People are paid for what they do, and how well they do it.
The first part—what people do—is concerned with job evaluation; the second with performance evaluation.
Job evaluation focuses on the job, not the person, so the information required to assign a value or level to a job, is to get clear and accurate information about the job. This information may be found in a job description and can be supplemented with a questionnaire, an organization chart or interview with the manager or job holder. The study of a job is called job analysis. The documents containing job content information are called job documentation.
A job is what the job holder DOES. It is about the actions taken, decisions made, relationships and communication involved, the complexity of the work and the scope of the job’s impact.
So this article is focused on the methods used to assign a value to a job, to determine it’s level. In mid to large organizations, companies use pay grade systems to assign job levels. Pay grades are one component of a broader job architecture. A job’s grade level usually determines the job titles that can be used.
Simple, Non-Quantifiable Job Evaluation Methods
The oldest job evaluation methods are the simplest. These methods date back to earliest hierarchies within villages, cities, nations, ship crews, hunting parties, etc.
Ranking
Ranking is systematically sorting your jobs from biggest to smallest, and then grouping jobs with similar sizes into grades. Intuitively, roles—or the people in them—with the greatest authority, power, judgment, skill or charisma were ranked.
Slotting
When an organization’s job titles are listed from the biggest to smallest, a new job can be placed at the same level as similar size jobs. This is called slotting. A job is assigned a grade level based on relative size compared to other jobs. It is also intuitive, looking at the overall jobs.
Both Ranking and Slotting are intuitive. The positioning of the job happens in seconds. There is nothing systematic about it. You cannot really call it a method.
Paired Comparison
The simplest true method is paired comparison. It is a systematic way of ranking. Each job is compared at least once with every other job. This method is likely to be many centuries old, as it is still highly intuitive. It does not require a job description, or use numbers or pay grades. Children could use this method to select a girlfriend or boyfriend. Car buyers could use this method to be a bit more rigorous in their selection of a new car.
It can be done on a spreadsheet, but I like using index cards. Get a deck of index cards, i.e. blank cards. Write a job title on each card, until you have a card for every job in your company. Shuffle the cards. Pick two cards and compare them. Select the smaller job and put it down. The card still in your hand is the bigger job. Now pick another card from the deck and compare it to the card in your hand. Pick the smaller job and put it down. Repeat this until the deck is gone. The card in your hand is the biggest job, such as the company CEO. Place it face down in a separate pile. Next pick up all the other cards, reshuffle and repeat the steps. The card left in your hand is the second biggest, such as Chief Financial Officer. Place this card face down on the #1 job. Repeat the entire process. In the end, pick up the new pile of cards, turn it over and you’ll see the CEO, then the CFO, and so on.
Ranking, Slotting and Paired Comparison all result in a job hierarchy. But jobs are only ranked top to bottom. There is no difference in the “space” between any two jobs. The result is ordinal only, i.e. jobs are in order. Two jobs that are “tied” must be ranked in this process. There is no record of whether two adjacent jobs are close or far apart in size.
Quantifiable Job Evaluation Methods
The first use of numbers in creating a job hierarchy would be the use of grades.
You could use ranking, slotting or paired comparison methods to determine the top to bottom ranking, but this is only a list of job titles. There is no law that a company must have pay grades, and a simple list of job titles is ok, provided you find a way to make pay decisions efficiently (fast) and effectively (fair and attractive). Most organizations adopt the use of grade levels to enable efficient and effective pay decisions, title decisions and support other people management goals where hierarchy is relevant.
Grade levels are normally numbered, for example, from 1 to 15, where 1 is usually the lowest grade.
| Grade | Title |
| 15 | President |
| 14 | VP Finance VP Engineering VP Operations |
| 13 | Dir HR General Counsel Controller Dir R&D Dir Marketing |
| 12 | Manager, Engineering Manager, Supply Chain |
Before considering quantifiable job evaluation methods, the next logical step for companies using non-quantifiable job evaluation methods, would be to assign jobs into pay grades, separating groups of jobs of similar size. All jobs within a grade should be smaller than all jobs in the grade above and bigger than all jobs in lower grades.
Classification Method
The classification method requires a grade structure, or other predefined levels which are defined. Jobs are therefore slotted, not in relation to other jobs, but in relation to grade definitions or criteria.
| Grade | Title | Classification Guide |
| 15 | President | Head of the organization |
| 14 | VP Finance VP Engineering VP Operations | Head of a major function or unit, contributing to company strategy and setting functional or unit strategy |
| 13 | Dir HR General Counsel Controller Dir R&D Dir Marketing | Head of a subfunction or non-major function, setting direction for their area consistent with company and functional strategies. |
| 12 | Manager, Engineering Manager, Supply Chain | Over sees execution of work under guidance from higher levels, and responsible for development of systems, methods and policies for a department |
Classification systems can have a single grade classification or level guide, or can make reference to multiple factors.
