11-multicriteria Job Evaluation For Large Organizations

European Journal of Operational Research 130 (2001) 375±387

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Multicriteria job evaluation for large organizations A. Spyridakos a

a,* ,

Y. Siskos b, D. Yannacopoulos c, A. Skouris

c

Business Administration Department, Technological Educational Institute of Piraeus, P. Ralli and Thivon 250, 12244 Aigaleo, Greece b DSS Laboratory, Technical University of Crete, 73100 Chania, Greece c Greek Telecom SA, Marousi, Athens, Greece Received 3 December 1998; accepted 22 June 1999

Abstract The job evaluation problem presents particular characteristics, the most important of which are: (1) the existence of multiple factors that in¯uence the evaluation; (2) the decision is often the duty of a committee; and (3) the available data include fussiness while the description, responsibilities and requirements of the jobs are usually not precisely determined. Nevertheless, job evaluation for large organisations is a crucial activity that enables the rationalisation of the links between the importance of a job and the corresponding rewards. In this paper a multicriteria disaggregation±aggregation approach is proposed to deal with the problem. Speci®cally, the UTA-II method was used in order to assess a consistent additive value model that allows the ranking of the jobs according to its relative importance. An application of this approach into a large Greek organisation is also described in order to present the adjustment of the multicriteria disaggregation±aggregation philosophy to this kind of evaluation problems. The implementation of this research project was supported by the MIIDAS system, which applies the abovementioned approach. Ó 2001 Elsevier Science B.V. All rights reserved. Keywords: Multi-criteria decision support; Job evaluation

1. Introduction One of the recent trends in the management of large private or public enterprises is mainly based on two processes: (a) the competence related human resources management; and (b) the performance management. The ®rst is oriented towards

*

Corresponding author. E-mail address: [email protected] (A. Spyridakos).

the improvement of the production or the services o€ered by exploiting the capacity that exists in a person so as to satisfy the job demands. The second concerns the management and development of human resources and is based on the principles of management by contracts or agreements. These two processes are linked together since: (a) competence involves personal trait, characteristics and skills, which are related to e€ective or outstanding job performance (Murphy, 1993); and (b) performance management emphasises the development and initiation of self-management plans as well as

0377-2217/01/$ - see front matter Ó 2001 Elsevier Science B.V. All rights reserved. PII: S 0 3 7 7 - 2 2 1 7 ( 0 0 ) 0 0 0 3 9 - 4

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the integration of individual and corporate objectives. The job evaluation is a systematic process that enables the design and establishment of human resources improvement procedures and fair reward systems. Actually, job evaluation concerns the assessment of a value system that encapsulates the importance of the parameters that re¯ect the global responsibility and duties of a job. It is remarkable that job evaluation does not concern the holders of the job but how responsible the job is and its share in the production of the desired results. The upshot of the job evaluation has a positive in¯uence on the above-mentioned two processes (competence and performance management) since it: (a) aids the establishment of a reward system that links the importance of the jobs to the payment o€ered, and (b) supports the designation of human resources development requirements in order to improve the e€ectiveness of the jobsÕ operation. This paper deals with the design and the implementation of a job evaluation system, which is based on the multicriteria disaggregation±aggregation UTA II method (Siskos, 1980). The research work that is presented in this paper aims at dealing with the particular characteristics of the job evaluation problem by utilising the features of the disaggregation±aggregation approach (Siskos et al., 1993; Jacquet-Lagreze and Shakun, 1984; Despotis et al., 1990; Hammond et al., 1977). This approach was used for the evaluation of the managerial jobs of a large Greek enterprise. The outcome of this study was utilised to design the payroll system. The paper consists of an Introduction and four other sections. An analysis of the job evaluation problem and its associations with the payroll strategy are presented in Section 2. In Section 3, the methodological frame of the proposed multicriteria approach is analytically described. Then, the above-mentioned case study is presented. Finally, the paper concludes by reviewing the outcome of the proposed methodology on this kind of evaluation problems.

