Final answer:
Job evaluation is the administrative procedure for assessing job worth within an organization; it involves analyzing positions to establish a ranking for the purpose of compensation. It is supplemented by job analyses and market evaluations to ensure internal equity and market competitiveness. This process helps to determine what to pay employees for their work.
Step-by-step explanation:
The administrative procedure for measuring the relative internal worth of the organization's jobs, identifying compensable factors, or determining what to pay people for their work is known as job evaluation. This process involves a systematic approach to establish the value of individual jobs in relation to each other within the company. Job evaluations typically analyze several aspects of the job, such as skill requirements, effort, responsibility, and working conditions to create a job ranking that informs compensation strategies.
By conducting job analyses using observation, surveys, and interviews aimed at understanding the roles and requirements of various positions, businesses can better appreciate the effort and skill each role demands. In parallel with job analyses, organizations might regularly or occasionally measure job satisfaction to assess how changes in the business model or management affect employee attitudes, which in turn may impact the company's operational effectiveness.
It is important to correlate these evaluations with data from the labor market, which uses demand and supply analysis to set benchmarks for salaries and wages. The balance between what a job is worth internally and how it compares to similar positions in the broader market ensures fairness and competitiveness in the organization's compensation structure.