Everything you need to know about the different methods of job evaluation. Also learn about:
- Factor Comparison Method of Job Evaluation
- Point Method of Job Evaluation
- Objectives of Job Evaluation
- Importance of Job Evaluation
- Job Evaluation Methods With Their Advantages And Disadvantages
Methods of Job Evaluation (4 Basic Traditional Systems):
There are four basic, traditional systems of job evaluation:
(1) The ranking system;
(2) The grading or job classification system;
(3) The point system; and
(1) The Ranking System:
Under this system, all jobs are arranged or ranked in the order of their importance from the simplest to the hardest, or in the reverse order, each successive job being higher or lower than the previous one in the sequence. It is not necessary to have job descriptions, although they may be useful. Sometimes, a series of grades or zones are established, and all the jobs in the organisation are arranged into these.
A more common practice is to arrange all the jobs according to their requirements by rating them and then to establish the group or classification. The usually adopted technique is to rank jobs according to “the whole job” rather than a number of compensable factors.
After ranking, additional jobs between those already ranked may be assigned an appropriate place/wage rate.
Generally speaking, the following five steps are involved in system:
Preparation of job description, particularly when the ranking of jobs is done by different individuals and there is a disagreement among them.
Selection of raters, jobs may be usually ranked by department or in “Clusters” (i.e., factory workers, clerical workers, menials, etc.). This eliminates need for directly comparing factory jobs and clerical jobs. Most organisations use a committee of raters.
Selection of rates and key jobs, usually a series of key jobs or benchmark jobs (10 to 20 jobs, which include all major departments and functions) are first rated; then the other jobs are roughly compared with these key jobs to establish a rough rating.
Ranking of all jobs, each job is then compared in detail with other similar jobs to establish its exact rank in the scale. For this, each rater may be given a set of ‘index card’, each of which contains a brief description of a job. These jobs are then ranked from ‘lowest to highest’ or from ‘highest to the lowest’ are ranked first and then the next highest and next lowest and so forth until all the cards have been ranked.
Preparation of job classification from the rating, the total ranking is divided into an appropriate number of groups or classifications, usually 8 to 12. All the jobs within a single group or classification receive the same wage or range of rates.
The ranking system of job evaluation usually measures each job in comparison with other jobs in terms of the relative importance of the following five factors:
(i) Supervision and leadership of subordinates;
(ii) Co-operation with associates outside the line of authority;
(iii) Probability and consequences of errors (in terms of waste, damage to equipment, delays, complaints, confusion, spoilage of product, discrepancies, etc.);
(iv) Minimum experience requirement; and
(v) Minimum education required;
Merits and Demerits of the Ranking Method:
i. The system is simple, easily understood, and easy to explain to employees (or a union). Therefore, it is suitable for small organisations with clearly defined jobs.
ii. It is far less expensive to put into effect than other systems, and requires little effort for maintenance.
iii. It requires less time, fewer forms and less work, unless it is carried to a detailed point used by company.
i. As there is no standard for an analysis of the whole job position, different bases of comparison between rates occur. The process is initially based on judgement and, therefore, tends to be influenced by a variety of personal biases.
ii. Specific job requirements (such as skill, effort and responsibility) are not normally analysed separately. Often, a rater’s judgement is strongly influenced by present wage rates.
iii. The system merely produces a 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) Job Classification or Grading Method:
Under this system, 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. Grade descriptions are the result of the basic job information which is usually derived from a job analysis. After formulating and studying job descriptions and job specifications, jobs are grouped into classes or grades which represent different pay levels ranging from low to high.
Common tasks, responsibilities, knowledge and experience can be identified by the process of job analysis. Certain jobs may then be grouped together into a common grade or classification. General grade descriptions are written for each job classification, and finally these are used as a standard for assigning all the other jobs to a particular pay scale.
The following five steps are generally involved:
(i) The preparation of job descriptions, which gives us basic job information, usually derived from a job analysis.
(ii) The preparation of grade descriptions, so that different levels or grades of jobs may be identified. Each grade level must be distinct from the grade level adjacent to it; at the same time, it should represent a typical step in a continuous way and not a big jump or gap. After establishing the grade level, each job is assigned to an appropriate grade level on the basis of the complexity of duties, non- supervisory responsibilities and supervisory responsibilities.
(iii) Selection of grades and key jobs, about 10 to 20 jobs are selected, which include all the major departments and functions and cover all the grades.
(iv) Grading the key jobs, key jobs are assigned to an appropriate grade level and their relationship to each other studied.
(v) Classification of all jobs, jobs are classified by grade definitions. All the jobs in the same grade receive the same wage or range of rates. For example, menials may be put into one class; clerks in another; junior officers in a higher class; and the top executive in the top class.