Paterson-based Classification Methods
T. T. Paterson, a Scottish professor, developed a classification system in the 1970s called the Decision Band method. He believed the decision making associated with a job was sufficient to predict the pay level. There are many Paterson-based job evaluation methods in use today, developed on the basis of Paterson’s Decision bands A through F, where job decisions in Band A are more routine and decisions in band F are strategic and long term. Paterson bands A through F are in the public domain and have been used by many consulting firms as the basis for their proprietary job evaluation systems. These include Paterson Points by 21st Century Rewards, as well as Remeasure, Task, Equate and Peromnes, offered by the big four tax firms’ HR consulting teams.
Factor Based Classification
The following table shows grades, job titles and a factor-based classification guide:
| Grade | Title | Decision Making | Supervision |
| 15 | President | Makes strategic decisions for the entire organization | Under board guidance, supervises senior executives |
| 14 | VP Finance VP Engineering VP Operations | Contributes to long-term strategic decisions and responsible for formulating unit or functional strategy. Responsible for a large budget, staff decisions and transformational changes. | Normally oversees multiple divisions or large departments including mid-level managers responsible for diverse areas of operation |
| 13 | Dir HR General Counsel Controller Dir R&D Dir Marketing | Makes operational and employment decisions in their area and recommends major initiatives or changes affecting the rest of the organization. | Oversees managers or professionals, across multiple sections or smaller departments. |
| 12 | Manager, Engineering Manager, Supply Chain | Makes decisions concerning methods, systems, resource allocation and procedures for assigned area. | Usually supervises non-managerial staff in their own area. |
Here we see Decision Making and Supervision factors. Other common factors found in classification methods include complexity, problem-solving, accountability, scope of impact, communication, or financial magnitude. Factors have equal importance. They are not weighted numerically. Factor comparisons may disagree: a job may be a grade 12 in terms of decision making, but a grade 13 under Supervision. The user must make a decision on the best grade in such cases.
Factors such as these are referred to as compensable factors. Higher factor ratings help predict size of compensation. Salary ranges can be established for each grade with confidence that the ranges will “work” for the jobs in each grade.
Point Factor Job Evaluation
Compensable factors can be weighted differently and specific point values can be assigned to each level of each factor. The total evaluation points of a job will then determine the pay grade. This approach is highly common among very large companies managing large workforces with millions or billions of dollars in annual salary costs. Use of points and scoring can result in more precise and defensible grading outcomes, and enable more accurate benchmarking of market pay, etc.
| Grade | Title | Evaluation Points |
| 15 | President | 900 or above |
| 14 | VP Finance VP Engineering VP Operations | 800 to 899 |
| 13 | Dir HR General Counsel Controller Dir R&D Dir Marketing | 700 to 799 |
| 12 | Manager, Engineering Manager, Supply Chain | 600 to 699 |
Factor weights and scores may look like this:
The Judgement and Decision Making factor, in this example, has five levels, described as follows:
These examples are from the JADE Job Evaluation method, created by the author.1 (JADE stands for Job Analysis, Documentation and Evaluation.)
Common Point Factor Job Evaluation Methods
Point factor methods appeared in the 1950s, most notably the Hay Guide Chart method developed by Edward Hay and Dale Purves. The point system they devised has not been changed in 75 years. The factors have been clarified, but not materially changed.
Mercer (now Marsh), Willis Towers Watson and Aon—along with KornFerry’s Hay method—all provide reliable point factor systems, used widely by large or global companies.
What is the Right System for My Organization?
Ultimately, the best job evaluation system is the one where:
- The results match expectations and align with pay
- Simple, transparent and easy to use by internal HR or compensation staff
- Cost
The popular systems from the big HR or tax firms are generally accurate and deliver expected job hierarchies. They are partially, but not entirely transparent, meaning you know what the factors are, but you may not see the underlying scoring, hence their may be high dependency on the provider or their software subscriptions. Big firm solutions are generally very expensive, with a cost of up to USD 200 or more per job, depending on many factors. For this cost, you get a widely used system and the credibility that comes with it. This is valuable when your internal HR compensation experts are not seen as credible on job evaluation.
Custom Systems
You can create your own system. Try it! It’s not easy, but it’s free. Factors and their weights should be relevant to your organization. The author has developed ten custom job evaluation systems over 30 years and it is a skill that can be acquired and developed.
- Contact us for more information on JADE job evaluation. ↩︎