Everything you need to know about the methods and techniques of job evaluation. Job evaluation is a systematic process that determines the relative worth of jobs within an organization.
Various types of jobs are performed by employees in an organization. Some are different in respect of efforts, duties, skill, working conditions and responsibilities to each other and some are similar belonging to same group.
It is, therefore, necessary to establish a mechanism or a process to determine the relative worth of jobs, to develop a rational basis for the design and maintenance of an equitable pay structure, and also of a fringe service pattern in an organization.
This mechanism / process is job evaluation. Job evaluation ascertains the worth or value of job, not the performance of people. The process does not look into the individual abilities or performance of the people at work.
Learn about the non analytical and analytical methods of job evaluation. They are:- 1. Ranking Method 2. Job Classification Method 3. Factor Comparison Method and 4. Point-Rating Method.
Also learn about, the computer-based methods of job evaluation. They are:- 1. Interactive Schemes and 2. Job Analysis-Based Schemes.
Job Evaluation Methods and Techniques: Analytical and Point Methods
Methods of Job Evaluation – Non-Analytical and Analytical Methods
The methods of job evaluation can broadly be classified as:
1. Non-analytical methods, and
2. Analytical methods.
Method # 1. Non-Analytical:
These methods are traditional and simple. They consider all the jobs available, compare them, and then rank them. In complex organisations, they cannot be used. They can be used in such cases where the jobs are distinctly different and not similar.
Non-analytical methods of job evaluation are:
i. Ranking method, and
ii. Job classification method.
i. Ranking Method:
Under this method, the jobs in the organisation are arranged either in the ascending or descending order and numbered serially. The basis of such arrangement could be the job description in terms of duties, responsibilities, qualifications needed, relative difficulty involved in doing the job, or value to the company. The job, which carries the highest value to the company, is paid the most, and vice versa. Similarly, the job that carries critical duties and responsibilities carries a relatively higher worth.
Conceptually, this is easy to understand and implement, particularly for a smaller organisation. However, it fails to indicate the degree of difference between each grade. Subjectivity cannot be ruled out in the process of ranking. In other words, value is placed on the people doing those jobs rather than on the job itself. However, this method cannot be used in larger organisations.
ii. Job Classification Method:
This is also called job-grading method. Here, the number of grades and the salary particulars for each grade are worked out first. The grades are clearly described in terms of knowledge, skill, and so on. Then the jobs in the organisation are allocated to these grades as per the job description and grades identified.
This is relatively simple to understand and easy to carry out. It is totally based on the number of grades and salary particulars for each grade worked out first. It may not be possible to make clear distinctions between jobs. In a complex organisation with a wide variety of specialist roles, it is very difficult to implement this method.
Method # 2. Analytical:
Under these methods, the jobs are broken down into different tasks. Different factors such as – skill, responsibility, education level, and so on, are assessed for each job. The comparison of factor by factor, sometimes, allocating points or monetary sums for each factor is made for meaningful interpretation.
There are two types of analytical methods:
i. Factor comparison method, and
ii. Points rating method.
i. Factor Comparison Method:
Every job requires certain capabilities on the part of the person who does the job.
These capabilities are considered as critical factors, which can be grouped as listed below:
a. Mental requirements (education, alertness, judgment, initiative, creativity, ingenuity, versatility)
b. Skill requirements (use of equipment and materials, dexterity, precision)
c. Physical requirements (strength, endurance)
d. Responsibility (for the safety of others; for equipment, materials, processes; cost of error; extent of supervision exercised)
e. Working conditions (work pressure, accident hazard, and environment).
The factor comparison method consists of six well-defined steps:
(a) Identify the key jobs.
(b) Rank the key job, factor by factor.
(c) Apportion the salary among each factor and rank the key jobs.
(d) Compare factor ranking of each job with its monetary ranking.
(e) Develop a monetary comparison scale.
(f) Evaluate non-key jobs based on the monetary comparison scale.
The principal of a college is paid a higher salary than the lecturer in view of several factors, one of which is higher responsibility. Considering other factors also, weightage (in terms of money) is given to each factor and the total weight and the monetary value is taken. This provides a basis for arranging the jobs in relation to their relative worth.
It provides a better basis for assessing the relative worth of each job when compared to the non-analytical methods. The list of factors is not a standard one. It can be changed as per the specific needs of the organisation. Non-key jobs are evaluated on the basis of monetary comparison scale.
It is difficult to comprehend, and hence, may be difficult to explain to the employees. Periodic adjustment of salary rates may lead to the development of inequities in the organisation’s salary structure. Inequities in salary rates of key jobs will further affect the non-key jobs in terms of their evaluated worth. The list of requirements is very critical. Any lapse in identifying any of the factors or its weightage appropriately may affect very badly the validity of the entire exercise.
ii. Point-Rating Method:
There are four widely accepted factors used in the point-rating method – skill, effort, responsibility, and job conditions. Each of these factors is divided into sub-factors!
