Report: External market pay and internal job evaluation: is a hybrid approach emerging?

This report article considers the UK approach to base pay setting, which straddles two main methods – job evaluation and market pay levels. Composed by the Institute for Employment Studies head of HR consultancy Duncan Brown, and E-reward’s managing partner Michael Armstrong, it contrasts the UK approach to that of the United States.

Key findings:

• The article cites a range of studies that consider the use of job evaluation. Although there are many approaches to job evaluation, the authors raise the question of what the purpose of these evaluations is: is it about internal relativity or external competitiveness?
• An excessive internal focus can create difficulties in recruitment and retention. Yet an extreme market pricing emphasis risks the importation of gender bias.
• The article suggests that a policy of tailored ‘best fit’ is preferable to copying ‘best practice’ in determining an employer’s base pay management approach.
• Base pay management processes should be simple and flexible to allow organisations to respond to internal and external challenges.

The article was originally published in the journal Compensation & Benefits Review.