The principal merits of this method may be listed thus:
i. This method is simple to operate and understand, for it does not take much time or require technical help.
ii. The use of fully described job classes meets the need for employing systematic criteria in ordering jobs to their importance. Since many workers think of jobs in, or related to, clusters or groups, this method makes it easier for them to understand rankings.
iii. If an organisation consists of 500 people holding different jobs, the jobs might be broken up into perhaps 5 classes, arranged in order of importance from high to low, and described class by class. This class description broadly reflects level of education, mental skill, profit impact or some combination of these.
iv. The grouping of jobs into classifications makes pay determination problems administratively easier to handle. Pay grades are determined for, and assigned to, all the job classification.
v. It is used in important government services and operates efficiently; but it is rarely used in an industry.
This system suffers from the following defects:
i. Although it represents an advance in accuracy over the ranking method, it still leaves much to be desired because personal evaluations by executives (unskilled in such work) establish the major classes, and determine into which classes each job should be placed.
ii. Since no detailed analysis of a job is done, the judgement in respect of a whole range of jobs may produce an incorrect classification.
iii. It is relatively difficult to write a grade description. The system becomes difficult to operate as the number of jobs increases.
iv. It is difficult to know how much of a job’s rank is influenced by the man on the job.
v. The system is rather rigid and unsuitable for a large organisation or for very varied work.
(3) The Point Method:
This method is the most widely used type of job evaluation plan. It requires identifying a number of compensable factors (i.e., various characteristics of jobs) and then determining degree to which each of these factors is present in the job. A different number of points is usually assigned for each degree of each factors.
Once the degree to each factor is determined, the corresponding numbers of points of each factor are added and an overall point value is obtained.
The point system is based on the assumption that it is possible to assign points to respective factors which are essential for evaluating an individual’s job. The sum of these points gives us an index of the relative significance of the jobs that are rated.
This system requires a detailed examination of the jobs. The steps in this method followed are:
The jobs have to be determined first which are to be evaluated. They are usually clustered. The jobs which require- (i) similar activities, (ii) the same workers characteristics or traits (corresponding machines, tools, materials and instruments) and work on the same kind of material (say wood or metal are placed in the same cluster or family. Gonyea and Lunneborg have clustered 22 occupations in five groups, based on common factors in five groups.
For the purpose, a predetermined number of factors are arbitrarily selected by raters. The number of factors used varies a great deal from company to company, ranging from as few as 3 to as many as 50, although most companies use less than 15. Sometimes, only three factors (job conditions, physical ability and mental requirements) may be used.
Another company may use four factors (skill, effort, responsibility and job conditions). As far as possible, the factors selected are such as are common to all the jobs.
The common factors are:
Education and training; experience; physical skills and effort; planning for the supervision of others; external contacts, internal contacts; confidential information and working conditions.
Moreover, the factors which overlap in their meaning are avoided and factors which are unique and relative to each other described in terms of varying degrees. They should also be so defined and described that everyone associated with the plan gets the same meaning of the words that are used.
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 one of the most commonly used job factors, may be subdivided into 5 degrees. The first degree, three months or less may be assigned 5 points; the second degree, 3 to 6 months, given 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 is assigned 25 points.
This same procedure is followed for each factor at each level or degree represented by an appropriate number of points. The point to note is that the major factors are assigned total points and that each of these factors is broken up into subgroups (with written definitions for each), and these subgroups are assigned points within the total established for the major group.
Generally speaking, the four job factors common to the point method of job rating are skill, effort, responsibility and job conditions. The relative values of these are skill, 50 per cent; effort, 15 per cent; responsibility, 20 per cent; and job conditions, 15 per cent.
Determination of relative values or weights to assign to each factor. For each job or cluster of jobs, some factors are more important than others. For example, for executives, the “mental requirements” factor would carry more weight than “physical requirements.” The opposite might be true of “factory jobs”.
The next step is to assign money values to points. For this purpose, points are added to give the total value of a job; its value of a job; its value is then translated into terms of money with a predetermined formula.
The system enjoys the following merits:
(i) It gives us a numerical basis for wage differentials; by analysis a job by factors it is usually possible to obtain a high measure of agreements on job value.
(ii) Once the scales are developed, they can be used for a long time.
(iii) Jobs can be easily placed in distinct categories.
(iv) Definitions are written in terms applicable to the type of jobs being evaluated, and these can be understood by all.
(v) Factors are rated by points which make it possible for one to be consistent in assigning money values to the total job points.
(vi) The workers’ acceptance of the system is favourable because it is more systematic and objective than other job evaluation methods.
(vii) Prejudice and human judgement are minimized, i.e., the system cannot be easily manipulated.
(viii) It has the ability of handling a large number of jobs and enjoys stability as long as the factors remain relevant.
The availability of a number of ready-made plans probably accounts for the wide use of points plans in job evaluation.
