Job evaluation is a process of determining the relative worth of various jobs in an organization. It involves ranking different jobs on the basis of various compensable factors and then assigning a pay grade to that job.
In short, job evaluation process helps in determining price for a job relative to other jobs in the organization.
Jobs are evaluated on the basis of various techniques. These techniques are grouped into two classes, viz., quantitative and non-quantitative techniques.
Non-quantitative techniques include ranking (simple ranking and paired comparison ranking) and job classification and grading method. Quantitative techniques include points rating and factor comparison method.
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The methods of job evaluation are categorised into:-
A. Non-Quantitative Techniques – 1. Ranking Method and 2. Job Classification and Grading Methods
B. Quantitative Techniques – 1. Points Rating Method 2. The Point Factor or Factor Comparison Method.
What are the Methods of Job Evaluation – Ranking Method, Grading Method, Points Rating Method and Point Factor Method
Methods of Job Evaluation – Non-Quantitative Techniques and Quantitative Techniques
Jobs are evaluated on the basis of various techniques. These techniques are grouped into two classes, viz., quantitative and non-quantitative techniques. Non-quantitative techniques include ranking (simple ranking and paired comparison ranking) and job classification and grading method. Quantitative techniques include points rating and factor comparison method.
1. Non-Quantitative Techniques:
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Conventionally, non-quantitative — simple and crude techniques are developed. They are ranking and job classification methods.
(a) Simple Ranking:
This is the simplest and administratively the most easy technique. The evaluator compares one job with other jobs based on duties, responsibilities and demands made by the jobs on the job incumbent and the degree of importance of the job to the organisation and ranks all the jobs from the most important to the least important. The evaluator has to appraise and rank the jobs but not the job incumbents.
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(b) Ranking the Key Jobs:
Ranking all the jobs at a stretch under simple ranking method is difficult. The evaluator, in order to minimise this problem has to identify the key or representative jobs at the first stage, rank the key jobs at the second stage, identify and rank all other jobs at the third stage.
(c) Paired Comparison:
Another problem of ranking method is that each job cannot be compared with all other jobs for the purpose of ranking. The method of paired comparison can be adopted to minimise this problem. Under this paired comparison ranking method the evaluator ranks each job in turn against all other jobs to be appraised, so that a series of paired rankings is produced. This method is more comprehensive, logical and reliable compared to the simple ranking method.
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(d) Single Factor Ranking Method:
Another problem in ranking method is difficulty of operation of the method is ranking has to be done on the basis of a number of factors. In view of this, Goldenberg has suggested a single factor ranking scheme. The single factor considered is the discretionary contents present in each job related to other jobs. The single most important task to be performed in a job is identified and compared with the single most important task to be performed in other jobs. Thus, pure ranking does not cover these refinements.
The jobs are to be priced after they are ranked. In other words, ‘money value should be assigned to each job. Key jobs with known monetary values will be used as the basis to determine the money value of other jobs. Generally there is agreement about the rates of key jobs.
Advantages and Disadvantages of Signal Factor Ranking Method:
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Advantages:
i. Simplest, quickest and least costly
ii. Most appropriate in small organisations
iii. Appropriate for managers in large organisations, and
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iv. Useful as a first and basic step.
Disadvantages:
i. Does not provide yardstick for measuring relative worth of a job
ii. Job specification and job requirements are not considered in evaluation
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iii. Does not indicate the extent to which job is worthy than the other, and
iv. Not comprehensive and systematic.
(ii) Job Classification and Grading Methods:
Class and grade are used differently in this method. A grade is a group of different jobs of similar difficulty or requiring similar knowledge and skill to perform. A class is a subdivision of a given occupation. For example, Assistant Accountant, Accountant, Senior Accountant and Chief Accountant are the jobs in the occupation of Accountant.
