What are the 5 most important job evaluation methods?

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Job Evaluation Methods
Non-analytical Job Evaluation Methods
Analytical Job Evaluation Methods
Point Method
Factor Comparison
Classification
Point factor comparison
Factor comparison
Job ranking
Job classification
A typical job evaluation project includes these common steps:

Definition: The Job Evaluation is the process of assessing the relative worth of the jobs in an organization. The jobs are evaluated on the basis of its content and the complexity involved in its operations and thus, positioned according to its importance.

The purpose of the job evaluation is to have a satisfactory wage differential.

Job Evaluation Methods

There are non-analytical and analytical job evaluation methods that are employed by the organizations to realize the worth of a set of jobs.

Non-analytical Job Evaluation Methods

Ranking Method: This is the simplest and an inexpensive job evaluation method, wherein the jobs are ranked from he highest to the lowest on the basis of their importance in the organization. In this method, the overall job is compared with the other set of jobs and then is given a rank on the basis of its content and complexity in performing it.
Here the job is not broken into the factors, an overall analysis of the job is done. The main advantage of the ranking method is, it is very easy to understand and is least expensive. But however it is not free from the limitations, it is subjective in nature due to which employees may feel offended, and also, it may not be fruitful in the case of big organizations.
Job Grading Method: Also known as Job-Classification Method. Under this method the job grades or classes are predetermined and then each job is assigned to these and is evaluated accordingly.
For Example Class, I, comprise of the managerial level people under which sub-classification is done on the basis of the job roles such as office manager, department managers, departmental supervisor, etc.

The advantage of this method is that it is less subjective as compared to the raking method and is acceptable to the employees. And also, the entire job is compared against the other jobs and is not broken into factors. The major limitation of this method is that the jobs may differ with respect to their content and the complexity and by placing all under one category the results may be overestimated or underestimated.

Analytical Job Evaluation Methods

Factor-Comparison Method: Under this method, the job is evaluated, and the ranks are given on the basis of a series of factors Viz. Mental effort, physical effort, skills required supervisory responsibilities, working conditions, and other relevant factors. These factors are assumed to be constant for each set of jobs. Thus, each job is compared against each other on this basis and is ranked accordingly.The advantage of this method is that it is consistent and less subjective, thus appreciable by all. But however it is the most complex and an expensive method.
Point-Ranking Method: Under this method, each job’s key factor is identified and then the subfactors are determined. These sub-factors are then assigned the points by its importance.
For example, the key factor to perform a job is skills, and then it can be further classified into sub-factors such as training required, communication skills, social skills, persuasion skills, etc.

The point ranking method is less subjective and is an error free as the rater sees the job from all the perspectives. But however it is a complex method and is time-consuming since the points and wage scale has to be decided for each factor and the sub factors.

The important thing to note is, the job evaluation is considered only with the analysis of a job and not with the job holders.

A job evaluation involves the use of a systematic process to determine the importance, monetary worth and complexity of jobs in an organization relative to one another. An effective job evaluation system can help determine the best rate of pay for a position and develop a broad job description that easily adapts to the company’s needs as they change over time. Popular techniques used in job evaluations include ranking, point method, factor comparison and classification.

Ranking

The simplest and most common technique for job evaluation employs a system whereby human resources associates or consultants rank jobs in an organization based on a single factor, such as difficulty or education required to effectively perform the job. They then base compensation on ranking order with the highest ranked position earning the highest pay. This least expensive method of job evaluation works well for smaller businesses with tight budgets. Although this method can prove effective, its analytical system does not reach deep enough to determine other things associated with job evaluation, such as the value of the job to the individual organization or experiential competencies necessary to properly perform the job.

Point Method

A more complex job evaluation technique, the point method, requires evaluators to assign points to a number of compensation characteristics based on skill level, responsibility, effort required and working conditions. They then assess the level to which each of these are present in the job and assign points accordingly. The jobs with the highest points garner the highest pay with this popular technique.

Factor Comparison

Factor comparison, a sophisticated, yet time-consuming method, utilizes the techniques found in several job evaluation schemes. The first step in factor comparison involves assessing each job based on characteristics used in the point method, but without assigning points. Next, evaluators analyze their findings against the market rate of pay for the compensation factors ranked in the first step. Finally, they establish external benchmark jobs that they use to compare to the job and its compensable characteristics to determine rate of pay.