(i) Education and job knowledge
(ii) Experience and training
(iii) Initiative and ingenuity
(i) Physical dexterity (skills) Effort
(ii) Physical effort
(iii) Mental and/or visual effort
(i) Tools and equipment
(ii) Materials or products
(iii) Safety of staff
(iv) Others’ work
d. Job Conditions:
(i) Working conditions
(ii) Unavoidable hazards
(iii) Immediate surroundings.
In the above list, skill is a factor and it has four sub-factors. Like this, each of these factors is further subdivided into sub-factors. Depending upon the complexity involved, each sub-factor is assigned a degree and points.
Once a factor is evaluated in accordance with its degree and points, the points attained for each factor are added up to obtain a score for the job. Based on this score, the jobs are ranked from the lowest to the highest or the other way.
If two jobs obtain equal score, that indicates that both jobs are equal in every respect, and hence, should be given equal wages also. The number of jobs may cluster around certain groups of scores. This can simplify the process of allocating wage grades.
It is difficult to develop factors, sub-factors, degrees, and points. Working out a point scale and selecting degrees are not simple jobs. They are complex in nature, and hence, involve a lot of time and skill. Allocation of points among sub-factors may appear to be arbitrary than realistic and scientific.
However, this is more rational because factors, sub-factors, degrees, and points are identified in an objective manner. In other words, it is less subjective. It provides consistent results. It is standardised to such an extent that it offers no scope for manipulations. Salary increases do not affect the basic system of grouping. The system is flexible to cater to the varying requirements of the organisations.
Methods of Job Evaluation – Top 4 Methods of Job Evaluation
Job evaluation forms one of the determinants of compensation. The most important objective of compensation is to ensure that an employee receives sufficient remuneration. Wage equity is generally determined on the basis of the nature of the job, job worth, job risk, job complexity, and the effectiveness of employees in performing their job.
There are a number of job evaluation methods, which are as follows:
Method # 1. Job Ranking:
Refers to the simplest method of job evaluation. The jobs are arranged based on the perceived value and difficulty. These jobs are classified based on the skills, efforts, responsibility, and experience required to perform them efficiently. Based on these requirements, each job is graded and similar wage level is allocated to each group of similar jobs. This method is very successful in small organizations; however, it is not suitable for large organizations.
Method # 2. Classification and Categorization:
Refers to a method wherein jobs are put in categories on the basis of similar features or characteristics. Jobs are categorized based on certain criteria or rule of thumb. Each job is categorized in an appropriate category based on the predefined criteria or after reviewing the job description of the job. Different categories are placed on wage scale based on their worth, value, and importance in the organization. This method is very similar to the ranking job method.
Method # 3. Rating:
Refers to a method through which detailed evaluation of the job is carried out in comparison to the ranking and classification method. Job requirements are identified by qualification, experience, training, mental and physical efforts, nature, and degree of responsibilities. Each aspect is to be reviewed, identified, and quantified. The points to be evaluated include kind of skills, education, and qualification required.
Each point is assigned a value and a range to that value. The process of evaluation involves a combination of various factors, such as points and weightage. This method has various limitations as it takes into consideration only some of the factors, such as skills, physical efforts, responsibilities and working conditions, and attached monetary value to the jobs. This method is more applicable to the jobs that are predominately mechanical in nature.
Method # 4. Job Evaluation as per HAY System:
Refers to the system developed by a global human resource-consulting firm, which was known as the HAY group. The advantage of HAY System is that it considers both job evaluation and market conditions. The HAY system is based on the point rating approach. It helps the organization to work out a wage structure that is realistic and competitive.
Methods of Job Evaluation – With Advantages and Disadvantages: Ranking, Job Classification, Factor Comparison and Point Method
Job evaluation is a systematic process that determines the relative worth of jobs within an organization. Various types of jobs are performed by employees in an organization. Some are different in respect of efforts, duties, skill, working conditions and responsibilities to each other and some are similar belonging to same group or category.
Some jobs are more important, some are less important in organizational activities in relation with other jobs. Most important job holders can obviously expect better pay structure and other fringe services, than the less important job holders.
It is, therefore, necessary to establish a mechanism or a process to determine the relative worth of jobs, to develop a rational basis for the design and maintenance of an equitable pay structure, and also of a fringe service pattern in an organization. This mechanism / process is job evaluation. Job evaluation ascertains the worth or value of job, not the performance of people. The process does not look into the individual abilities or performance of the people at work.
There are many methods used to evaluate jobs.
Out of them, the following four methods are frequently used:
2. Job Classification
3. Factor Comparison
Two of these methods (ranking and classification) are non-quantitative while other two methods (factor comparison and point) are quantitative. But, all these methods need well written elaborate job description for evaluation of the jobs.