The jobs within a class have fairly similar tasks to be performed whilst the Jobs within a grade may be different as far as tasks are concerned. However, classes and grades are designed for the similar jobs and thus receive similar pay. For example, a grade may consist of jobs like Financial Accountants, Cost Accountants and Management Accountants and a class may consist of Assistant Financial Accountant, Financial Accountant, Senior Financial Accountant and Chief Financial Accountant.
Under this method, jobs at different levels in the organisational hierarchy are divided into various grades with a clear cut definition of each grade. Grades are formulated on the basis of nature of tasks, requirements of skill, knowledge, responsibilities and authority of various jobs. There are several steps in the mechanism of this method.
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The important among them are:
(i) Determine the shape and size of organisational structure, i.e., tall or flat organisation, geographical or functional organisation etc.
(ii) Preparation of job descriptions.
(iii) Preparation of grade descriptions based on various components.
(iv) Establishment of a number of job grades and division of the organisation into various grades like Grade-I, Grade-II . . . Grade-VI.
(v) Discussion and negotiation with trade union representatives regarding the number of grades, grade descriptions, getting their consent, finalising the number of grades and grade description and recording them
(vi) Selection of key jobs and grading them.
(vii) Grading the entire jobs.
(viii) Classifying the jobs of each grade.
(ix) Assigning the money value to the key grades first and then to all other grades. Exhibit 14.2 depicts the advantages and disadvantages of job classification and grading methods.
Advantages and Disadvantages of Job Classification and Grading Methods:
Advantages:
i. Simple and easy to understand and operate
ii. Provides an opportunity for a systematic organisation structure
iii. Pay grades are appropriate for comparison with those of other organisations, and
iv. More elaborate.
Disadvantages:
i. Seems to be arbitrary
ii. Difficult to write grade descriptions, and
iii. Fails to establish relationships.
2. Quantitative Techniques:
There are two methods under conventional quantitative techniques, viz., points rating and factor comparison system.
I. Points Rating Method:
This method was introduced by Merrill R. Lott. This was one of the earliest approaches for evaluating jobs based on quantitative values. This method is analytical in the sense that jobs are broken into components for purposes of comparison. This method is quantitative as each component of the job is assigned a numerical value.
Thus, characteristics or factors considered to have a bearing on all jobs in the programme like skill, knowledge, responsibility, working conditions etc., are selected under this method. Each factor is divided into degrees or levels and point value is assigned to each level.’ The total of point values assigned to each factor gives the total point values for each job which can be compared.
This method of job evaluation should be developed systematically and applied methodically in order to avoid the anomalies.
The important steps in the process of developing this technique are:
(i) Constituting a representative committee of members from various departments for job evaluation.
(ii) Selecting a sample of jobs and preparing job descriptions, job specifications and employee specifications.
(iii) Selecting and defining those factors which are related to all jobs and are considered to be most critical in determining the relative degrees of difficulty and responsibility between jobs. Eight to twelve factors are most desirable. The following factors may be considered for this purpose.
(a) Skill- Education, training, judgment, analysis, mental complexity, mental dexterity, adaptability etc.
(b) Effort- Physical demand, visual effort, concentration, mental effort, alertness etc.
(c) Responsibility- For preventing monetary loss, machines, materials, safety, policy etc.
(d) Job conditions-Working conditions, hazards etc.
(iv) Determining the weight of each factor according to its relative importance and assigning the percentage value to each factor. The total percentage of all factors is 100.
(v) Defining each factor, specifying the scope and elements of each factor.
(vi) Dividing each factor into levels and defining each level.
(vii) Determining relative value of each level within factors. Factors can be divided into point values by arithmetic or geometric progression. The following example gives a clear idea.
(viii) Testing the mechanism- Get the total points with the help of above mentioned method for a few sample jobs and compare them with the results obtained through other methods. Proceed further, if the system produces acceptable results.
(ix) Appraise all the jobs and arrive at a composite numerical value for each job.
(x) Price the points in order to arrive at the wage level and establish a wage structure with the help of organisational hierarchy of jobs and salary policy.
There are no hard and fast rules regarding factors, sub-factors assigning the weightages, deciding upon degrees and values.
