Job evaluation seeks to rank all the jobs in the organization and place them in a hierarchy that will reflect the relative worth of each.
There are four widely used job evaluation methods.
- Ranking System.
- Job Classification or Grading Method.
- Points Rating System.
- Factor Comparison System.
These methods are discussed in the next section.
1. Ranking System
The ranking method is one of the simplest methods of job evaluation.
Under this system, the job raters simply rank one job against another without assigning point values.
Jobs within the organization are arranged in some order from the most difficult to the simplest or in the reversed order. It does not measure the value of jobs but establishes their ranks only.
When this method is employed, the job rater simply compares two jobs, one against another and asks which of the two is more difficult.
Once that question has been settled, another job is compared against the first two and a similar determination is made. This process is repeated until all jobs have been assigned relative positions. Jobs are usually ranked in each department and then the department rankings are combined to develop an organizational ranking.
No attempts are made to break down the jobs by specific weighted criteria. The ranking method of job evaluation is generally used in small firms where all jobs are well -known. It is useful as a first and basic step of job evaluation.
The main drawback of this system is that it can tell only that one job is more difficult than another without indicating how much difficult it is. This method provides no yardstick for measuring the relative worth of one job against another.
Job requirements, job specifications, and employee specifications are not considered in the evaluation.
Another drawback is subjectivity, as there are no definite or consistent standards by which to justify the rankings and the fact that because jobs are only ranked in terms of the order, we have no knowledge of the distance between the ranks. It is neither comprehensive nor systematic technique.
2. Job Classification or Grading Method
Job grading or job classification is slightly more sophisticated than job ranking, but still not very precise. It begins with an overall classification of all jobs on the basis of common sense, skill, responsibilities, and experience. The job structure is divided into a number of classes.
A committee will do it.
For each class, a general description is written indicating the nature of work and responsibility that are included.
Each job in the organization is put into a class or grade according to the class description it matches best. Each class or grade is assigned a salary range with maximum and minimum limits.
Thus, according to this system, the clerks may be put into one class, supervisors in a higher class and higher executives on the top class.
This method is relatively simple to operate and to understand.
- It does not take a great deal of time and does not require technical help.
- It provides an opportunity for a systematic organizational structure.
- It is more elaborate than the ranking method.
- It takes into account all the factors that a job comprises.
- In spite of the above-mentioned merits, this method suffers from the following limitations:
- It sometimes seems to be arbitrary, though it takes the views of representatives of trade unions.
- Writing grade or class descriptions is not easy in this method.
3. Points Rating System
The point method is more sophisticated than the ranking and classification methods. This method is analytical in the sense that it breaks down jobs into various compensable factors and places weights or points on them.
A compensable factor is one used to identify a job value that is commonly present throughout a group of jobs. This method is quantitative as each of the compensable factors is assigned a numerical value.
It is based on the assumption that it is possible to assign points to the different factors as well as to each degree of each factor involved in jobs and that the sum-total of the points will give an index of the relative value of jobs.
The factors are determined from the job analysis. This system requires six steps and is usually implemented by a job evaluation committee or an individual analyst.
- Determine critical factors.
- Determine the levels of factors.
- Allocate points to sub-factors.
- Allocate points to level.
- Develop the point manually.
- Apply the point system.
Step 1: Determine critical factors.
The critical factors are skill effort, responsibility, experience, working condition, and these factors are broken down into sub-factors.
For example, Figure I shows that the factor of responsibility can be broken down into the safety of others, equipment, and materials, assisting trainee and product quality.
Step 2: Determine the levels of factors.
Since the amount of responsibility or other factors may vary from job to job, the point system creates several levels associated with each factor. There may be four levels namely, minimum, low, moderate and high.
Step 3: Allocate points to sub-factors.
The job evaluation committee subjectively assigns the maximum possible points to each sub-factor. For example, if safety (100) is twice as important as assisting trainees (50), it gets as many points.
Step 4: Allocate points to level.
Once the maximum total points for each job element are assigned under level IV, analysts allocate points across each row to reflect the importance of the different levels.
Step 5: Develop the point manually.
Analysts then develop a point manual that contains a written explanation of each job element. It also defines what is expected for the four levels of each sub-factor.
Step 6: Apply the point system.
When the point matrix and manual are ready, the relative value of each job can be determined. The points for each sub-factor are added to find the total number of points for the job. After the total points for each job are known, the jobs are ranked.
Advantages of Point Rating Method
The points rating system has many advantages over ranking and classification systems. These are listed below:
- It is relatively simple to use.
- It considers the components of a job rather than the total job and is much more comprehensive than either ranking or classification method.
- The use of fixed and predetermined factors forces the raters to consider the same job elements when rating jobs.
- It forces the raters to consider individual factors rather than the jobs as a whole.
- The assignment of point values indicates not only which job is worth more than another, but how much more it is worth.
- It uses the job-by-job comparison technique, which is a far more accurate method of measurement.
- .The weights selected are not arbitrary but reflected existing wage and salary practice.