Method # 1. Ranking:
This is the most simple method used for determining the relative worth of jobs in an organization. Job evaluation is made through comparison of one job with other job in an organization. The whole job, not the factors or components of the job, is compared. After comparison, ranking order is made from highest to lowest.
Ranking method involves the following activities:
i. Collection of information relating to all jobs within the organization
ii. Obtaining job descriptions data for each job
iii. Selection of rater (generally committee comprising of both management and employee representatives is assigned the job)
iv. Comparison of job (i.e. comparing of one job with other job) in terms of importance or difficulty
v. Ranking of jobs
vi. Pricing of jobs (money values of non-key jobs are determined on the basis of monetary value of key jobs which is known)
i. This method is simple to understand
ii. This is very much effective in case of small organization where number of jobs is less and employees know the importance of each job.
iii. It does not take much time to know the results of evaluation.
iv. This method looks to the entirety of jobs while comparison is made. It, therefore, ensures that all significant areas are taken into consideration.
i. It is difficult to use in big organization where number of jobs that need evaluation are many.
ii. Raters/Committee members may not have thorough knowledge of all jobs of the organization. So, proper evaluation of jobs may not be possible.
iii. It is difficult to compare jobs which have equal value/ worth
iv. The method is subjective as no standard/yardstick is used to justify ranking. Ranking is made on the basis of perception committee members/raters hold a bout the jobs.
v. It does not indicate the distance between jobs ranked.
vi. In case of new jobs ranking method may not be effective.
Job classification method is a non-quantitative method for job evaluation. Under this method different jobs within an organization are ascertained and divided into various grades. The jobs requiring similar effort, knowledge, ability, responsibility are placed in same grade and evaluation is made after ranking of job grades.
Classification method involves the following activities:
i. Listing of jobs operating in organization
ii. Establishing grades with distinct number on the basis of some criteria like responsibility, effort etc.
iii. Preparation of grades / classification description
iv. Ranking each position’s job description against the classification/grade description
v. Placing each job in appropriate classification
vi. Assigning money value to the key grades and other grades subsequently.
i. This method is very easy to understand. So, the evaluators may not need training to carry out job evaluation exercise. Employees also can understand without any difficulty.
ii. It is easy and less expensive to introduce this mechanism for evaluation of jobs in organization.
iii. This method is rational for making evaluation of jobs as grading is made taking into account of the vital factors like responsibilities, efforts, knowledge, skill, ability etc.
iv. It looks to entirety of job, not some aspects of job.
v. It is useful and effective in small organizations as number of jobs are few.
vi. It is very easy to compare pay grade of one organization with that of other organization.
i. It is difficult and time consuming to prepare grade description.
ii. It is subjective especially in the area of selection of number of different categories / grades and also of ranking of key jobs.
iii. Placing of jobs into grades is not an easy task.
iv. Grade descriptions which are inflexible in nature tend to be unconcerned with the situation arising out of organization development and technological advancement.
v. New jobs may not fit any existing grade.
Method # 3. Factor Comparison:
Factor comparison method is a quantitative method used for .evaluation of jobs in an organization. Each job consists of some factors. Under this method, key jobs are decided and all other jobs are compared to such key jobs based on factors that are present in all jobs.
Factor comparison method involves the following activities:
i. Selection of key jobs that are well known to everyone within the organization. Such key jobs that are found within the organization consist of representative characters.
ii. Identification of factors that are present to some degree in all jobs in organization. Generally, factors like mental requirements, physical requirements, skill requirements, working conditions and responsibility are widely used.
iii. Describing / defining of factors so that the evaluators can have thorough knowledge about such factors.
iv. Evaluation of key jobs through ranking on a factor by factor basis. Ranking of key jobs is done
v. Conversion of ranking into money rates. Existing wage rates for key jobs are taken to find out the worth of each factor in each key job.
vi. Evaluation of all other jobs in organization, through comparing each job to the key jobs on a factor by factor basis.
The factors of each job are examined to decide to which factors of key jobs they closely resemble, and money rates of those factors are taken for fixing the worth of such job. Key jobs of an organization are shown as A, B, C, D, E while factors are taken as mental requirements, skill requirements, physical requirements, responsibility and working conditions. The key jobs are ranked on a factor by factor basis and the organization ranks each of such key jobs from top to bottom, for each of the factor.
The worth of each factor which is proportionate to the total wage rate of concerned key job is also shown.
The evaluation of other jobs is made by comparing each such job with the key jobs on factor by factor basis and also looking to such aspect of job that closely resembles to key jobs. After this money rates are determined.
This method has the following advantages:
i. This method is easy to understand. Employees, union members, committee members cannot find difficulties to comprehend modus operandi of the system.
ii. No training is required to implement this system.
iii. This is a justified method of evaluating different jobs in an organization as relative values are determined through comparing of other jobs with key jobs.
iv. Standard jobs / bench mark jobs vary from organization to organization. Looking to different perspectives, organization requires to set key job for its own use. So, emphasis is given on the need and requirement of organization.
v. Since number of factors generally remains in the range of five to eight, possibility of overlapping or not considering any component is remote.