2. The role of job evaluation in organisations Job evaluation includes comparative processes due to the fact that the relations and dependencies among the jobs have to be explained. This consists of an essential determinant that allows the management (through the analysis of the targets, achievements and factors that in¯uence the requirements of the jobs) to assign the corresponding proportions of every job. For this reason job evaluation usually includes an extensive analysis of the roles, the objectives and the corresponding actions and achievements of the jobs (Elliott, 1991). The outcome of this analysis is the establishment of structures that aid the comparison among the jobs and support the evaluator(s) to make consistent and reasonable judgements. This is the reason why analytical processes have to be implemented so as to make the collection and handling of the required data be eciently achieved. In most of the cases, especially in large organisations, job evaluation is the duty of a committee composed of medium and high level managers. Usually members of the workers' union also participate in the Evaluation Committee. Consequently, it is expected that there will be less objectivity and con¯icting standpoints are likely to arise. Nonetheless, it is obvious that a global acceptance of the job evaluation model constitute a critical factor that e€ects the ecient utilisation of the planned reward system. Furthermore, diculties and crucial factors appear in the design and enforcement of a job evaluation system and it is not incongruous to consider that it is a semistructure or unstructured decision problem (Roy, 1985). Some of these particular characteristics are described in the following: · There is a rather large number of linked or con¯icting factors, which in¯uence the evaluation. · There is no step by step procedure or a structure that enables the direct evaluation of the jobs. In addition, every enterprise has its own strategic and market plans that entail an individual nature for the job evaluation procedure. · There is a wide di€erentiation among jobs in relation to their contribution to the results (quantitative and qualitative) of the enterprises. Some

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jobs have mainly supportive orientation (e.g. Information Centre, Human Resources Management) and others have a direct bearing to the creation of the results (e.g. Marketing Department, Branches, Sales Department, etc.). For the ®rst group of jobs is often dicult to estimate their contribution to the results of the organisation and to establish a fair measurement system. · The enterprises (public or private) operate in a dynamic environment. Consequently, the job evaluation data as well as the strategy and the policy of the organisations are continuously under modi®cation or adaptation. Job evaluation within organisations aims at the establishment of a relative value system that reinforces payroll decisions. The main attitudes of the job evaluation system can be categorised as follows: · provides a rational framework for planning and establishing a fair payroll structure; · allows job relation management within organisation; · aids the de®nition of the payroll analogies that are correlated to the corresponding work (equal payment for equal work). The above described lead the analysts to take into consideration three factors during the design of the payroll system: · The trends of the labour market since equilibrium is commonly established between the labour needs and the salaries o€ered. · The job importance from the organisationÕs management point of view, which is the object of the job evaluation system. · The jobholderÕs performance (performance measurement system). For the job evaluation a considerable number of approaches have been developed and used. The most simple of them treat the problem providing a ranking or a classi®cation of the jobs based on a simple comparative process or on a simple points factor rating system (Armstrong and Murlis, 1994; Neathley, 1994). One common approach consist in providing a ranking of the jobs according to the perception of their relative size. This approach is characterised by low degree of rationality since the judgement of

377

the relative sizes of the jobs is not based on a kind of standards or measures. Another approach utilises a scale for the classi®cation of the jobs. Different levels of grades are assigned into a number of characteristics such as ``decision making'', ``knowledge required'' and ``equipment used''. Every job is posed on a position on the total scale by its evaluation on the characteristics. This approach can be easily applied in cases where: (a) there is a small number of jobs to be evaluated; (b) the jobs are not too complex and they can be described by the characteristics used; and (c) it is quite easy to determine the borderlines between two neighbouring positions on the scales for every characteristic. Another commonly used approach is based on the comparison of the jobs with an internal benchmark one. This approach cannot be applied in cases where there is a small number of jobs and a high degree of di€erentiation among the jobs does not exist. Otherwise it is dicult to de®ne a job which can be used as a benchmark. The most common approach is the ``point factor rating'' (Candlili and Armagast, 1987; Plachy, 1987). According to this method the evaluation of the jobs derives from a multiattribute value system. The principles of this value system are based on the essential of the Multiattribute Utility Theory (Keeney and Raifa, 1976; Keeney, 1992). This approach is widely used by management consultants and usually provides reasonable results but lacks on the estimation of the weights of the attributes and on the evaluation of the jobs on the criteria. Actually, the factorsÕ weights are estimated through a survey analysis or are directly expressed by an expert or a management consultant. It is obvious that in this case the determination of the components of the value system operates like a ``black box'' for the organisation. Also, the individual circumstances of the enterprise or organisation are not taken into account to the extent that is required. In spite of the job evaluation assessment procedures the payroll strategies can be eciently determined based on a rational evaluation system. Most of the cases the payroll is a combination of: · A standard bonus aligned to the ranking of the job positions in the organisationÕs job evaluation system.