Classification

The classification method requires that evaluators categorize jobs into groups with relatively the same value to a business. The groups are commonly called grades. Evaluators categorize the grades with similar compensation characteristics together. The characteristics may include level of responsibility required, competencies required and physical exertion necessary to perform the job. Those evaluating the positions may choose to include other characteristics, such as education or security clearance levels required.

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Another challenging topic for HR leaders to grasp and understand in preparation for their HR certification exams including the PHR, aPHR, SPHR, SHRM-CP, and SHRM-SCP is different kinds of job evaluation methods.

Job evaluation is a systematic and objective process used by companies to compare jobs within their organization to assess the relative value or worth of each job. This is unrelated to performance reviews, as the goal is to evaluate the job itself, not the person who is performing the job.

Job evaluation typically occurs early in the process of creating a compensation system for an organization. The goal is to make a comparison between jobs to assess their relative worth for the purpose of establishing a logical pay structure. It may be compared to or used in conjunction with market pricing, which uses the labor market to set the value of jobs. An effective job evaluation system determines the best rate of pay for a position and develops a broad job description that adapts to a company’s needs as they change over time. There are a number of ways to approach job evaluation, but there are four primary methods that all HR professionals should know.

The four primary methods of job evaluations used to set compensation levels are point factor, factor comparison, job ranking, and job classification. The first two are quantitative and the latter two are non-quantitative. The difference between the two is: In quantitative methods, the key factors of a job are selected and then measured. In non-quantitative methods, a job is compared as a whole with other jobs in the organization.

Point factor comparison

This approach breaks down jobs into compensable factors identified during a job analysis. Points are assigned to the factors, and a pay structure is established for the position. The jobs with the highest points garner the highest pay. By comparing the jobs, the rank order of importance of each can be established.

Factor comparison

The factor comparison method represents a combination of ranking and points factor methods. Jobs with similar responsibilities within the organization are identified to set benchmarks. Identifiable factors for the benchmark jobs are ranked during factor analysis and then are compared to market rates in order to assign a monetary value to each compensable factor. The advantage of this method is that it is consistent and less subjective, however, it is also the most complex and expensive method.

Job ranking

This is the simplest method and is best used for smaller organizations with a manageable number of specific job titles. Job ranking places jobs in a hierarchy of their value to the company, creating a ranking of jobs within the point factor system. The jobs are typically ranked based on a single factor, such as difficulty or education required to effectively perform the job. The top of the hierarchy is considered the most important level; the person who sits at the top has the most authority. As you go down in the ranking method, duties become less specialized and jobs considered less valuable or expendable. Salaries are typically generated in order of job importance to the company and compensation is then based on ranking order with the highest-ranked position earning the highest pay.

Job classification

This is a grading system. In the job classification method, descriptions of each class of jobs are created and assigned a grade based on the job’s skill and complexity that best matches the class description. The characteristics may include the level of responsibility required, competencies required, and physical exertion necessary to perform the job and, as such, positions may fall within more than one grade level. This method relies on job titles and duties, assuming they are similar among organizations, and job titles are often associated with numerical values, such as HR Specialist 1 and HR Specialist 2 or appending titles with “class 1,” “class 2,” and so on.

A typical job evaluation project includes these common steps:

1. Specify the project’s parameters, and gain approvals and support from senior management.

2. Select an appropriate evaluation method or system.

3. Collect job data consistent with the method or system. This step includes specifying trustworthy data collection techniques.

4. Analyze data, document job content and evaluate jobs.

5. Use points to develop job worth hierarchy, and group jobs into grades based on appropriate breaks, or take another fair, understandable, defensible and practical approach.

6. Allocate jobs to the existing pay structure, or develop a new one.

7. Document system development, and establish operating procedures, including policies for reconsidering decisions or a formal appeals procedure.

8. Gain final approvals.

9. Implement and administer system.

SOURCE: SHRM

Understanding job evaluation is critical for your HR certification exams as there will likely be 2-3 questions asked on these topics come exam day. What tactics or strategies are my using to remember the different job evaluation methods? Leave us a note in the comments below.

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