- Point values are assigned to all factors in a systematic way, eliminating bias at every stage.
- The methodology underlying the approach contributes to a minimum of rating error (Robbins, 2005). It accounts for differences in wage rates for various jobs on the strength of job factors. Jobs may change over time, but the rating scales established under the point method remain unaffected.
The point rating system is not without limitations. The listing of factors may omit some elements that are important in certain jobs. It is obvious that arbitrary weights are attached to various degrees and to the factors by specifying maximum and minimum limits.
The difficulty of this method is that it is costly and somewhat difficult to operate compared to conventional non-quantitative techniques. This technique does not consider all the sub-factors as the operation of the system would be difficult if it considers all the factors. The point method is complex.
Preparing a manual for various jobs, fixing values for key and sub-factors, establishing wage rates for different grades, etc. is a time-consuming process.
4. Factor Comparison System
Thomas E. Hitten was the first to originate factor comparison method of job evaluation. This method determines the relative rank of the jobs is evaluated in relation to the monetary scale.
It is often used in evaluating, the managing administrative and white-collared jobs. It is essentially a combination of the ranking and point systems.
Steps of Factor Comparison System
It is a sophisticated and quantitative ranking method. This method is analytical as jobs are broken into sub-factors and components.
Werther, B.W and Davis, K (1998) point out that the factor comparison method involves the following steps:
Preparing clear-cut job descriptions and job specifications.
Job specifications are developed in terms of the compensable factors the committee decides to use.
Selecting a number of keys- jobs in the organization as standards.
Key jobs are jobs that are commonly found throughout the organization and in the labor market. Common jobs are selected because it is easier to discover the market rate for them. Usually, the committee selects ten to fifteen key jobs.
Identifying the critical factors of key jobs.
These factors are the job elements common to all the jobs being evaluated. The factors are mental requirements, skill requirements, physical requirements, responsibility, and working conditions. For example, mental requirements include mental traits, intelligence, memory, reasoning, imagination, general education, specialized knowledge, etc.
Ranking the key jobs on the criteria by a committee.
The sub-factors of each key job must be given relative ranks, based on their individual contribution to the total job. This ranking procedure is based on job descriptions and job specifications. Each committee member usually makes this ranking individually and then a meeting is held to develop a consensus on each job.
Valuing the factors of each key job.
The committee members have to divide up the present wage now being paid for each key job, distributing it among the five compensable factors.
This step is also called factor evaluation. The committee agrees upon the base rate, (usually expressed on an hourly basis) for each of the key jobs and then allocates this base rate among the five criteria.
To illustrate, in one organization the job of maintenance electrician was chosen as a key job and had an hourly rate of Dollar 1300.00. The committee then allocated Dollar 350 to mental effort, Dollar 450 for skill, Dollar 100 for physical effort, Dollar 250 to responsibility and 150 for working conditions.
These amounts then became the standards by which other jobs in the organization could be evaluated. That is, all other jobs with similar responsibilities were assigned Dollar 250 for that criterion.
Ranking key jobs, according to wages assigned to each factor. For example, for the mental requirements factor, the welder job ranks first, while the security guard job ranks last.
The committee appraises all other jobs and assigns a value on each factor by comparing them with key jobs. Once the worth of a job in terms of total points is expressed, the points are converted into money values keeping in view the hourly/daily wage rates.
A wage survey is usually undertaken to collect wage rates of certain key jobs in the organization. Let’s explain this. Market pricing is the process for determining the external value of jobs, allowing the manager to establish wage and salary structures and pay rates that are market sensitive.
Advantages of Factor Comparison Method
The factor comparison method permits a more systematic comparison of jobs than the non-analytical methods.
- It is a systematic and quantifiable method for which detailed step by step instructions are available.
- The system results in more accurate job evaluation because weights are not selected arbitrarily.
- It is flexible as it has no upper limit on the rating that a job may receive on a factor.
- The reliability and validity of the system are greater than the same statistical measures obtained from group standardized job analysis plans.
- The procedure of rating new jobs by comparing with other standards or key job is logical and not too difficult to accomplish.
- It utilizes a few factors and thereby reduces the likelihood of overlapping.
- It is a scheme that incorporates money value and determines wage rates automatically.
Disadvantages of Factor Comparison Method
Lawler (1991) identified the demerits of the factor comparison method of job evaluation. The main demerits are discussed below:
- This method is comparatively complicated to apply and it is difficult to explain to the workers.
- It is costly to install, and somewhat difficult to operate for anyone who is not acquainted with the general nature of job-evaluation techniques.
- The use of the present wages of the key jobs may initially create errors in the plan. The contents and the value of these jobs may change over a period of time and they will lead to future errors.
- It goes against the common belief that the procedure of evaluating jobs and fixing their wages should be kept separate.
- The use of the five factors is the growth of the technique developed by its organizations. And using the same five factors for all organizations and for all jobs in an organization may not always be appropriate.
- It is a very expensive method/system of job evaluation because experts have to be appointed particularly in selecting weights which are based on actual analysis.