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· Additional performance pay in accordance with employeeÕs achievements regarding the preset action plan targets. 3. The methodological frame The main target of the proposed methodological frame is the assessment of a value system that is described by the following formulae: U …g† ˆ

n X

pi ui …gi †;

iˆ1

u…gi † ˆ 0; u…gi † ˆ 1; n X pi ˆ 1;

for i ˆ 1; 2; . . . ; n;

iˆ1

pi P 0;

for i ˆ 1; 2; . . . ; n;

where g ˆ …g1 ; g2 ; . . . ; gn † is the performance vector of a working position on the n criteria; gi and

gi are the least and most preferable levels of the criterion gi , respectively, and ui (gi ), pi are the values of the performance gi and the relative weight of the ith criterion. This value system can be obtained utilising the MIIDAS System (Siskos et al., 1999) the spine of which is the disaggregation±aggregation UTA II method. In Fig. 1 are presented the major steps of the methodological frame which are described in detail in the following. (i) Criteria modelling. The criteria in a job evaluation tasks can be divided into three categories: (a) Input criteria that include the knowledge, skills and personal characteristics which are required for the ecient accomplishment of the job; (b) Process criteria which encapsulate demands of the job by its holder such as problem solving, complexity, originality, judgement, etc.; and (c) Output criteria that represent the contribution of the job to the quantitative and qualitative results such as sales, quality of products, pro®t, etc.

Fig. 1. A multicriteria methodological frame for job evaluation.

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(ii) Selection of the reference set. From the total number of the jobs a small number is selected (reference set). The jobs of the reference set have to be: (a) known to the evaluators so as to express their preference from a known situation; and (b) representative of the whole set of the jobs in order to take into account the di€erent levels of the decision space. (iii) Evaluation of the jobs on the criteria. Since the evaluation of the jobs on the criteria is the duty of a committee of managers or executives, this procedure includes a high degree of judgmental and negotiation activities. Time consuming meetings, communication and data handling procedures take place in order to: (a) determine the relative situation of every job; and (b) assign accurate values on the criteria. In addition, this activity provides the opportunity knowledge concerning the enterprise or the organisation to be distributed among the members of the committee. (iv) Assessment of the value system. The main stages for the assessment of the above-presented additive value model are: · The assessment of the marginal value functions that re¯ect the variation of the criteria importance on their scale. · The estimation of the criteria weights that represent their relative importance. The determination of the model parameters (value functions and the weights of the criteria) can be done utilising the UTA II disaggregation±aggregation approach (Siskos, 1980). The assessment of the additive value model is carried out through a two step procedure. In the ®rst step, the DM expresses his/her preferences. First, the construction of the marginal value functions takes place, by assigning the variation of importance on the scale of each criterion. This construction can be done using one of the techniques that are embedded into the MIIDAS system (Siskos et al., 1999). In the second one, the UTA II method estimates the weighting factors pi of the criteria using special linear programming techniques. Suppose a ranking (weak order) is given on a set of reference actions Ar ˆ …a1 ; a2 ; . . . ; ak †, where the actions are rearranged in such a way that a1 is the head and ak is the tail of the ranking and for every pair of

379

consecutive actions …am ; am‡1 † holds, either am Pam‡1 (preference) either am Iam‡1 (indi€erence). UTA II solves the linear program below which, because of the transitivity of the (P, I) preference system has k constraints only. Special post-optimality analysis techniques are also applied to test the stability of the estimated weights (see JacquetLagreze and Siskos, 1982; Siskos, 1980). ‰minŠ F ;

