Market Pricing and Pay Structures



Market Pricing and Pay Structures

Market Pricing and Job Evaluation

The practice of using external sources in order to assign value to the jobs of an organization is called Market Pricing. On the other hand, the systematic method to evaluate and value the job within an organization is called Job evaluation. According to an author Tande, “The approach of Job evaluation gives an organization a common language to talk about Jobs within and to develop the hierarchy of jobs. This can be understood from the example; what is it that differentiates an accountant from an HR generalist, or a sales job with a technology job? The common language which is offered by job evaluation translates all jobs to some form of a grade, number or a point factor. All jobs are different; however, from the perspective of an internal value stance, different jobs may have the same value. There are a lot of methodologies available for job evaluation, but, for most of the people and organizations, the Hay Guide Chart leads the list of available methodologies. It is the methodology mentioned in textbooks and perhaps the one, out of which all the new and existing methodologies have branched out (compensation.blr.com).

The underlying difference between these methodologies is the degree of accuracy they provide. The greater the degree of precision, the more complex they are. Fundamentally, this is the main criticism of the approach of job evaluation. A number of people have had experiences with complex job evaluation models which became difficult to look after with the passage of time and ultimately fell apart because the exception became the rule. Often, iyt becomes very difficult to define the jobs and eventually the value which they hold. On the other hands, sometimes defining jobs is a mission critical for the ...