I know. In many places, for many organizations, job evaluation - of the traditional factor-based type - has kept its place as a cornerstone of the base salary program. In most organizations, however, the dominant method of valuing jobs has been a market-based approach.
A WorldatWork poll, conducted in 2005 (the most recent research I've been able to find on the subject), confirms what I have found to be true in my own travels. The responding 450 member organizations identified their "dominant" job evaluation method as:
Market pricing - 61.0%
Point factor - 23.0%
Whole job (e.g., ranking or classification) - 8.8%
Job component - 3.8%
Do not use (formal) job evaluation - 3.4%
I've written about the choice of market versus factor-based (or internal job content based) job evaluation approaches before, and have done some hypothesizing of my own as to our strong preference (at least in the past decade or so) for the former over the latter:
Why is market trumping internal job content as a job evaluation approach in most organizations today? Primarily because most organizations today do not have the same luxury of disregarding, or giving "second fiddle" status to the labor market in setting employee pay that they may have had in the past.
Job evaluation approaches which focus on internal job content (like point factor plans, of which the Hay Group had the brand name product for many years) came into prominence in an era when people stayed with the same employer for years, often their entire career. Most hiring was done at the entry level, after which employees typically progressed through the internal hierarchy as talent and opportunity permitted. Sourcing and recruiting talent from the outside, while certainly important, was not nearly as widespread or critical as it is for today's organization. For these reasons, the most important pay relationships were the ones between jobs inside the organization and there was little risk if the internal job hierarchy that developed was out of sync with the external labor market.
So ... market pricing appears to dominate today. I wonder, though, if that might be about to change.
Pay equity is becoming an increasingly hot issue, with Lily Ledbetter having been signed into law recently and the Paycheck Fairness Act still on deck in the Senate. And many of the approaches touted for assessing the degree to which pay differences are influenced by protected class membership rely on internal-relative-comparison methods which strongly resemble traditional factor-based job evaluation.
Does this mean that the tide is about to turn? Will pay equity pressure serve to unseat market-based job evaluation from the top spot and put factor-based job evaluation in its place?
Stay tuned, I guess.
Image: Creative Commons Photo "Measuring Time" by aussiegall