Job Evaluation is a process many organizations look to HR to administer and lead. Certainly, each organization has unique internal job benchmarks, work structures, and pay scales, to form internal alignment.
How can the external market forces be included in the job evaluation process and does it matter? How do you balance the internal input from employees, managers, and executives with external (market) forces? What causes the weighting to be more favorable towards internal inputs versus market forces (or vice versa)?
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External market considerations such as labor market supply and demand forces have strongly influenced the setting of wages and they leave job evaluations to be overshadowed by these factors. Job evaluations have not been very significant as compared to the supply and demand factors in the control of wages. When there are many jobs in the market but there are less people who are qualified, it follows that the wages are going to be higher. Likewise, when there are less job opportunities and more qualified applicants, the wages will tend to be lower.
Another external force affects the going rate - the legal constraints. These labor laws and legislations such as equal pay, minimum wage are mandatory and companies need to consider them, too. Labor groups or unions protect themselves from employers who take advantage of them especially at times when there is a large supply of workers. Sometimes professional groups can also affect the market and a limited acceptance to universities results in a limited supply of professionals.
Employers conduct wage surveys to learn about how other employers pay in the same labor market and to establish external equity. They want to know whether they can pay the going market rate.
Job evaluation may not greatly affect the setting of wages as much as market pricing does but market pricing can work as a job evaluation method. Companies structure ...
This solution discusses how external forces are included in the job evaluation process and more in 875 words.