F ˆ

k X …r‡ …ai † ‡ rÿ …ai †† iˆ1

s:t: for m ˆ 1; 2; . . . ; k ÿ 1; n X pi ui ‰gi …am †Š ÿ r‡ …am † ‡ rÿ …am † iˆ1

"

n X pi ui ‰gi …am‡1 †Š ÿ r‡ …am‡1 † ‡ rÿ …am‡1 † ÿ

#

iˆ1

Pd

if am Pam‡1

or n X pi ui ‰gi …am †Š ÿ r‡ …am † ‡ rÿ …am † iˆ1

"

n X pi ui ‰gi …am‡1 †Š ÿ r‡ …am‡1 † ‡ rÿ …am‡1 † ÿ

#

iˆ1

ˆ 0 if am Iam‡1 ; n X pi ˆ 1; pi P 0;

for i ˆ 1; 2; . . . ; n;

iˆ1

r‡ …aj † P 0;

rÿ …aj † P 0;

for j ˆ 1; 2; . . . ; k;

where d is a small positive number; gi (am ) the evaluation of the am action on the ith criterion and ui [gi (am )] the corresponding marginal value; and r‡ (aj ), rÿ (aj ) is the under(over)estimation errors concerning the jth action. (v) Feedbacks: The ®nal accepted evaluation model is assessed through iterative procedures, where from the knowledge acquired from the exploitation of the instantly assessed preference models in one of the iterations, prompts the evaluators to express better portraits of their knowledge, experience and preferences. Criteria modelling, selection of the reference set, evaluation of the jobs on the criteria, ranking of the jobs of

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the reference set are the most common used feedbacks as they form the element for the encapsulation of the evaluators knowledge and experience. The information and knowledge acquired from the assessment of the evaluation model in an iteration leads to partial reconsideration of the problem standpoints. In cases where a committee is responsible for the construction of the evaluation system, a systematic co-operation with the Decision Analysts is required in order to approximate, step by step, the evaluation model. These learning procedures aid evaluators to realise the real nature of the evaluation problem, which forms another important aspect of this approach. (vi) Extrapolation: The extrapolation is part of the ®nal procedure where the assessed preference model, which has been accepted by the evaluator or the Evaluation Committee, is used in order to rank order the whole set of the jobs. (vii) Design of the reward system: The payroll strategy group bears the responsibility for grouping jobs into clearly delineated payroll zones in accordance with job evaluation. These zones are de®ned in such a way as to meet the following prerequisites: · To have clearly de®ned limits leaving no space for ambiguity or reaction to the system. · To be few in number rendering the system ¯exible and avoiding di€erent pay for each job that leads to a multiplex payroll system. · To lead to a payroll climax for the jobholders analogous to each jobÕs contribution to the results of the enterprise. 4. The job evaluation of a large Greek organisation The above described disaggregation±aggregation approach was used for the job evaluation of a large Greek organisation. The main target in this case was to evaluate 102 managerial jobs, that is to say the managers of the departments and branches. These jobs can be categorised into two groups: (a) operational (managers of the Head Oce departments); and (b) executive (managers of the branches all over Greece). In this paper a case concerning the 26 operational jobs will be presented in order to illustrate the methodological

frame. The eciency of a methodological frame and the way that it is used in a case is in¯uenced by the speci®c circumstances under which the project takes place. Consequently, it is required to describe these conditions in order to provide a better picture of the project and how the job evaluation e€ects and is e€ected by the operation of the organisation. 4.1. The speci®c circumstances The main facts that in¯uence the process of the job evaluation are brie¯y presented in the following: · The re-engineering process was oriented to convert the management from a structure that had been used for more than 20 years to a new one commonly used by modern private enterprises. New structures and orientations had been inserted led by two principles: (a) the enforcement of the Performance Management; and (b) activities and products oriented towards the satisfaction of the customers. These resulted in new dynamic-raising diculties since the job evaluation was implemented in a new and untried operational environment. · The organisation used to monopolise the products and services o€ered in Greece for many years. In the next few years the market will move to a new unregulated and high-competence situation due to the European Union guidelines. · At the same time two other signi®cant activities were taking place: (a) the organisation had just entered the Greek stock market; and (b) the expansion of the organisation into foreign neighbouring markets through a considerable large investment programme. · The job evaluation project was the duty of a special committee that was established by the top management. This committee was supported by a group of experts in decision sciences and evaluation systems. The Evaluation Committee consisted of seven executives (managers or deputy managers) of the main operational departments. · Taking into account that it was the ®rst time that an evaluation system was going to be estab-

