Methods of Job Evaluation

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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
  each
• Job Ranking Method
• Job Classification Method
• Point Method
• Factor Comparison Method

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Job Evaluation Methods
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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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Classification Method

• Advantages
• Uses job families/groups instead of individual
  jobs
• May produce same results as Point Method, but is
  less costly

• Disadvantages
• Not useful when jobs are very different from each
  other
• May be confusing to employees about why jobs are
  included in a class

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Factor Comparison Method

• Advantages
• Customized to the organization
• Relatively easy to use once its set up
• Results in ranking of jobs and a specific dollar
  value for each job, based on allocating part of
  the jobs total wage to each factor

• Disadvantages
• Using dollar values may bias evaluators by
  assigning more money to a factor than a job is
  worth
• Hard to set up
• Not easily explained to employees
• Every time wage rates change, the schedule
  becomes obsolete

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Point Method

• Advantages
• 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

• 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 scale that reflects differing quantity or
  quality of the factor
• It is used to differentiate jobs on the factor
• It is a definition that is clear and unambiguous
• It contains explicit language that spells out the
  behaviors, skills, 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

• 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 of degrees selected should be no more than
  are needed to differentiate adequately and fairly
  between all the jobs being rated.
• Each degree should be clearly defined in terms
  the workers can understand.
• Avoid the use of ambiguous terms, e.g., strong
  skills, excellent.
• Definitions of degrees should be written in
  objective terms.
• In writing degree definitions, use examples as
  much as possible.

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How Do You Assign Point Values to the Entire
System?

• The maximum number of points assigned is a fairly
  arbitrary judgment (500-3000 is common)
• The number must be large enough to allow
  sufficient differentiation among the jobs to be
  evaluated. 
• If there is a very wide spread between the
  current wages of the highest paid job and the
  lowest paid job, the maximum number of points
  will need to be higher
• If you choose more than one pay system, the
  number of points or the actual factors themselves
  do not have to be the same in each one.
• SUGGESTION FOR YOUR PROJECT Have no fewer than
  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 a factor
  weighted at 10). Then use
• The straight-line method, which simply takes the
  maximum points for a given factor and divides it
  by the number of degrees. Note this method
  assumes that the degrees should be viewed as
  equidistant from each other

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How Do You Assign Point Values to the Degree
Levels?

• Or the accelerating method, where differences in
  degrees are seen as greater as you move up in
  that factor, and so the point differences reflect
  that jump, e.g., 27, 80, 160, 267, 400
• Or the decelerating method, where differences in
  degrees are seen as smaller as you move up in
  that factor, and so the point differences reflect
  it, e.g., 133, 240, 320, 373, 400
• Rememberthe highest level of a factor is always
  assigned the full number of points allocated to
  that factor, 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 and Weights you
  generated for them