This system is only a preliminary step in arriving at an equitable pay structure. There are no scientific techniques to guide in respect of assigning money value to the points. But, various factors like influence of trade unions, pay structure in comparable industries, financial position of the company, living cost affect the pay level. However, points system will help in arriving an equitable pay structure.
The important task in this context is conversion of point scores into monetary values by assigning a standard unit of money to each point. Money value of various scores can be attained by plotting a graph with point’s ratings on the X-axis and money values on the Y-axis. There are certain alternatives regarding plotting money on the Y-axis. Important one is showing current salary rates on Y-axis against the score of the job concerned on X-axis. Trend line through a scatter of points is seen in Figure 14.4.
In case, point score is divided among various grades of jobs in an organisation, the pay level can be related to the grades (Fig. 14.5). The minimum and maximum pay of each grade are shown in the figures. The pay scales of various jobs will be fixed within the minimum and maximum limits of the pay.
This method is superior to other methods discussed so far as this is analytical as well as quantitative. The advantages of this method are presented in Exhibit 14.4.
Advantages and Disadvantages of Points Rating Method:
Advantages:
i. Almost same pay scale can be arrived at for the same jobs as agreement among rates on the same is very close
ii. Definitions are written in applicable terms to the jobs
iii. Point score/monetary values can’t be manipulated very easily
iv. Assignment of point score/money value is consistent and accurate
v. Score once assigned is long standing, and
vi. Wage differentials are systematic and according to the content of the job.
Disadvantages:
i. It is difficult to determine factor levels and assign point values
ii. Difficult to explain the mechanism and operation of the method, and
iii. Operation involves heavy expenditure, time and clerical work.
II. The Point Factor or Factor Comparison Method:
This method is based both on the principles of points rating and principle of ranking. This method is analytical as jobs are broken into sub-factors and components. Under this method, first the components sub-factors are ranked under various factor headings. The next step is assigning the monetary values to the components or sub-factors of each job. Thus, each job is ranked a number of times (i.e., number of compensable components or sub-factors).
The mechanism or modus operandi of this method involves the following steps:
i. Developing job descriptions, job specifications or job requirements covering physical requirements, mental requirements, skill requirements, training and experience, responsibility and authority, working conditions etc.
ii. Selecting a number of key jobs: This step is more critical and useful from the point of final evaluation as the other jobs are assigned monetary values based on the fixed wage rates arrived for the key jobs on the basis of negotiations. A key job must be clearly divisible into sub-factors and components. This step also involves dividing the job into sub-factors and components.
(iii) The third step is ranking of key jobs: The sub-factors of each key job must be given relative ranks based on their individual contribution to the total job.
Comparative picture of the ranking of these two jobs is shown in matrix of factor rankings (Exhibit 14.5).
(iv) The fourth step involves valuing the sub-factors of each of the key jobs. This step is also known as factor evaluation. Money worth of each sub-factor of the key jobs is ascertained in order to know the total money value (or salary) of each of the key jobs. The Exhibit shows factor evaluation or monetary value (per day) of each of the key jobs.
(v) The fifth step is integrating the monetary value of sub-factors arrived through factor evaluation with those of ranking of factors. It is to find out whether the difference among factors as per the ranking and factor evaluation is one and the same or not. Cross checking is provided through where the money value of each sub-factor is given in brackets.
(vi) The sixth step is comparing all the jobs (factor by factor) of the same grade or level with the related key job and establishing monetary value to the sub-factors of various jobs based on the monetary value of sub-factors or key jobs. There are certain advantages to this technique over others.
Advantage and Disadvantages of Points Rating Method:
Advantages:
i. Analytical and quantitative
ii. Combination of ranking and factor comparison methods
iii. Modus operandi is relatively easy to understand
iv. It can be explained easily to all concerned
v. More reliable and of value, and
vi. Assigns money value fairly.
Disadvantages:
i. It is costly to operate
ii. Relatively difficult to operate
iii. Factor evaluation is not very objective, and
iv. Does not consider all sub-factors.
