexible, and as painless as possible.
- Use the job worth hierarchy to find the right balance between internal and external equity in order to allocate the compensation budget effectively.