CERTIFIED HUMAN RESOURCE ASSOCIATE REVIEWER
I. BASE PAY
Base pay is the minimum salary paid to an employee. It can also be interpreted as a fixed amount paid to an
employee for a certain job. Base pay is only one component of an employee’s total compensation and does not
include overtime pay, bonuses, benefits, or insurance. The rate can be stated as an hourly, weekly, monthly, or
annual rate.
II. JOB EVALUATION
Job evaluation is the systematic process of determining the relative value of different jobs in an organization.
The goal of job evaluation is to compare jobs with each other in order to create a pay structure that is fair,
equitable, and consistent for everyone. This ensures that everyone is paid their worth and that different jobs
have different entry and performance requirements.
The advantage of job evaluation is that it does not take into account the qualities of the job holder. According
to a report on this topic by the European Commission, the relative worth of a job is assessed irrespective of the
qualities of the specific job holder.
The relative worth corresponds to a ranking, which in turn corresponds to basic pay brackets or scales (called
wage grids). Personal qualities of the job holder (including seniority, education level, tenure) are rewarded by an
entitlement to higher steps within the applicable pay bracket.
Job evaluation requires some basic job analysis to provide factual information about the jobs concerned. The
starting point is often the job analysis and its resulting job description. Based on this, the job is evaluated. One
of the key criteria in the evaluation is the added value of the job to the organization. Based on this evaluation,
the job is added to the job structure. The resulting structure ensures pay transparency and equity between
gender and minorities.
, The European Commission actively encourages the use of job evaluation. According to Cordis, which
coordinates EU-supported R&D activities, 49% of European organizations in the private sector use a formal Job
Evaluation scheme, with SMEs at less than 3%. This lack of evaluation leads to unstructured wage payment
practices and a lack of requirement-based career and skill development for employees.
Job Evaluation Methods
There are different methods that can be used for job evaluation. The easiest way to split these up is to make a
distinction between qualitative and quantitative methods.
Four common job evaluation methods
Qualitative Quantitative
Job to job comparison Ranking method/ pair Factor-comparison method
comparison ranking
Job to predetermined grade comparison Job classification Point-factor method
Each of these methods has its own advantages and disadvantages. The qualitative methods are usually faster
while the quantitative methods are more objective and take into account required skills and responsibilities.
The best approach is always a combination of methods. We will give a brief explanation of each of the
methods.
Evaluation Method Description
Ranking method/ Paired Jobs are paired and for each pair the most impactful job is chosen.
comparison This results in a forced ranking of different jobs based on their
seniority. This approach is only recommended for smaller
organizations with fewer than 100 jobs
Job classification Jobs are ranked based on a predetermined grade comparison. An
example classification is a CEO, vice president, director, manager, and
operator. This is a predetermined ranking that many US-based
organizations use. Grades are created among job families (e.g.,
marketing, HR, sales).
Factor-comparison method Jobs are ranked on a series of factors, the most frequently used
factors being knowledge & skills, communication & contacts, decision
making, impact, people management, freedom to act, working
environment and responsibility for financial resources. Each factor is
assigned points and the total number of points indicate the job’s
ranking.
I. BASE PAY
Base pay is the minimum salary paid to an employee. It can also be interpreted as a fixed amount paid to an
employee for a certain job. Base pay is only one component of an employee’s total compensation and does not
include overtime pay, bonuses, benefits, or insurance. The rate can be stated as an hourly, weekly, monthly, or
annual rate.
II. JOB EVALUATION
Job evaluation is the systematic process of determining the relative value of different jobs in an organization.
The goal of job evaluation is to compare jobs with each other in order to create a pay structure that is fair,
equitable, and consistent for everyone. This ensures that everyone is paid their worth and that different jobs
have different entry and performance requirements.
The advantage of job evaluation is that it does not take into account the qualities of the job holder. According
to a report on this topic by the European Commission, the relative worth of a job is assessed irrespective of the
qualities of the specific job holder.
The relative worth corresponds to a ranking, which in turn corresponds to basic pay brackets or scales (called
wage grids). Personal qualities of the job holder (including seniority, education level, tenure) are rewarded by an
entitlement to higher steps within the applicable pay bracket.
Job evaluation requires some basic job analysis to provide factual information about the jobs concerned. The
starting point is often the job analysis and its resulting job description. Based on this, the job is evaluated. One
of the key criteria in the evaluation is the added value of the job to the organization. Based on this evaluation,
the job is added to the job structure. The resulting structure ensures pay transparency and equity between
gender and minorities.
, The European Commission actively encourages the use of job evaluation. According to Cordis, which
coordinates EU-supported R&D activities, 49% of European organizations in the private sector use a formal Job
Evaluation scheme, with SMEs at less than 3%. This lack of evaluation leads to unstructured wage payment
practices and a lack of requirement-based career and skill development for employees.
Job Evaluation Methods
There are different methods that can be used for job evaluation. The easiest way to split these up is to make a
distinction between qualitative and quantitative methods.
Four common job evaluation methods
Qualitative Quantitative
Job to job comparison Ranking method/ pair Factor-comparison method
comparison ranking
Job to predetermined grade comparison Job classification Point-factor method
Each of these methods has its own advantages and disadvantages. The qualitative methods are usually faster
while the quantitative methods are more objective and take into account required skills and responsibilities.
The best approach is always a combination of methods. We will give a brief explanation of each of the
methods.
Evaluation Method Description
Ranking method/ Paired Jobs are paired and for each pair the most impactful job is chosen.
comparison This results in a forced ranking of different jobs based on their
seniority. This approach is only recommended for smaller
organizations with fewer than 100 jobs
Job classification Jobs are ranked based on a predetermined grade comparison. An
example classification is a CEO, vice president, director, manager, and
operator. This is a predetermined ranking that many US-based
organizations use. Grades are created among job families (e.g.,
marketing, HR, sales).
Factor-comparison method Jobs are ranked on a series of factors, the most frequently used
factors being knowledge & skills, communication & contacts, decision
making, impact, people management, freedom to act, working
environment and responsibility for financial resources. Each factor is
assigned points and the total number of points indicate the job’s
ranking.
