Job Evaluation by Factor Comparison
Job evaluation by factor comparison
1. Overview of factor comparison:
Under this method, instead of ranking complete jobs, each job is ranked according to a series of factors.
These factors include mental effort, physical effort, skill needed, supervisory responsibility, working conditions and other relevant factors (for instance, know-how, problem solving abilities, accountability, etc.).
Pay will be assigned in this method by comparing the weights of the factors required for each job, i.e., the present wages paid for key jobs may be divided among the factors weighed by importance (the most important factor, for instance, mental effort, receives the highest weight).
2. Advantages of factor comparison:
• Relatively easy to use once it’s set up.
• Customized to the organization.
• Results in ranking of jobs and a specific dollar value for each job, based on allocating part of the job’s total wage to each factor.
3. Disadvantages of factor comparison:
• Hard to set up.
• Not easily explained to employees.
• Using dollar values may bias evaluators by assigning more money to a factor than a job is worth.
• Every time wage rates change, the schedule becomes obsolete.
4. Process of factor comparison:
• Select key jobs (say 15 to 20), representing wage/salary levels across the organization. The selected jobs must represent as many departments as possible.
• Find the factors in terms of which the jobs are evaluated (such as skill, mental effort, responsibility, physical effort, working conditions, etc.).
• Rank the selected jobs under each factor (by each and every member of the job evaluation committee) independently.
• Assign money value to each factor and determine the wage rates for each key job.
• The wage rate for a job is apportioned along the identified factors.
• All other jobs are compared with the list of key jobs and wage rates are determined.
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Job Evaluation by Point Method
Job evaluation by point method
1. Overview of point method
A set of compensable factors are identified as determining the worth of jobs.
The point method is an extension of the factor comparison method.
Each factor is then divided into levels or degrees which are then assigned points. Each job is rated using the job evaluation instrument. The points for each factor are summed to form a total point score for the job.
Jobs are then grouped by total point scores and assigned to wage/salary grades so that similarly rated jobs would be placed in the same wage/salary grade.
2. Factors of point system:
Skill
• Experience
• Education
• Ability
Responsibilities
• Fiscal
• Supervisory
Effort
• Mental
• Physical
Working Conditions
• Location
• Hazards
• Extremes in Environment
3. Advantages of point method
• Highly stable over time
• Perceived as valid by users and employees
• Likely to be reliable among committee that assesses the jobs
• Provides good data to prepare a response to an appeal
4. Disadvantages of point method
• Time, money, and effort required to set up
• Relies heavily on key (benchmark) jobs, so if key jobs and correct pay rates don’t exist, the point method may not be valid.
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Categories: Compensation and Benefits, Job Evaluation Tags: Point Method
Job Evaluation
Job Evaluation
1. Definition of job evaluation
A process aimed at determining relative differences between jobs within an organization by measuring the size or weight of jobs
Job evaluation is the process of determining how much a job should be paid, balancing two goals
• Internal Equity: Paying different jobs differently, based on what the job entails
• External Competitiveness: Paying satisfactory performers what the market is paying
2. Purpose of job evaluation
Common purposes of job evaluation include:
a. Employment
• Identify “families” of occupations,
• Evaluate “fit” between candidates and job requirements, and
• Develop career paths.
• Identify skills and competencies needed for successful performance,
b. Pay administration
• Define key responsibilities and skills to aid in conducting salary surveys, and
• Assign jobs to a grade structure.
• Develop a grade structure and pay ranges,
c. Internal equity
• Determine whether different jobs have comparable requirements and responsibilities, and
• Ensure compliance with the Equal Pay
3. Factors affecting the job values
a. Market rates
It can be said that a job is worth what the market says it is worth. Retaining people will be very difficult if their rates of pay are not kept in line with those prevailing in the local and national labor markets.
b. Negotiated pay scales
The negotiated rates will be influenced by the market rates, the relative strength of the employers and the unions, the economic situation, legislation, and government anti-inflationary pay regulations.
c. Internal relativities and equity
They should aim to achieve equity in the sense that individuals should feel that their rewards are in balance both with their own output in the shape of effort, skill and contribution, and with the rewards received by others in relation to their output.
4. Methods of job evaluation
Market pricing using going market rates as the primary determinant of a job’s worth and pay.
Ranking ordering jobs based on their relative value to the organization.
Classification method. Jobs are classified into an existing grade/category structure or hierarchy. Each level in the grade/category structure has a description and associated job titles.
Factor Comparison is a set of compensable factors are identified as determining the worth of jobs.
Point Method is the points rating scheme is based on an analysis of separately defined characteristics or factors which are assumed to be common to all the jobs
The Hay system assesses each job by examining three main elements of job content which are common to all jobs to one extent or another: Know How, Problem Solving, Accountability.
Categories: Compensation and Benefits, Job Evaluation Tags: Job evaluation