Market pricing and job evaluation
This factsheet was last updated in February 2014.
What are market pricing and job evaluation?
Market pricing is a system of collecting data on the pay rates for similar jobs in other organisations to establish their market rate or ‘price’ and track movements in those rates. The aim of the process is to help set the organisation’s own pay rates at the appropriate level in order to recruit and retain the staff it needs.
Although the concept of a market rate for a job is fairly common, there is no such thing as an accurate or scientific single rate of pay for a job or role, and rates may vary even for the same occupation and in the same location.
A central decision relates to how the data will be interpreted, and for this organisations need to consider where they wish to position their salary and total remuneration levels in relation to the market, for example at the median or the upper quartile level of pay in the external labour market.
Job evaluation may be defined as ‘a method of determining on a systematic basis the relative importance of a number of different jobs’. It is often deemed a useful process because job titles can be misleading, either unclear or unspecific, and in large organisations it is impossible for those in HR to know each job in detail.
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- What are market pricing and job evaluation?
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