Enhancing Small Business Efficiency through Job Evaluations

Masha -

Motivated employees are productive employees! To keep them happy and on board, having a strong grasp on employee information is key.This includes understanding their roles and responsibilities compared to their peers, along with current industry salary benchmarks.

Keeping your employee information organized is crucial for fair compensation.  Just like a well-oiled machine, your business thrives on a structured system. Implementing a document management system for employee information streamlines the process. This allows you to easily access and analyze job descriptions, responsibilities, and qualifications, making job evaluations a breeze.

This article will outline the key benefits of a job evaluation for small businesses, examine typical methods for conducting a job evaluation, and provide practical tips for getting started - even with limited resources.

Job evaluations. Don't skip them.

Not only does conducting job evaluations help you ensure correct pay, it also allows you to:

  • Match roles and responsibilities to the needs of your business. For example, job evaluation may reveal that you need to convert one position into two positions based on industry benchmarks, or vice versa to reduce headcount.
  • Redefine job descriptions. A job evaluation may result in new job descriptions or better defined role responsibilities.
  • Optimize your organizational structure. As mentioned above, job evaluations help you find the best structure for your organization based on the positions you have or the new ones you need to create.
  • Benchmark compensation. It is important to use job evaluations to conduct internal and external salary comparisons. This way, you can ensure that you are paying your employees living wages that are in line with market conditions.

Quick overview of job evaluation methods

You can evaluate your jobs using a variety of methods. These can be qualitative or quantitative and help you assess the value of each function so you can rank them accurately.

Qualitative methods:

  • Paired comparison ranking. The goal is to compare two different jobs and choose the one that has the most impact. This forces you to list your various tasks in order of importance to the company. For example, let's say you put together the jobs of a barista and a cashier. You choose the barista as the most important job and put it at the top of the list. Repeat this process with all of your jobs until you have a complete ranking list.
  • Job classification. Rank the jobs based on a predefined level comparison, i.e. C-level executives, executives, directors, managers, and individual contributors. This makes it clear which job has a higher ranking than the other. Typically, you use industry standards to define your internal hierarchy, a manager cannot be below an assistant in the reporting line.

Quantitative methods:

  • Factor comparison method. Rank your jobs based on various factors such as required knowledge and skills, decision making, impact, communication and networking, and financial responsibility compared to other jobs. Assign points to each of these factors, add them up, and come up with a total score per job to determine your ranking.
  • Point Factor Method. Rank each job based on expertise, problem-solving skills, and accountability. This method is very similar to the above in that you assign points to each factor and determine the ranking by adding up the total points per job. The difference is that in this case, you are comparing the factors to standard job descriptions. For example, in a factor comparison, you would rank the factors based on your internal jobs. In a point factor analysis, on the other hand, you compare your jobs to industry ratings.
  • Market Rates. This is essentially benchmarking salaries and setting internal ranks based on market rates. If a job has a higher base salary, it means the job is more important than others.

How to Conduct a Job Evaluation

Conducting a job evaluation means that you use a systematic process to determine the relative value of the different jobs in your company and compensate them appropriately. Remember, you are not evaluating the person who holds the job, but the job itself.

Here is a step-by-step guide to conducting a job evaluation:

  1. Define the purpose of the evaluation. Clarify why you want to conduct a job evaluation. What will be the result of this process? Are you willing to adjust your salaries or reorganize your organizational structure and positions?
  2. List all the positions. Create a document with all the positions in your company, but only add them once. If you have two cashiers, you only need to include one in the full list.
  3. Choose a job evaluation method. As you saw above, there are five different job evaluation methods you can choose from. You can choose to compare against industry benchmarks or do an internal evaluation. However, choose a method that will help you achieve your initial goals and is compatible with your available resources, do not choose benchmarking if you do not have the budget or time to conduct market research.
  4. Gather information. Gather detailed information about each job, including job descriptions, responsibilities, required qualifications, skills, working conditions and other relevant details. This information will be very useful in ranking the different jobs.
  5. Evaluate the different jobs. Apply the chosen method to evaluate the jobs. For example, if you use the point factor method, assign points to each job based on the given criteria and calculate the total score to determine the relative value of the job. Use a table to collect all the data.
  6. Define a job hierarchy. Use the results of the evaluation to create a hierarchy of jobs. This means listing your jobs in order of their relative importance or value within the company.
  7. Benchmark against the market. Compare your job evaluations to market data to ensure your pay scale is competitive and fair. This step is critical to attracting and retaining talent and offering living wages.
  8. Develop a compensation structure. Use the results of the job evaluation to shape and influence your compensation structure. Set salary levels or bands that match the assessed value of the job. For example, if a job is expected to manage expenses, this should be reflected in the compensation as it has more responsibility than others.
  9. Review and update regularly. Job roles and market conditions change over time. Remember when there was no AI? It's important to conduct a job evaluation every year and update your systems to ensure they remain relevant and fair - and that you're paying your employees correctly.
  10. Communicate with your employees. It's important to communicate the job evaluation process and results to employees to maintain transparency and trust. This shows that you care about them and put them first.
  11. Ensure legal compliance. Make sure your job evaluation process complies with employment laws and regulations regarding equal pay and non-discrimination. If you use IceHrm's HR and Compliance module, you can ask HR professionals for advice and have your processes reviewed at no extra cost.

It's critical that you create objective and accurate descriptions and evaluations for each job. At this point, it's helpful to remind yourself and your team that you're evaluating jobs, not people. It's beneficial to bring in HR professionals or outside consultants, especially if you're conducting this process for the first time.

As we've seen in this article, conducting job evaluations isn't enough to become a fair and equitable employer. You need to use the results to change your internal processes and strategies - and you should get buy-in from the owner or management before you even start conducting evaluations.

Then, make sure you use the job evaluation results to:

  • Change your organizational structure
  • Redefine roles and train employees for the changes
  • Rehire based on the new job description and gaps
  • Change or design a compensation structure
  • Offer salary increases where appropriate

How to use job evaluations to identify structural gaps

Job evaluations will likely reveal gaps in your company's structure. Imagine this: you own a coffee shop and discover that your job description doesn't require baristas to have a food hygiene certificate. That would be fine if you only served coffee, but since you now also serve lunch and your baristas work near the chefs, you can't risk cross-contamination. A job evaluation could force you to train your baristas in food hygiene or hire new baristas with that certificate.

But you could also discover that you're not paying your employees appropriately for their tasks. This could be the case if you've asked one person to take on multiple tasks and it's resulted in a new position with the same pay.

Or you find that you have several positions that are essentially the same, or positions that could benefit from automation. For example, let's say your store manager manually enters punch card data into the system every Friday. Surely you want the person in that role to have time to coach employees, streamline processes, and talk to suppliers. A job evaluation could show you how to restructure the job description and where to use tools.

In the previous example, you could automate time tracking with IceHrm's time clock. There, employees can log their hours via an app, the manager can review and approve the timesheets with a few clicks, and the data is sent to payroll in a matter of minutes. This way, you can hire or train your store manager so they can focus on other valuable tasks.

Job evaluation: Should I do one?

Job evaluations not only help you compensate your employees correctly, but also optimize your company structure by allowing you to identify structural issues. Unlike individual performance evaluations, this process focuses on evaluating the job itself, not the person who performs it. So job evaluations help you review your operations and processes.

A thorough job evaluation allows you to align roles and responsibilities with your business needs, redefine job descriptions, optimize your organizational structure, and compare compensation to industry standards. This ensures that each role is fairly compensated based on responsibilities, experience, and seniority, contributing to a transparent and equitable work environment.

If you're ready to optimize your small business's resources, offer competitive compensation, and create clearly defined job descriptions, consider using tools to automate processes found during the evaluation.

By using IceHrm to free yourself from manual HR tasks, you can rethink certain tasks, reduce staff and use the money to better compensate your employees. IceHrm offers a range of tools designed specifically for small businesses to help you streamline your HR processes and align your workforce with your strategic goals. And if you need help conducting your assessments, an HR expert can call you and advise you on how to proceed.

Your employees make up your business, don't overlook the processes that benefit them.

Job evaluations ensure fair compensation and streamlined operations. IceHrm offers tools to automate HR processes and enhance employee satisfaction.