Methods of Job Evaluation – With Merits and Demerits
There are four basic technique of job evaluation, which are grouped into 2 categories.
They are:
1. Non-Quantitative Technique:
(a) Ranking or job comparison.
(b) Grading or job classification.
2. Quantitative Technique:
(a) Point rating.
(b) Factor comparison.
The basic difference between non-quantitative and quantitative method is that:
(a) In non-quantitative method, job as a whole is considered.
(b) Judging and comparing jobs with each other.
(c) In quantitative method ‘compensable factor’ are considered i.e., Key factors or critical factors.
(d) There is an assignment of numerical scores on a rating scale and then key factors are measured.
Technique # 1. The Ranking System:
The ranking method is the simplest method of job evaluation, where each job as a whole is compared with; other i.e., “the whole job” is compared rather than compensable factors. All jobs are ranked in the order of their importance from highest to lowest, or in the reverse order, each successive job being higher or lower than the previous one in the sequence.
This method involves the following steps:
(a) Preparation of job description, which is studied, analyzed and ranked.
(b) Selection of rater or committee of rater is done.
(c) Identification of key jobs or benchmark is done and rated on the basis of its importance.
(d) Ranking of all jobs in the organization around the benchmark jobs, until all jobs are placed in their rank order importance.
(e) Finally, job classification is done based on the rating where the total ranked job is classified into appropriate group by considering the common features of jobs. All the jobs within a single group or classification receive the same range of wages.
(a) This method is simple, easily understood, easily explainable and flexible.
(b) It is suitable for small organizations with clearly defined jobs.
(c) It is less time consuming.
(d) It is economical and requires little effort for maintenance.
Demerits:
(a) There is no standard of judgment of one job with another job and hence associated with errors.
(b) Improper analysis of competencies from rater’s point of view.
(c) This method fails to indicate the degree to which one job is better than the other. It only produces a job order and tells us that one job is higher or lower than the other.
(d) It is a failure when large numbers of jobs are to be analyzed.
Technique # 2. Job Classification or Grading Method:
Under this method, a number of predetermined grades or classifications are first established by a committee and then the various jobs are assigned within each grade or class. A job grade is defined as a group of different jobs of similar features, requiring similar skills to perform them.
Grade descriptions are the result of the information derived from a job analysis, which includes responsibilities, skills, knowledge, experience, etc. Once the grades are established, each job is placed in its appropriate grade or class depending upon its similarities. Finally, wage/salary rate is fixed for each grade, because of difference in duties, skills and knowledge.
This method involves the following steps:
(i) Preparation of job description.
(ii) Preparation of grade description.
(iii) Selection of grades for key jobs.
(iv) Grading the key jobs.
(v) Classification of all jobs.
(i) This method is simple, easy to understand and less time consuming.
(ii) It takes into account the entire factor that a job comprises.
(iii) The grouping of jobs into classification makes pay determination problems administratively easier to handle.
(i) It is difficult to write a grade description especially where large number of jobs is involved.
(ii) The system is a failure in large organizations.
(iii) The judgment may produce an incorrect classification because of lack of detailed analysis of job.
Technique # 3. Point System:
This method is widely used, where jobs are expressed in terms of Key of factors or compensable factors and points are assigned to each factor on the basis of priority. The sum of these points gives us an index of the relative significance of the jobs that are rated.
The steps involved are:
(i) Select key jobs and cluster the jobs on the basis of similar skills, efforts, responsibility etc.
(ii) Divide each major factor into a number of sub-factors. Each sub-factor is defined and expressed in the order of preference along a scale.
(iii) Each factor is assigning a point value which is summed up to find the maximum number of points assigned to each job. This helps to find the relative worth of a job.
(iv) Once the worth of a job in terms of total points is expressed, the money value is assigned to points.
(i) It is the most widely used method of job evaluation.
(ii) Job can be easily placed in distinct categories.
