Getting the job done: Finding a job evaluation approach that works for you

September 9, 2025

Drew Maginn

While typically experienced by employees as a simplified pay grade or salary band, compensation management is anything but a simple process. In practice, it’s a step-by-step approach that ensures consistency, fairness and transparency in pay, and job evaluations are a key source of information. Whether your organization embraces job grading, job ranking, or a point system, choosing the right job evaluation system can be a deciding factor in having a compensation approach that you can stand behind with confidence.

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What is job evaluation?

In order to understand job evaluation, you need to understand compensation management. The process of compensation management consists of four phases:

Phase 1 – Compensation philosophy: Understanding your organization’s approach to compensating its employees, either above, below or at market rates.
Phase 2 – Job analysis: Understanding the different elements of each job and the skills needed to succeed at them.
Phase 3 – Pricing jobs: Understanding how much each job is worth to your organization.
Phase 4 – Matching employees to pay: Using the information gathered to match employees to appropriate pay levels.

According to Canadian Human Resource Management, job evaluations sit within phase three and “are systematic processes of assessing job content and ranking jobs according to a consistent set of job characteristics and worker traits.” Basically, they help you figure out how much a job is worth to your organization and which jobs should be paid more than others.

” Regardless of which you select, each job evaluation method considers the core duties, responsibilities and working conditions of different jobs within the organization. ”

What are the different job evaluation methods?

Regardless of which you select, each job evaluation method considers the core duties, responsibilities and working conditions of different jobs within the organization. The most common approaches include the below.

Job ranking: Using job analysis information to rank the importance of jobs within the organization.
Job grading: Assigning each job a grade based on its worth to the organization.
Point system: Assessing the worth of key job factors by assigning points with higher total points leading to higher pay.

Depending on the type of organization and the resources available, any of these approaches may meet your needs as long as you understand their strengths and limitations.

Simplifying the process through job ranking

Job ranking is the simplest way to perform a job evaluation and will typically work best for smaller organizations with a clear organizational hierarchy.

This is because job ranking does not define the relative importance of one job to another. For example, as outlined in Canadian Human Resource Management, in a retail environment, a regional manager might be ranked one, with a store manager and sales assistant ranked two and three respectively. But these job rankings would not account for the fact that the regional manager and store manager jobs might be similar in importance, with the sales assistant being far less important. The result? Pay levels might be inaccurate, with store managers being underpaid in comparison to both the levels directly above and below them.

Playing the matching game with job grading

In job grading, or job classification, each job is assigned a grade based on which job description it most closely matches. This approach is most commonly used for public sector employees, large unionized workplaces, universities and colleges and large private sector employers. In these environments, these structures benefit by being easily explainable to employees, consistent when comparing different types of jobs and equitable and defendable. However, these systems require significant effort to develop and maintain, can fail to track the evolution of certain roles and may discourage employees from supporting any work outside their grade.

Keeping score with the Hay Method and other point-based systems

Point-based evaluation systems prioritize the critical or compensable factors of each job, which is judged by the required skill (e.g., education, experience), responsibility (e.g., supervisory, fiscal), level of effort (e.g., mental, physical) and working conditions (e.g., locations, work environment).

Points are awarded based on each critical factor and jobs are ordered from most to least points. Whether you use this point-factor method or variations like the Hay Method, this system is more challenging because it requires the ongoing engagement of job evaluation specialists. Based on this in-depth review process, however, the approach is considered more precise than others and tends to lead to a more accurate valuation of jobs.

When done with purpose and care, performing job evaluations is a valuable step that all organizations should take to implement a fair, defensible compensation management strategy.

While each approach comes with its own advantages and disadvantages, the act of doing this work will undoubtedly lead to a greater understanding of the jobs within your organization and their importance to the overall success of your business.

By ensuring that jobs of high importance are paid accordingly, you can take a step toward ensuring that retaining your most valuable resource – your people – remains a top priority.

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