The importance of job evaluation
With EU-wide pay transparency laws set to come into full force in 2026, you’d expect that businesses across the bloc would be busy preparing for the seismic shift.
However, a report from The Conference Board, based on a survey of 78 of Europe’s largest employers, suggests that this is far from being true. In fact, the survey found that 41% of respondents haven’t even begun to start preparing for the EU Pay Directive. Less than 2% believe they’re already compliant.
One of the reasons companies are so far from compliance? They don’t have job evaluation schemes in place.
This exercise, which involves breaking down and analysing all of the requirements of a job role to establish an internal hierarchy, is a vital process for establishing a fair compensation structure. So, when it comes to the EU Pay Directive, JE is a prerequisite for compliance.
Yet, in 2022, only 49% of private sector organisations in the EU were using formal Job Evaluation schemes. For SMEs, this rate was less than 3%.
So, what makes putting a job evaluation system in place so difficult?
Carrying out a JE evaluation can strike fear into even the hardiest of HR departments. Far from something that can be done in an afternoon, it takes significant time, resources - and sometimes cash - to get JE right.
Firstly, undertaking a job evaluation exercise requires a whole lot of data. Because to accurately evaluate a job role, you first need to know what it actually entails. This involves gathering information on each role’s required education, necessary skills, scope of responsibility and - if necessary - working conditions.
Collecting and collating this data is no mean feat. Where job descriptions are outdated or of low quality, it’s likely that current employees will need to be interviewed to get a deep understanding of what they do.
When you imagine that some organisations have 100s - even 1000s - of roles, it’s easy to imagine why setting up a JE system can feel like a Herculean task.
Equally, SMEs might be working with small, sometimes even single person, HR departments. Alongside their daily tasks, these small teams simply don’t have the bandwidth to plan, implement and maintain a traditional JE exercise.
To solve this, many organisations have outsourced. This involves hiring external compensation consultants to come in and set up a JE system from scratch. The catch? The cost can be eye-watering.
Smaller organisations simply don’t have the resources to make the initial investment - let alone the regular maintenance it takes to keep a JE system up to date as a company evolves.
To dodge the expense, some organisations may fall back on in-house excel-based solutions to make sense of data and put roles in rank order. This may seem like a handy solution, but the reality is that rudimentary JE methods are likely to prove useless in the face of emerging pay laws.
An ineffective job evaluation system makes it impossible to successfully comply with the EU Directive’s requirements. Once the law changes, this lack of compliance could come with legal ramifications and damaging penalties.
With all the hurdles that come with carrying out a JE exercise, it’s no wonder so many organisations are burying their heads in the sand when it comes to getting prepared for the EU Pay Directive.
The good news? Job evaluation is changing
gradar is making job evaluation faster, simpler and more sustainable than ever before. It equips HR teams big and small with an all-in-one, easy to use tool that allows them to carry out objective job evaluation in-house.
Because as we strive towards pay transparency and equality, job evaluation should be available to all businesses - no matter their size. This means ending the reliance on expensive external compensation consultants. Instead, gradar is empowering HR teams to set up and maintain their own effective JE schemes.
As well as objective, point-factor based job grading, gradar offers a whole host of progressive features such as gender pay gap analysis, salary band creation and market benchmarking.
So, as new pay transparency laws - including the EU Pay Directive - come into full force, companies no longer need to fear job evaluation. By using it as a foundation for their compensation architecture, they can be sure not just to comply - but to optimise their pay practices across the board.