HRTMS Powerful Job Description Software
  • Home
  • Solutions
    • Job Management
    • People Management
  • About
    • Partners
    • Careers
  • Resources
    • Blog
    • Webinars
    • Materials
    • Newsletters
  • Client Support
    • JDXpert Support
  • Contact
  • Home
  • Solutions
    • Job Management
    • People Management
  • About
    • Partners
    • Careers
  • Resources
    • Blog
    • Webinars
    • Materials
    • Newsletters
  • Client Support
    • JDXpert Support
  • Contact

Blog

Combining The Best Of Job Evaluation and Market Pricing

4/3/2016

0 Comments

 
​So how do you determine employee compensation?  Are you a firm believer in job evaluation or do you side with market pricing? Have you ever considered using a combination of the two?  Doug Jensen refers to this as Job Content Market Pricing in his book “The Manager’s Guide To Rewards” and defines it as an approach that “begins with an evaluation of each job and then applies that information to the specific market data.”
What Job Evaluation Brings To The Table
Unlike market pricing which determines the pay scale of a job on external sources, job evaluation defines compensation based on a job’s appraised internal value.  There is less of an emphasis on title-to-title comparison and more emphasis on comparing jobs by skill, responsibility, and effort.  The benefit of job evaluation is that because a number or grade is given to each job, a consistent language is determined and a hierarchy is established.  Consider the value of a sales job compared to an accountant, although the market might assign different pay grades to each job, you might feel that each are of equal value.  Job evaluation is not only helpful when linking a job to compensation but can also be helpful in career development, job-person fit assessment, succession planning, and organizational analysis. 

Market Pricing
Because people are more fluid in their careers, rarely staying at one company for 20 years or more like they did in the past, many companies are switching to market pricing to set compensation.   Market pricing determines the value of a job based on what other companies pay employees with a similar job.  Survey data is collected, analyzed and matched to each job to determine the rate paid.  Although companies strive to provide employees with a fair and competitive wage, one must consider the market because the market often sets the rate. This method is beneficial to organizations in a highly competitive business environment like high tech or scientific companies, but for most companies, a combination of the two approaches will be the most valuable.

A Combined Approach
After seeing what each approach brings to the table it seems more apparent that the best approach is a combined approach.  It is important to understand both the internal value and external value of a job.  The market pricing approach allows you to remain competitive while job evaluation allows you to determine the value of a job based on your company alone.  We make decisions based on price every day, how much we are willing to pay for a car, a pair of shoes, or dinner.  But our decision to buy is based on our needs and the value we derive from it, not just the market average.  When determining the value of a particular job, you do need to keep in mind a job’s market value but because each organization values jobs differently, it is important to also conduct internal evaluations. 

We'd like to know, how you are setting your compensation levels?  Job Evaluation?  Market Pricing?  Both?  Or Something Else?

Jensen, D., McMullen, T., & Stark, M. (2007). The Manager's Guide To Rewards: What You Need To Know To Get The Best For-And From-Your Employees (pp. 90-94). New York: Hay Group. Retrieved May 25, 2012

Market Pricing versus Job Evaluation.Why Not Both?. (2011). In BLR. Retrieved May 25, 2012
0 Comments

Your comment will be posted after it is approved.


Leave a Reply.

    Archives

    August 2020
    July 2020
    April 2020
    January 2020
    November 2019
    October 2019
    August 2019
    July 2019
    June 2019
    April 2019
    January 2019
    November 2018
    April 2018
    March 2018
    December 2017
    November 2017
    August 2017
    June 2017
    April 2017
    December 2016
    November 2016
    October 2016
    July 2016
    April 2016

    Categories

    All
    360 Degree Reviews
    ADA
    ADEA
    Buy In
    Buy-in
    Collaboration
    Compensation
    Competency
    Compliance
    Corporate Culture
    Features
    FLSA
    HRTMS News
    Job Description Management
    Partners
    PDQ
    Performance Management
    Recruitment
    Results Oriented Job Descriptions
    Retaining Top Talent
    Security
    Succession Planning
    Total Rewards
    Wellness Program

    RSS Feed

Popular links

Solutions - JDXpert
Webinars
​Blog
​About

Contact
​
Disclaimers and Policies

Contact us

HRTMS Inc.
5171 Glenwood Avenue, Suite 105
​Raleigh, NC 27612

Sales
sales@hrtms.com | 919.351.JOBS (5627)

Client Support

If you are an HRTMS client and need help, please visit our Client Support page for more information.

Socialize

Subscribe

Join our mailing list today!
JOIN NOW