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lished and used on an integrating basis it is obvious that special handling had to be used in order not to disturb the fragile equilibrium between management and unions. This was strongly recommended because new managerial activities at this level ought to be accepted by the personnel so as the changes would be supported and aided by all the parts. 4.2. The job evaluation model As previously mentioned an example set of 26 managerial positions will be used for the illustration of the methodology. The jobs are referred with the code names p1 ; p2 ; . . . ; p26 . Input and data required were handled and provided by the Administration Department. The available information for this evaluation was the job descriptions which had been recently implemented in the framework of the re-engineering process, the annual reports, the budget programmed to be handled by every position and the documents concerning the strategic plans of the organisation. The criteria used had been divided into three categories (input, process, and output). Fig. 2

381

presents the family of criteria used in this case in a hierarchical structure. Also, in Appendix A an analytical description of every criterion modelling is presented as well as the rules for the evaluation of the jobs on the criteria. The construction of this family of criteria was a joint work of the Evaluation Committee and the Decision Analysts. All the criteria used are qualitative ones. For all the criteria except the criterion ``Required Quali®cations by the job holder'' a scale of ®ve discrete degrees was used. For the criterion ``Required Quali®cations by the jobholder'' the scale includes 16 degrees. The evaluation of the jobs was a laborious work since the required data had to be handled and structured in order to be in a form that would be comprehensible by the Evaluation Committee. After that, a questionnaire was distributed to the members of the Evaluation Committee including a table asking them to evaluate the jobs on the criteria. Following the con¯icting opinions had to be drowning near. This was succeeded by the apposition of facts and information that were veri®ed or disputed opinions and arguments of the Evaluation Committee. In Fig. 3 the evaluation of the jobs on the criteria is presented, derived from the above-mentioned judgmental process.

Fig. 2. The criteria modelling.

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Fig. 3. Criteria±Jobs±Evaluation (MIIDAS scene layout).

The assessment of the additive value model was done using the MIIDAS system through iterative procedures. In the ®rst session an additive value model was constructed, that is to say that a ®rst approach of the value functions and the weights of the criteria was assessed. The construction of the value functions was done using special dialogues based on the frame of the midvalue split point technique (Keeney and Raifa, 1976). Then a reference set of 13 jobs was selected. The selection of the reference jobs was done under the previously mentioned two considerations: (a) the selected jobs were familiar to the members of the Evaluation Committee; and (b) they were representative of the whole set of jobs. The ®rst was assured by the fact that the members of the Evaluation Committee had some connection with the jobs (e.g. holders or associate managers or executives) and the second was assessed by a cluster analysis that determines the similarities among the jobs and is included into the MIIDAS system. The ranking of the jobs of the reference set was done using the social choice function of Cook and Seiford (1978) model. Every member of the committee ranked the jobs of the reference set. A ranking of the jobs was estimated by the minimisation of the summation of the absolute di€erences of the Evaluation CommitteeÕs rankings from the assessed one. For a better exploitation of the evaluation model, the

weights of the criteria were estimated for the ranking coming from the Cook and Seiford model as well as the rankings of every member of the committee. The weights of the criteria were estimated solving the linear programming problem described in Section 3. The exploitation of the ®rst assessed evaluation model resulted in a circle of feedbacks. A number of meetings took place in order to determine the feedbacks coming as a response of

Fig. 4. Value function of the criterion ``Quali®cations''.

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383

Fig. 7. Value function of the criterion ``Multiplicity''.

Fig. 5. Value function of the criterion ``Management''.

Fig. 8. Value function of the criterion ``Responsibility''.

Fig. 6. Value function of the criterion ``Decisions''.

the Evaluation Committee. In every session an evaluation model closer to the ®nal one adopted was assessed. This process was ®nished when a satisfactory model for Evaluation Committee was assessed. The value functions of this model are presented in Figs. 4±9 and the weights of the criteria in Fig. 10. Also, in Fig. 11 the ordinal regression curve of the assessed evaluation model is presented in a form that is produced by the MIIDAS system. The ®nal stage of this process was the use of this model for the ranking of the total set of the

Fig. 9. Value function of the criterion ``Budget''.

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Fig. 10. The estimated weights of the criteria.

Fig. 11. Ordinal regression curve.

jobs (see Fig. 12 where the ®nal ranking of the working positions are presented in a layout of MIIDAS system). Finally the ranking of the whole set of jobs was used for the design of the payroll strategy. A scale with strictly ®ve or six levels was created in a way that jobs that converge to a degree are placed into the same payroll scale level. For example, in Fig. 12 the jobs can be categorised in the fol-

lowing four groups according to their Global Utility: Group

JobÕs global utility

No. of ranked jobs

1st 2nd 3rd 4th

Above 0.65 From 0.50 to 0.65 From 0.40 to 0.50 From 0.30 to 0.40

1±7 8±12 13±20 21

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385

Fig. 12. Extrapolation to the whole set of jobs.