(iii) For various factors of job are rated by points which make it possible for one to be accurate in assigning money value to total job points.
(iv) This method is associated with minimum rating errors because rater using similar criteria would get more or less similar answers.
(v) It is more systematic, reliable and objective than other methods of job evaluation.
Demerits:
(i) This method is very costly complex and time consuming.
(ii) It is difficult to determine the factor levels within factors and assign values to them. Preparing of manual is a difficult process.
Technique # 4. The Factor Comparison Method:
The factor method is based on the analysis of jobs in terms of separately defined factors, component that are compensable to the organization.
The steps involved are:
(a) Determine the appropriate factors to measure. Factors could include education, training, experience, customer relation, responsibilities and decision making authority.
(b) Weight the factors, when designing the system, each of these factors would be assigned a different weight based on the relative importance of each factor.
(c) Calculate the whole score for each job. Once the factors in weights are established, the whole score is calculated for each job. The total points assigned to a job factor determine the job’s relative value and location in the pay structure.
(i) This method is more defensible and objection measure of job, worth due to numerical valuation.
(ii) It is easy to communicate and be understood.
(iii) The value of the job is expressed in monetary terms which make the method effective.
(iv) It can be applied to a wide range of jobs.
Demerits:
(i) It is time consuming process due to consistent detail required.
(ii) The method is more expensive to maintain and update.
Methods of Job Evaluation – 4 Important Techniques: Ranking, Grading, Point System and Factor Comparison System Techniques
There are four techniques of job evaluation:
1. The Ranking Technique:
Under this technique, all jobs are arranged or ranked in the order of their importance from the simplest to the hardest or on the reverse order, each successive job being higher or lower than the previous one in the sequence.
Generally the following four steps are involved in this system:
i. Preparation of job description.
ii. Selection of rates and key-jobs.
iii. Ranking of all jobs.
iv. Preparation of job classification.
From the Rating:
The ranking system of job evaluation usually measures each job in terms of relative importance of the following five factors:
i. Supervision and leadership of subordinates.
ii. Co-operation with associate outside the line of authority.
iii. Probability consequences of errors (in terms of waste damage etc.)
iv. Minimum experience requirement
v. Minimum education required.
Merits:
i. The system is simple and easily understood.
ii. It is less expensive and required less efforts for maintenance.
iii. It requires less time.
Demerits:
i. There is no standard for an analysis of the job position, different basis of comparison.
ii. Specific job requirement (such as skill efforts responsibility) are not normally analysed separately.
iii. The technique merely produces job order and does not indicate to what extent it is more important than the one below it. It only gives us its rank or tells us that it is higher or more difficult than another but it does not indicate how much higher or more difficult.
2. Grading or Job Classification System:
Under this technique a number of pre-determined grades classification are first established by a committee and then the various jobs are assigned with each grade or class. Grade descriptions are the result of the basic job information which is usually derived from the job analysis. After formulation and studying job description and job specification, jobs are grouped into classes or grades Mechanism.
The following five steps are generally involved:
i. The preparation of job description which gives us basic job information usually derived from job analysis.
ii. The preparation of trade description, different levels or grades of job may be identified.
iii. Selection of grades and key jobs. About 10-20 jobs are selected which include all the major departments and functions.
iv. Grading the key jobs.
v. Classification of all jobs.
Jobs are classified by grade definitions. All the jobs in the same grade receive the same wage.
Merits:
i. It is simple to operate and simple to understand.
ii. It does not take much time or requires technical help.
iii. Grouping of jobs into clarification makes pay determination easier to handle.
iv. It is used in important Government services and operates efficiently.
Demerits:
i. Personal evaluation by executive establishes the major classes and determines into which classes each job should be placed.
ii. Since no detailed analysis of job is done the judgment in respect of whole range of jobs may produce an incorrect classification.
iii. It is difficult to know how much of jobs rank is influenced by the man on the job.
iv. The technique is rather rigid and unsuitable for a large organisation.
