Streamlining Your Small Business with Job Evaluations

As a small business owner, you want to keep your employees happy so they can perform at their peak and stay around longer. One of the factors that contribute to employee satisfaction is accurate pay—offering a salary that’s competitive for the industry and makes sense in comparison to their coworkers’ responsibilities. 

To ensure you’re providing the right compensation for the job responsibilities, you need to conduct a job evaluation. Job evaluations offer a structured approach to leveling roles, benchmarking pay, and optimizing organizational structure. 

Quick definitions:
A job evaluation is a systematic process for defining the value of the different roles in your business. The goal is to compare them against each other and develop a structure to provide fair compensation. This way, every job gets paid what they deserve in terms of responsibilities, experience, and seniority. This is different from a performance evaluation because you’re not valuing the person but the job. 

This article breaks down the key benefits of job evaluation for small businesses, explores typical methods to conduct one, and offers practical tips for getting started—even with limited resources.

Job evaluations. Don’t skip them.

Conducting job evaluations doesn’t only help you guarantee accurate pay, they also allow you to: 

  • Align roles and responsibilities with your business needs. For instance, during job evaluations, you might discover that you need to turn one job into two positions based on industry benchmarks, or the other way around to reduce the headcount.
  • Redefine job descriptions. A job evaluation may result in new job descriptions or better-defined role responsibilities. 
  • Optimize your organizational structure. Like the point above, job evaluations help you identify the best structure for your organization based on the jobs you have or the ones you’ll include. 
  • Benchmark compensation. It’s important to use job evaluations to conduct internal and external salary benchmarks. This helps guarantee you’re paying your employees living wages that are in line with market mediums.

Quick overview of job evaluation methods

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

Qualitative methods: 

  • Pair comparison ranking. The goal is to pair two different jobs together and choose the most impactful one from the duo. This forces you to list your different business jobs in order of business impact. For instance, let’s say you pair up the jobs of a barista and cashier. You choose the barista as the most impactful one, this puts it at the top of the list between the two. Repeat this process with all your jobs until you have a complete ranking.
  • Job classification. Rank jobs based on a predefined grade comparison, i.e., C-level executives, executives, directors, managers, and individual contributors. This makes it clear which job has a higher classification than the other. Usually, you use industry standards to define your internal hierarchy, i.e., a manager can’t be under an assistant in the reporting line. 

Quantitative methods:

  • Factor-comparison method. Rank your jobs based on different factors like knowledge and skills needed, decision-making, impact, communication and network, and financial responsibility in comparison to other jobs. Assign points to each of these factors, sum them up, and get a total score per job to determine your ranking. 
  • Point-factor method. Evaluate each job based on expertise, problem-solving skills, and accountability. This is very similar to the above method as 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 compare the factors with standard job descriptions. For instance, using a factor-comparison approach, you’d rank the factors based on your internal jobs. Whereas, in a point-factor analysis, you compare your jobs to the industry appraisals. 
  • Market pricing. This is basically benchmarking salaries and defining internal ranks based on the market rates. If a job has a higher base salary, it indicates the job is more impactful than others. 

How to conduct a job evaluation

Conducting a job evaluation means following a systematic process to determine the relative worth of various jobs within your business and pay them accurately. Remember, you’re not evaluating the person in the role, you’re assessing the job itself.

Here’s a step-by-step guide to conducting a job evaluation:

  1. Define the purpose of the evaluation. Clarify why you’re planning to conduct a job evaluation. What will be the outcome of this process? Are you willing to adjust your salaries or reorganize your organizational structure and jobs? 
  2. List all jobs. Make a document of all your business jobs, but only add them once. If you have two cashiers, you only need to add one to the full list.
  3. Choose a job evaluation method. As seen above, there are five different job evaluation methods you can choose from. You can prefer to compare against industry benchmarks or review internally. Either way works but choose a method that helps you reach your initial goals and that aligns with your available resources—i.e., don’t choose to benchmark if you don’t have the budget or time to conduct market research.
  4. Compile job information. Gather detailed information about each job, including job descriptions, responsibilities, required qualifications, skills, working conditions, and any other relevant details. This will come in handy when ranking the different roles.
  5. Evaluate the different jobs. Apply the chosen method to assess the jobs. For instance, if using the point factor method, assign points to each job based on the predetermined criteria and calculate the total points to determine the job’s relative worth. Use a spreadsheet to collect all the data.
  6. Define job hierarchy. Use the results from the evaluation to create a hierarchy of jobs. This means, listing your jobs in order of relative importance or value of each one within the organization.  
  7. Benchmark against the market. Compare your job evaluations with market data to ensure your pay scales are competitive and fair. This step is crucial for attracting and retaining talent and offering living wages.
  8. Develop a compensation structure. Use the results of the job evaluation to design and influence your compensation structure. Include pay grades or bands that correspond to the evaluated worth of the jobs. For instance, if a job is expected to manage expenses, that should be impacted in their pay as they have more responsibility than others. 
  9. Review and update regularly. Job roles and market conditions change over time. Remember when AI wasn’t a thing? It’s important to conduct job evaluations every year and update your systems to ensure they remain relevant and fair—and you’re paying people accurately.
  10. Communicate with employees. It’s important to communicate the process and outcomes of the job evaluation to employees to maintain transparency and trust. This shows that you care and you’re putting them first.
  11. Ensure legal compliance. Ensure that your job evaluation process complies with labor laws and regulations related to equal pay and non-discrimination. If you’re using Homebase’s HR and compliance module, you can ask HR professionals for advice and get them to review your processes at no additional cost.

It’s crucial that you come up with objective and accurate descriptions and assessments of each job. Here’s when reminding yourself and your team that you’re evaluating jobs and not people come in handy. It’s beneficial to involve HR professionals or external consultants, especially if you are conducting this process for the first time.

As we’ve seen throughout the article, conducting job evaluations isn’t enough to become a fair and equitable employer. You need to use those findings to change your internal processes and strategy—and you should get approval from the owner or directors before you even start conducting evaluations. 

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

  • Modify your organizational structure
  • Redefine jobs and train people on changes
  • Hire based on the new job description and gaps
  • Change or design a compensation structure 
  • Offer pay rises if needed 

How to use job evaluations to identify structural gaps

Job evaluations will likely reveal gaps in your organization’s structure. Picture this: You own a coffee shop and you identify that your job description for baristas doesn’t ask for a food hygiene certificate. This would be fine if you were only serving coffee, but since you’re now offering lunch and your baristas work near the cooks, you can’t risk cross-contamination. A job evaluation might force you to train your baristas on food hygiene or hire new ones with said certification.  

But you might also discover that you’re not paying people accurately for their responsibilities. This might be the case if you asked one person to cover multiple roles and ended up becoming a new position but with the same pay. 

Or you might find out that you have different job names that are essentially the same or jobs that could benefit from automation. For instance, let’s say your branch manager manually enters the punch card data into the system every Friday. Surely, you want the person in this role to have time to mentor the staff, streamline the processes, and talk to suppliers. A job evaluation could show you how you need to restructure the job description and where to leverage tools.

In the previous example, you could automate time tracking with Homebase’s time clock. There, employees can clock in and out of work from an app, get the manager to review and approve the timesheets in a couple of clicks, and send it over to payroll in minutes. This way, you can hire or train your branch manager to focus on other valuable responsibilities.

Job evaluation: Should I conduct one?

Job evaluations help you offer accurate pay to your staff, but they also help you streamline your business structure as you get to identify structural issues. This process, different from individual performance evaluations, focuses on assessing the job itself, not the person performing it. So, job evaluations help you review your operations and processes. 

By conducting thorough job evaluations, you can align roles and responsibilities with your business needs, redefine job descriptions, optimize your organizational structure, and benchmark compensation against industry standards. This ensures that each role is fairly compensated based on responsibilities, experience, and seniority, fostering a transparent and equitable work environment.

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

Using Homebase to get rid of manual HR tasks invites you to rethink certain jobs, reduce headcounts, and use the money to compensate your people better. Homebase offers a range of tools that are specifically designed for small businesses, helping you streamline your HR processes and align your workforce with your strategic goals. Plus, if you need help conducting your evaluations, an HR expert can hop on a call with you and advise you on how to proceed.

Your people make your business, don’t skip the processes that benefit them.  

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