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Methods of Job Evaluation

The Compensation Handbook

Chapter 6

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In this session.

Well look at the four major methods used

in job evaluation and the

advantages/disadvantages of eachJob Ranking Method

Job Classification Method

Point MethodFactor Comparison Method

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Job Evaluation Methods

Comparison Method Analysis Method

Entire Job Job Factors

Job Against Scale

Job Against Job

Classification Point Method

RankingFactorComparison

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Ranking Method

Advantages

Simple

Alternation method ranks

highest then lowest,

then next highest, then

next lowest

Paired comparisons

method picks highest out of

each pair

Fast

Most commonly used

Disadvantages

Comparisons can be

problematic depending on

number and complexity of

jobs

May appear arbitrary to

employees

Can be legally challenged

Unreliable

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Factor Comparison Method

Advantages

Customized to theorganization

Relatively easy to useonce its set up

Results in ranking of jobsand a specific dollar value

for each job, based onallocating part of the jobstotal wage to each factor

Disadvantages

Using dollar values maybias evaluators by

assigning more money to afactor than a job is worth

Hard to set up

Not easily explained to

employees Every time wage rates

change, the schedulebecomes obsolete

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Point Method

Advantages

Highly stable over time

Perceived as valid byusers and employees

Likely to be reliable

among committee that

assesses the jobs

Provides good data to

prepare a response to an

appeal

Disadvantages

Time, money, and effort

required to set up

Relies heavily on key

(benchmark) jobs, so if

key jobs and correct pay

rates dont exist, the point

method may not be valid

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Factor Degrees and Point Systems

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What is a Degree Level?

It is a scalethat reflects differing quantity or

quality of the factor

It is used to differentiate jobson the factor

It is a definition that is clear and

unambiguous

It contains explicit language that spel ls out thebehaviors, ski l ls, or performance expectations

for that factor at different levels of the factor

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How Do You Develop Degrees?from Otis and Leukarts (1948) Rules

1. Degrees should be selected so that each job falls at only one level.

Note: you can include some degrees that do not apply to the current

jobs if you feel there is too much of a jump between levels. Another

reason to create "empty" levels is if you think new jobs will be

created that will require that level in the factor. The number ofdegrees selected should be no more than are needed to differentiate

adequately and fairly between all the jobs being rated.

2. Each degree should be clearly defined in terms the workers can

understand.

3. Avoid the use of ambiguous terms, e.g., strong skills, excellent.4. Definitions of degrees should be written in objective terms.

5. In writing degree definitions, use examples as much as possible.

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How Do You Assign Point

Values to the Entire System?1. The maximum number of points assigned is a fairly

arbitrary judgment (500-3000 is common)2. The number must be large enough to allow sufficient

differentiation among the jobs to be evaluated.3. If there is a very wide spread between the current wages of

the highest paid job and the lowest paid job, the maximumnumber of points will need to be higher

4. If you choose more than one pay system, the number of

points or the actual factors themselves do not have to be thesame in each one.

5. SUGGESTION FOR YOUR PROJECT: Have no fewerthan 1000 points and no more than 2000.

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How Do You Assign Point

Values to the Degree Levels? First, determine the number of points for

each main factor(e.g., 2000 total points for

the system would result in 200 points for afactor weighted at 10%). Then use

The straight-line method, which simply takesthe maximum points for a given factor and

divides it by the number of degrees. Note: thismethod assumes that the degrees should beviewed as equidistant from each other

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Position: Engineering Manager

Grade: 7

MAXIMUM

FACTOR

POINTS FACTOR JE Points

DEGREE

LEVEL

FACTOR

WEIGHTS

250 Communication & Interpersonal Skills 250 4 10%

250 Education & Training 250 5 10%

500 Problem Solving & Decision Making 400 4 20%500 Responsibility & Accountability 500 4 20%

250 Specialized Knowledge & Application 200 4 10%

250 Supervision & Leadership 250 4 10%

125 Internal Impact 125 3 5%

125 External Impact 75 1 5%

125 Planning & Organizing 125 4 5%125 Innovation 90 2 5%

2500 2265 100%

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How Do You Assign Point

Values to the Degree Levels? Orthe accelerating method, where differences in

degrees are seen as greater as you move up in thatfactor, and so the point differences reflect that jump,

e.g., 27, 80, 160, 267, 400 Orthe decelerating method,where differences in

degrees are seen as smaller as you move up in thatfactor, and so the point differences reflect it, e.g., 133,240, 320, 373, 400

Rememberthe highest level of a factor is alwaysassigned the full number of points allocated to thatfactor, and the lowest level of a factor has to have some

points assigned to it, i.e., 0 points is not permitted!

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Whats Next?

In the next class session, well practice

evaluating the ten jobs using the Point

Method Bring with you to class (10) copies of the

Job Evaluation Form on our website, and

the ten Job Analyses with the Factors andWeights you generated for them