3. The Point System Technique:
Under this technique jobs are valued by means of yardstick, one for each factor which is considered too common to all the jobs. The point system is based on assumption that it is possible to assign points to respective factors which are essential for evaluation an individual job. The sum of these points gives us index of the relative significance of the job that is rated.
Mechanism:
This system requires a detailed examination of the job.
i. A pre-determined number of factors used vary a great deal from company to company. The common factors are – Education, training, experience, physical skill and efforts, planning for the supervision of others, external contract, internal contract working condition.
ii. The next step is to break down each factor into degrees or levels and to assign a point value to each level or degree. For example—experience which is the most commonly used job factor may be sub divided into five degrees.
The first degree three months or less may be assigned 5 points. The second degree 3 to 6 month, gives 10 points. The third degree 6 to 12 months assigned 15 points. The fourth degree 1 to 3 years assigned 20 points and the fifth degree is over 3 years and assigned 25 points. The same procedure is followed for each factor at each level.
iii. The next steps is to assign money value to points for this purpose, points are added to give the total value of job. Its value is then translated into terms of money with a predetermined formula.
Merits:
i. It gives us numerical basis for wage differential by analysing a job by factors; it is usually possible to obtain a high measure of agreement of job value.
ii. Once the scales are developed they can used for a longer time.
iii. Job can be easily placed in distinct categories.
iv. Definitions are written in terms of applicable to the type of jobs being evaluated and these can be understood by all.
v. Points make it possible for one to be constant in assigning money value to total job points.
vi. Workers acceptance of the system is favourable because it is more systematic and objective than other job evaluation.
vii. Prejudice and human judgments are minimised.
Demerits:
i. The development and installing of the system calls for heavy expenditure.
ii. The risk of defining job factors and factors degree is time consuming and difficult task.
iii. Considerable clerical work is essential in recording the scale.
iv. It is difficult to determine the factor level within factors and assign values of them.
4. The Factor Comparison System Technique:
Under this technique jobs are valued by means of standard yard sticks of value. The analyst committee select key jobs for which there are clearly understood job description and counterparts in other organisation and for which they pay rates are such as agreed upon the acceptable to both management and labour. Jobs are compared to one another factor by factor key jobs are judged and rated then other jobs are compared to key jobs standard.
Mechanism:
i. Determine the key jobs.
ii. Ranking the key jobs.
iii. Value the factors in which key jobs are divided.
iv. Compare all the jobs with key jobs rating.
v. Establish the monetary unit value for all the jobs.
i. Selection of Key Jobs:
The key jobs which are selected for which pay is determine to be standard and for which there is no controversy between the management and employees. They serve as standard against which all other jobs are measured.
ii. Ranking of Key Jobs:
The job evaluation committee ranks each of the key jobs under five factors:
(a) Mental requirement – memory, intelligence etc.
(b) Responsibility – material, tool, property etc.
(c) Skill requirement – job knowledge.
(d) Physical requirement
(e) Working conditions.
iii. Valuing the Factors:
The basic pay for each key job is allocated to each factor. Pay for such jobs should range from about the lowest to or near the highest, usually 15-20 jobs are chosen against which to evaluate all other jobs.
iv. Comparing all Jobs with Key Jobs:
All the jobs are comparing with key jobs, factor by factor to determine their relative importance and positioning the scale of job, to determine also their money value.
v. Establishing the Monetary Unit Value for all Jobs:
Monetary values are assigned to each factor of every key job. This should reflect a range from lowest to the highest.
Merits:
i. There are no limits to the value which may be assigned to each factor.
ii. The reliability and validity of the system are greater than the same standard measures obtained from group standardised job analysis plan.
iii. The limited number of factors tends to reduce the possibility of overlapping and overweighting of factors.
Demerits:
i. Costly or it is costly to install and difficult to operate.
ii. Wage level changes from time to time and their minor inconsistencies may be adjusted.
iii. Money rates when used as a basis of rating, tend to influence the actual rate more than the obstruct point
iv. The system is complex to understand.