This system has a number of disadvantages.
i. Selection of key jobs is a difficult task that needs expertise, special skill and ability
ii. This is a costly method to construct.
iii. Use of same factors / criteria to assess all jobs in an organization may not be effective in situations when jobs vary within the organization.
iv. Ranking of job factors is made on assumption / subjective assessment.
Method # 4. Point:
The Point method is widely used to evaluate jobs in organizations. It is a quantitative technique of job evaluation. Under this method components / factors of jobs are ascertained and defined, degrees of each factor in jobs are decided, points are assigned for each degree of each factor, corresponding points of each factor are summed, jobs with similar point value are placed in similar pay grade / scale.
The point plan involves the following activities for job evaluation:
i. Identification of key jobs – Benchmark jobs are identified for the purpose of job evaluation
ii. Description of key jobs – Job description is made to let the committee members know that such sorts of work are actually performed.
iii. Selection and description of factors.
Factors that are commonly present in jobs are selected (e.g. skill, responsibility, working conditions, physical activity etc.). Such factors are described to give the overall view / idea to the evaluators, in respect of factors and also the importance / influence of the respective factors for performance of jobs.
i. Ascertainment of number of degrees and description of degrees for each factor – The number of degrees of each factor is ascertained to express exact amount or extent of factor existing in a job. So, total number of degrees varies from factor to factor. Details of degrees are described to make the evaluator easy to place factors in the appropriate degrees. An example of one factor-‘skill’ in respect of clerical employees of a management institute involving five degrees.
ii. Assigning points to factors and degrees – Evaluators examine each job on a factor-by-factor basis and ascertain the degree that job fits into for each factor. Then factors and degrees are weighted or assigned points.
iii. Preparing job evaluation manual – Job evaluation manual is prepared by the evaluation committee members. Such manual, which is also called ‘point manual’, contains factor and degree definitions, point values and job descriptions.
iv. Rating jobs – Evaluators rate jobs with the help of point manual. First, they rate key jobs and after that they rate rest jobs.
Job rating activities include:
a. Determination of degree in respect of factors
b. Finding out respective points assigned to degrees
c. Adding points for all factors to ascertain total point value for each job.
This method has the following advantages:
i. Point method is systematic and rationale to evaluate jobs in an organization
ii. There is less or no chance for subjective judgement in evaluating jobs, as the factors and degrees are elaborately explained.
iii. It does not require much expertise to use this method in organization for evaluating jobs.
iv. This method gives accurate evaluation as points for factors / degrees are decided before job evaluation is made.
v. This method is acceptable to the employees and trade union members because it is difficult to manipulate evaluation.
vi. Since, emphasis is given on ‘point’ factor not ‘money’ factor, this evaluation technique is unbiased and not influenced by any factor.
vii. Each individual organization can use this method through selection of appropriate number of factors and degrees.
viii. Rating scale prepared under point method for evaluation of jobs in an organization can be used for a long period.
ix. Evaluation can be made for large number of jobs under this method.
This method is not free from its limitation.
It has following disadvantages:
i. Use of this method is much costly as, it needs substantial amount of money to conduct job evaluation exercise.
ii. This method is very much time consuming. Selection of factors, determination of degrees and points, evaluation of jobs and completion of whole process need a lot of time.
iii. It needs expertise to decide factors, degrees, point values.
iv. Since, this point system is complex, employees, trade union leaders, supervisors find it difficult to understand the method.
v. It is difficult to change / modify any factor, degree or point value after a point plan is established.
Methods of Job Evaluation – Two Main Categories: Non-Analytical and Analytical Methods
The methods of job evaluation tend to fall into one of the two main categories and are referred to as either non-analytical or analytical.
Each has two sub-divisions:
(i) Job Ranking Method
(ii) Job Classification Method
(i) Weighted Point Assessment Method
(ii) Factor Comparison Method
The basic difference between the two is that the non-analytical methods, whilst establishing a grading hierarchy, are non- quantitative and the analytical methods are quantitative and are expressed in some numerical form.
(i) Ranking Method:
Ranking, the original method, is a direct system of comparing jobs together so that they are ranked in order of their importance, starting with the least important in the first rank and moving to the most important in the last. Jobs are not divided factor by factor, but are considered whole entities.
This appears to be a simple method, but its application calls for a high degree of personal knowledge on the part of the evaluator of the jobs under review, especially when judging and comparing a job that requires considerable skill against another where the responsibility is high.