5. Conclusions The job evaluation includes characteristics that can be categorised in this kind of semistructure multicriteria problems. The proposed approach provides satisfactory results the most important of which are as follows: · The evaluation process is an ``open'' procedure where the evaluator has the control of the evaluation model components estimation. · Provides the ¯exibility to combine the di€erent opinions and considerations through interactive iterative procedures. · Operates in a group decision-making environment where the decisions are crucial and in¯uence the equilibrium states since the job evaluation is related to the wages and human resources improvement. Job evaluation and payroll strategies ought to be reviewed regularly since degrees of importance for jobs within an organisation may diversify as a consequence of the jobÕs role modi®cation. This is required in order for the organisation to adapt to the dynamics caused by the new open market and the planned general operational strategy for the coming years. Another signi®cant outcome for the organisation was that know-how was acquired con-

cerning the concept and the use of the multicriteria approaches. This will be useful for the future providing new perspectives to evaluation processes. Also, this research work comprises one of the ®rst stages of a project concerning the business process re-engineering of the organisation.

Appendix A. Criteria modelling A.1. Criterion 1: Required Quali®cations and Skills Three characteristics have been combined for the construction of the criterion Required Quali®cations and Skills. 1. Knowledge ± Formal studies Levels

Points (Grade 1)

Higher (Secondary or technical school) Technological degree University degree Post-graduate studies

1 3 4 5

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2. Skills ± Expertise Levels

Points (Grade 2)

Limited Sucient Signi®cant

1 2 3

3. Required experience Levels

Points (Grade 3)

Scale of 5 yr Scale of 10 yr Scale of 15 yr

1 2 3

The evaluation of a job pi is done using the following formulae: gi …pi † ˆ 2  Grade 1 ‡ Grade 2 ‡ 2  Grade 3: A.2. Criterion 2: Human resources management This criterion combines ``the number of subordinates'', ``Knowledge level of the subordinates'' and ``Degree of communication between the director and the subordinates''. 1. Limited: 0±35 subordinates and frequent communication or 1±100 subordinates and limited communication. 2. Rather limited: 35±70 subordinates and frequent communication or 100±200 subordinates and low communication. 3. Medium: 71±150 subordinates and frequent communication or 200±400 subordinates and least communication. 4. Signi®cant: 150±400 subordinates and frequent communication or 400±700 subordinates and low communication. 5. Extremely signi®cant: 400 subordinates with frequent communication and high quali®cation or 700 subordinates with least communication. A.3. Criterion 3: Contribution to decision making A scale with ®ve degrees is used in this criterion (1: Limited, 2: Medium, 3: Rather high, 4: High, 5: Very high).

Structure of decisions

Participation to committees Seldom

Regular

Continuous and strongly required

Structured Semistructured Unstructured

1 2 3

2 3 4

3 4 5

A.4. Criterion 4: Multiplicity of the projects The evaluation of the jobs on this criterion is based on a cross margin of the characteristics ``Quantity of duties and projects'' and ``di€erentiation of the projects''. A scale consisted of ®ve degrees is used. The evaluation rules are presented in the following table: Quantity of projects

Di€erentiation of projects Limited to small

Signi®cant

Small Medium Large

1 2 3

± 4 5

A.5. Criterion 5: Responsibility 1. Limited: No strategic planning, no crucial actions, narrow geographical area, limited ®nancial results. 2. Medium: Intermediate grade to be chosen by the evaluator. 3. Rather high: Intermediate grade to be chosen by the evaluator. 4. High: Intermediate grade to be chosen by the evaluator. 5. Very high: Strategic role, crucial actions, wide area, wide support of other departments, quite high ®nancial results.

A.6. Criterion 6: Budget handling A qualitative scale with ®ve degrees was also used in this criterion because of the plurality of the

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di€erent economical accounts that were used by the jobs (Expenses, Income, Budget, etc.). The Evaluation Committee supported by the Decision Analysts did the evaluation of the jobs.

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