The evaluator simply compares each job against the others by deciding whether it is:
1. Less demanding
3. More demanding.
Having compared jobs ‘vertically’, the evaluator will then, if more than one distinct area is under review, look at the situation horizontally in order to equate jobs of equal worth across the whole area. Thus, it is possible to draw up a complete schedule which will show the relative position of all the jobs. Job of the same ranking are allocated the same grade and a grading structure emerges. The final phase is the attachment of monetary values to the various grade levels.
The ranking of jobs is reliable when it is done systematically. To begin with, a benchmark job or a key job should be selected which may be compared. A comparison may be made by asking the question- Is this job more important than the benchmark job, or less important?
The jobs are then placed in rank order above or below the key job according to the answer. When the number of jobs is large, the jobs may have to be grouped into job families, for e.g. accounts, engineering, administrative, etc. and key jobs for each family may have to be ascertained before ranking jobs in order of their importance. When the number of jobs is large, an organisation-wise ranking will not be simple.
Ranking is the simplest and oldest method of determining the economic value of a job. It can be executed quickly with a minimum expenditure of time, energy and resources. The jobs, under this system, are compared as ‘wholes’, they are not broken down into their component elements. The system is thus non- analytical and non-quantitative. It only produces the rank order of jobs. The most important job comes on the top and the least important one on the bottom.
Monetary values are assigned to each job after ranking. Although this does not form a part of job evaluation which is concerned with determining only the relative worth of each job, it is a useful device for the managers. Key jobs with known monetary value become the cornerstone for determining the monetary value of other jobs. The demand and supply position of personnel with different qualifications may, however, upset such calculations. Market conditions, an organisation’s paying capacity, the existing salary structure, and past conventions may be other limiting factors in this regard.
The ranking system is marked by simplicity and easiness. But it is of a very limited use when the number of jobs is large as it fails to provide a satisfactory yardstick for comparison. The existing position of a job in the hierarchy of jobs and the rater’s personal judgement are important factors which affect ranking more than the objective criteria like mental, physical and other requirements of a job.
(ii) Classification Method:
As in job ranking, the classification method does not call for a detailed or quantitative analysis of individual parts of the job, but is based on the job as a whole. It differs from the job ranking method in that, before any evaluation of a job takes place, the number of grading levels and the criteria for determining the type of work or responsibility to meet those levels are defined.
It is usual in job classification to select one or two jobs from each of the levels in the grading structure and prepare descriptions of the duties, responsibilities and requirements necessary to fulfil them to an acceptable level of performance. These jobs are known as benchmarks or key jobs and indicate the type of work and level of responsibilities at each grade in the structure. Having selected the benchmark or key jobs, the other jobs in the area under review are compared against them to indicate their grade.
This method is basically a ranking operation as it ends in classifying jobs into various, grades in the organisation. More important jobs are put into higher salary grades and jobs with lower ranking are assigned lower scales. This method has been a forte of the government organisations. Officials positions are ranked into grades I, II, III, etc., and different pay scales are provided for each grade.
The grades are selected on the basis of varying levels of duties and responsibilities. The nature of work is combined with the salary range to show that there is a direct relationship between the rating of the importance of the job and the salary paid.
The classification method helps in manpower budgeting. The manpower costs can be accurately computed and can be broken down to their respective levels. The future cost may be predicted with a degree of accuracy and career planning may be done for the existing employees according to projected assumptions about organisational structure and establishment. This system also helps in developing a uniform wage structure in an industry or a region as comparison becomes easy and a basis for negotiation between the employers and employees is prepared.
The classification system has some limitations. It enables subjective grading and rating of jobs by total content, which may create distrust among employees. The existing grades and past conventions also seriously affect the process of fixing new grades. The system thus suffers from inflexibility which may be harmful for jobs which change in their nature and have contents like scientific advances, discoveries, etc. When compared to ranking, classification is certainly more advanced, but when it is compared to quantitative techniques like the point method, its utility is challenged.
2. Analytical Methods:
(i) Weighted Points Assessment:
This is the most commonly used system. It is an analytical technique. It involves breaking down the job into several compensable factors, giving each job a numerical score on each of these factors and summing these scores to obtain the value of the job. The same factors are used for each job. It is similar to the classification method in that a scale is set up against which jobs are measured. The difference between the two methods is that while a scale is developed for jobs in the case of the classification method, a scale for each compensable factor is developed in the points assessment method.
In this method, a carefully worded rating scale is constructed for each compensable method. This rating scale includes definition of each compensable factor, several divisions (called degrees) of each factor carefully outlined, and a point score for each such degree. These rating scales may be thought of as a set of rulers to be used to measure jobs.
The so-called rulers must be constructed from words and the so-called measurements are still judgements. The same points assessment plan is not normally used to cover the entire range of jobs in an organisation, but the common practice is to have separate plans for manual, clerical and managerial jobs. This is because the different nature of work in these jobs calls for assessment by different factors and for giving different emphasis to them.
An early and very widely used points scheme was devised by Kress (1939) for the National Electrical Manufacturers Association in the USA in which he studied jobs under eleven characteristics, grouped under the generic headings of ‘skill’, ‘effort’, ‘responsibility’ and ‘job condition’.
Each generic group consisted of a number of specific sub-factors:
(iii) Initiative and ingenuity
(i) Physical demand
(ii) Mental and/or visual demand
(i) For equipment or process
(ii) For materials or product
(iii) For safety of others
(iv) For work of others
d. Job Conditions:
(i) Working conditions
Each characteristic was divided into five degrees and weighted according to its considered importance vis-a-vis other factors in the scheme.
The British Institute of Management has suggested the following factor complex:
a. Acquired Skill and Knowledge:
(i) Training and previous experience
(ii) Central responsibility
(iii) Complexity of process
(iv) Dexterity and motor accuracy
b. Responsibilities and Mutual Requirements:
(i) Responsibility for material or equipment
(ii) Effect on other operations
(iii) Attention needed to orders
(iv) Alertness to details
c. Physical Requirements:
(i) Abnormal position
(ii) Abnormal effort
d. Conditions of Work:
Usually, the weightages in the point system are assigned in arithmetic progression. In some organisations geometric progression is used for assigning weightages. But this may produce arbitrary and probably unwanted loadings in the higher degree range.
(ii) Factor Comparison Method:
In this, jobs are examined using a predetermined monetary scale for each factor, and the total of the factor values so determined for each job represents its evaluated cash rate. Its significance lies in the fact that once the factors have been identified, the jobs are evaluated in cash terms rather than using a numerical points scale. The method embodies the principles of ‘point rating’ with the principles of ranking.
The initial stages are basically the same as in the points assessment method, and as a first step, job factors are selected. However, in points assessment method, sub-factors are not used.
Key jobs are then selected and job description prepared. It is, however, important that the key jobs should be considered to be adequately paid in relation to the local labour market.
The key jobs are then ranked under each of the factors. The next step is to decide the current rate for each job to be paid for each factor. A schedule can be built using this matrix.
Comparisons are then made between the ranking and the agreed factor rate. This serves as a useful check on the suitability of key jobs originally selected. It is recommended that a ranking/ factor rate schedule be drawn up at this stage.
The final stage is to prepare a factor comparison schedule, which shows the piece rate value of all the key jobs under each of the factor headings. Using this as a matrix, other jobs can be compared against the key jobs under each factor heading, and a factor value assessed. The sum total of these factor values represents the cash rate of the job in question.
The factor comparison scheme described above is specific to shop-floor levels, but a number of adaptations have been used for managerial levels. This system is also known as the job comparison system. Eugene Buys originated this system in 1941.
He divided jobs into five compensable factors, viz.:
1. Mental requirements
2. Skill requirements
3. Physical requirements
4. Responsibility and
5. Working conditions
Steps in Factor Comparison:
(1) A few key jobs that represent a cross-section of all the jobs to be evaluated are selected by an expert belonging to a committee representing the management and the employees.
(2) Key jobs are ranked according to five basic factors, one factor at a time, in order of their relative importance. The ranking is first arranged numerically.
(3) The average salary is established after ranking all key jobs, and money value for each job is divided among the five factors according to their relative importance to the key job.
(4) The rankings are pooled in a reference master table after monthly salaries have been assigned to the key jobs.
The weakness of the system lies in assigning monetary values to the factors on the basis of prevailing rates as standards. Inequities then creep into the factor comparison method.
Methods of Job Evaluation – Ranking, Grading, Factor and Point Rating Method
A committee consisting of the foremen or the supervisor, the representative of the personnel department and the representative of the employees is generally formed for Job Evaluation.
Any of the following methods may be followed:
(1) Ranking or Job-to-Job Comparison Method:
This method is suitable for small organisations, though it is the oldest method of job evaluation. Under this method, a job is entirely compared with all other jobs but no details of the comparison are recorded; only the final conclusion is written. This method can be successful if the rater is fully conversant with various jobs.
The rater may put the highest and the lowest job at the top and at the bottom, respectively, and then other jobs in between the two. Though simple, it lacks scientific precision and objectivity. It cannot specify why one job is rated superior to another. But it may tell the rating of different jobs.
(2) Grading or Job Classification Method:
For salaried jobs in Government and other services, this method is suitable. In this method, grades or classifications are determined beforehand, broadly taking into account the skill, responsibility, training and the like involved and then the functions corresponding to these grades are defined.
Thereafter, the description for each job is prepared and matched with that of a particular grade already decided upon. On the basis of grades, various scales of remuneration are fixed and thus pay differentials on a prevailing rate basis are made possible. In case a new job is added, it would be put up in the grade with a group to which an established minimum and maximum pay rate applies.
It is a qualitative method of rating the jobs and does not try to quantify the various factors of a job. A candidate is selected for appointment against a particular grade as we find in case of Government officers divided into class I, class II and class III, the clerical staff graded as lower division and upper division.
(3) Factor Comparison Method:
Under this method, comparison among different jobs is made factor by factor and not in its entirety as we find in case of ranking method. This is a quantitative method. All jobs are arranged in order of their possession of certain characteristics such as skill, effort, responsibility and working conditions. Each factor is assigned points which are totalled in the end to find out the ranking of the job. These points may then be converted into money scale. This is a method usually applied in a few basic and key jobs.
Flippo has outlined the steps in this method as – (i) Select job factor (ii) Select key jobs (iii) Determine correct rates of key jobs (iv) Rank key jobs under each factor (v) Allocate the correct rate of each key job among the job factors (vi) Evaluate all other jobs in terms of these factor yard-sticks, and (vii) Design, adjust and operate the wage structure.
The difficulty in this method may be with regard to the weighing of the several factors equitably. The weighing may not be quite justifiable. As a matter of fact, to put it into practice is a difficult task.
(4) Point Rating Method:
Under this method, evaluation is done on the basis of points. It is a quantitative method and is based on the assumption that “it is possible to assign points to the respective factors considered pertinent in evaluating the individual jobs and that the sum of these points will give an index of the relative significance of the jobs being rated”.
Whereas the ranking and grading methods measure jobs as wholesale activities, this method assesses the element that job is worth. Jobs are broken into four major factors – skill, responsibility, effort and working conditions. Workers are paid in return for the use of these factors. Each of these factors may be subdivided into a number of minor factors such as education, experience etc. Each factor or sub-factor is classified in degrees or levels.
Each of the factors is assigned points already determined for the purpose. More weights are given for the factor which are more important; for instance 20 points may be assigned to leadership while 10 points for responsibility of machinery and equipment. In this connection, some analysts assign exact point value to each degree, while others provide a range. As a matter of fact, mathematical precision is not possible in quantifying the value of each factor. So, the range-principle appears to be better.
To establish the degree of skill complexity between jobs by using one of the four methods and then to translate those data into a pay structure with grades and rates of pay is the objective of a job evaluation study. This involves the problems of pricing. In the ranking method, a rate of pay has to be found for each job.
In the point method, the total points for each job are added and jobs compared. A distribution of job scores is the first step and the jobs are classified into several grades. Only a few grades are desirable from the administrative point of view.
Job evaluation enabling comparison of scores helps management to ascertain the efficacy of the existing pay/wage structure; the rational pay system may be formulated on the basis of the job evaluation studies. Generally, a job evaluation committee performs this task with members from trade unions.
Method of Job Evaluation – Non-Analytical, Analytical and Computer-Based Methods
The methods of job evaluation discussed below:
1. Non-Analytical Methods:
Non-analytical or non-quantitative job evaluation schemes, includes comparison of jobs with each other without attempting to break down and analyse jobs under their various demands or components.
Various methods are as under:
(i) Job Classification or Grading System:
In this system, the work is done on two levels first, a number of predetermined grades or classifications are established by a committee thereafter the various jobs are assigned within each grade or class. Grade descriptions are the result of die basic job information that is usually derived from a job analysis.
After formulating and studying job description and job specifications, jobs are grouped into classes or grades which represent different pay levels ranging from low to high. At this stage certain job may then be grouped together into a common grade or classification. General grade description are mentioned for each job classification, finally these are used as a standard to assign all the other jobs to a particular pay scale.
(ii) Ranking System:
Under this system, all jobs are arranged in as per their importance from the simplest to the hardest ones or vice-versa thus each successive job is higher or lower than the previous one in the sequence. It is not necessary to have detailed description of job although they may be useful. Sometimes, a series of grades or zones are set accordingly and all the jobs in the organisation are arranged into these.
2. Analytical Methods:
This method is also known as quantitative method. Under this jobs are broken-down into components or factors and scores for each component of the job are awarded with a final total giving an overall rank order.
Various methods are as under:
(i) Point Ranking Method:
This method includes identifying a number of compensable factors (i.e., various characteristics of jobs) and thereafter determining degree to which each of these factors is present in the job. A different number of points are usually assigned for each degree of each factor.
Once the degree to each factor is determined, the corresponding number of points of each factor is added and an overall point value is obtained. The sum of these points gives us an index of the relative significance of the jobs that are rated.
(ii) Factor Comparison Method:
Evaluation of jobs is made by means of standard yardsticks of value in this method. It entails deciding which jobs have more of certain compensable factors than others.
Here, the analyst or the evaluation committee selects some ‘key’ or ‘benchmark’ jobs these are the jobs for which there are clearly understood job descriptions and counterparts in other organisations, and for which the pay rates are such as are agreed upon and are acceptable to both management and labour.
3. Computer-Based Methods:
Computerising of job evaluation is considered as a recent trend.
The computer-assisted systems are of two types as under:
(i) Interactive Schemes:
The jobholder and his or her manager while using computer, presented with a series of logically interrelated questions forming a question tree; the answers to these questions lead to a score for each of the built-in factors in turn and a total score.
(ii) Job Analysis-Based Schemes:
Under this method, job analysis data is either entered direct into the computer or transferred to it from a paper questionnaire. The computer software applies predetermined rules based on an algorithm, the algorithm reflects die organisation’s evaluation standards to convert die data into scores for each factor and produce a total score. The algorithm replicates panel judgments both on job factor levels and overall job score.
Method of Job Evaluation – 4 Main Methods (With Comparison)
The four major methods of job evaluation are listed below:
1. Job ranking
2. Job classification
3. Factor comparison
4. Point method
Method # 1. Job Ranking:
Job ranking is the simplest method. You have to rank from highest to lowest in order of their values or merit to the organization. Jobs are often arranged according to the relative difficulty in performing them. Jobs are examined as a whole rather than on the basis of important factors contained by the job.
The evaluator just rank orders the jobs on the basis of his/her perception. This method can be easily adopted in small organizations, but gets more and more difficult as different jobs exist within the company.
Method # 2. Job Classification:
The general purpose of a job classification method is to create and maintain pay grades for comparable work across the organization. This method uses job classes for more customized evaluation. This method also uses scales to measure performance rather than simply comparing and ranking employee performances.
For job classification, you are required to write descriptions for different categories of jobs, after which you need to develop standards for each job category by describing the key characteristics of those jobs in the category and then finally consider similarities among tasks and contributions of the jobs to the organization’s overall goals and match the jobs to the categories.
Government and non-government organizations, universities and institutes, and other large organizations typically use job classification systems. These types of organizations have many types of jobs at diverse locations and must maintain equitable and fair standards across all work settings.
The advantage of job classification method is that it is very simple once you have established your categories. You can assign new jobs and jobs with changing responsibilities within the existing systems. The disadvantages are that job classification method is subjective, so jobs might fall into several categories.
Decisions rely on judgment of the job evaluator. Job evaluators must evaluate jobs carefully because similar titles might be described as different jobs on different work sites.
Method # 3. Factor Comparison:
Factor comparison method is more scientific and complex than the qualitative methods of ranking and classification. The factor comparison method of job evaluation assumes that there are five universal factors consisting of mental requirements, skills, physical requirements, responsibilities, and working condition. The evaluator makes decisions based on these factors independently.
The five universal factors are discussed in brief:
(a) Mental requirements- This reflects mental traits such as inquisitiveness, intelligence, reasoning, imagination, and innovation.
(b) Skills- It pertains to facility in muscular coordination and training in the interpretation of sensory impressions.
(c) Physical requirements- The requirements involve sitting, standing, walking, lifting, and so on.
(d) Responsibilities- It covers the areas of collecting input materials, arranging funds, generating, maintaining, retrieving, analysing records for decision making, and leading and supervising.
(e) Working condition- It highlights environmental factors such as noise, suffocation, illumination, smell, ventilation, hazards, and length of working hours.
After classifying the factors, the evaluators create a monetary scale, containing each of the five universal factors. Thereafter, the evaluator ranks the jobs according to the value for each factor. The factor comparison method determines the absolute value of the job. Then, jobs can be ranked like most other job evaluation methods.
Method # 4. Point:
A rater using this method first identifies specific job factors such as knowledge and skills required to perform the job. Thereafter, he/she assigns numerical values to each factor. The algebraic sum of the points provides a quantitative assessment of a job’s relative worth.
The point method measures performance through scales and job factors rather than focusing on the entire job functions and ranking employees against each other. The point method is usually seen as the most reliable and valid job evaluation method by employees compared to more subjective methods like the job ranking method. This is the most commonly used method.
The key elements of each job are referred to as ‘factors’ which are identified by the organization and then broken down into components. Each factor is assessed separately and points are allocated according to the level needed for the job. The more demanding the job, the higher is the ‘points’ value’. Factors usually assessed include knowledge and skills, people management, communication and networking, freedom to act, decision-making, working environment, impact and influence, and financial responsibility.
Anderson (1997) studied all the ‘pluses’ and ‘minuses’ of the various methods of job evaluation and uncovered and advocated that the ranking method was simpler for smaller jobs, cheaper, and easy to explain. On the other hand, Anderson (1997) stated that the result of ranking method could be superficial having possibility of perpetuation.
The classification method might suffer from the subjectivity of evaluators or raters and job overlaps. The factor comparison methods, though not complex, could discriminate between the jobs in a better way.
The point rating system, although expensive and having difficulty in weightage fixing, was identified as scientific, logical, and objective.
While comparing two jobs, certain points are allotted to them.
CIPD suggests allotting the following:
i. Two points if it is considered to be of higher value
ii. One point if it is regarded as equal worth
iii. No point if it is less important