The drawbacks of the system are:
(i) The development and installing of the system calls of heavy expenditure.
(ii) The task of defining job factors and factor degrees is a time-consuming and difficult task.
(iii) If many rates are used, considerable clerical work is entailed in recording and summarising the rating scales.
(iv) It is difficult to determine the factor levels within factors and assign values to them. It is difficult to explain to supervisors and employees. Workers find it difficult to fully comprehend the meaning of concepts and terms, such as factors, degrees and points.
In spite of these drawbacks, this system is used by most organisations because its greater accuracy possibly justifies the large expenditure of time and money.
(4) The Factor Comparison Method:
Under this system, jobs are evaluated by means of standard yardstick of value. It entails deciding which jobs have more of certain compensable factors than others. Here, the analyst or the Evaluation Committee selects some ‘key’ or ‘benchmark’ jobs for which there are clearly understood job descriptions and counterparts in other organisations, and for which the pay rates are such as are agreed upon and are acceptable to both management and labour.
Under this method, each job is ranked several times — once for each compensable factor selected. For example, jobs may be ranked first in terms of the factor ‘skill’. Then, they are ranked according to their mental requirements. Next, they are ranked according to their ‘responsibility’, and so forth. Then these ratings are combined for each job in an overall numerical rating for the job.
The major steps in this system consist of the following:
Step 1- Clear-Cut Job Descriptions are Written and Job Specifications then Developed:
Preferably in terms of compensable factors. The people writing job specifications are generally provided with a set of definitions which have been used in each of the compensable factor selected. Usually, five factors are used- (i) mental requirements, (ii) physical requirements; (iii) skill requirements; (iv) responsibility and (v) working conditions. These factors are universally considered to be components of all the jobs.
Step 2- Selecting of Key Jobs:
Such jobs are those jobs which represent the range of jobs under study; and for which pay is determined to be ‘standard’ or ‘reference points’ and for which there is no controversy between the management and the employees. These ‘key’ jobs serve as standards against which all other jobs are measured. They are selected in such a way that they cover the range from the ‘low’ to the ‘high’ paid jobs.
Besides, such jobs must be those on the pay of which analysts and executives do not disagree. Again, they should be definable in accurate and clear terms. Usually, 10 to 30 jobs are picked up as ‘key’ jobs.
Step 3- Ranking of ‘Key’ Jobs:
Several different members of the Job Evaluation Committee rank the key jobs on each of the five factors (mental requirements, physical requirements, skill, responsibility, and working conditions). Ranking is made individually and then a meeting is held to develop a consensus (among raters) on each job.
Mental Requirements involve inherent mental trait (such as memory, intelligence, reasoning, ability to get acquired education, and acquired specialisation of education or knowledge).
Physical Requirements consist of physical effort (climbing, pulling, walking and lifting); and physical conditions (age, height, weight, sex, eyesight and strength).
Skill Requirements are concerned with acquired facility in muscular co-ordination, assembling, sorting, and dexterity of fingers; and acquired job knowledge for an effective performance of the job.
Responsibility involves responsibility for raw and processed materials, tools, equipment and property; money securities; profit and loss; supervision; and maintenance of records.
Working Conditions include atmospheric conditions (illumination, ventilation, noise, congestion); hazards of work and its surroundings; and hours of work.
Step 4- 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, at or near the highest, and there must be complete agreement on job selected. Usually, 15 to 20 jobs are chosen against which to evaluate all the other jobs.
Step 5- Comparing All Jobs with Key Jobs:
All the other jobs are then compared with the key jobs, factor by factor, to determine their relative importance and position in the scale of jobs, to determine also their money value.
This identical process is repeated for all the other factors. The pay rate assigned to a job is obtained by adding the determined amounts as indicated by the money values shown in the five scales that individually set a job money value in relative comparison to fixed key jobs.
Step 6- 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 the lowest to the highest.
The following example will clearly show how the system works:
Suppose job E and job A are similar in skill (Rs.3.00); job B in responsibility (Rs.0.85); job C in effort (Rs.1.40); and job D in working condition (Rs.1.20); then its correct rate of pay will be Rs.6.45, i.e., the sum total of all.
This system is usually used to evaluate white-collar, professional and managerial positions.
This system enjoys the following benefits:
(i) It is a systematic, quantifiable method for which detailed step by step instructions are available.
(ii) Jobs are compared to other jobs to determine a relative value.
(iii) It is a fairly easy system to explain to employees.
(iv) There are no limits to the value which may be assigned to each factor.
(v) The plan does not require a translation from points to money. It involves a comparative process wherein jobs are priced against other jobs rather than against some established numerical scale.
(vi) The reliability and validity of the system are greater than the same statistical measures obtained from group standardised job analysis plans.
(vii) The limited number of factors (usually 5) tends to reduce the possibility of overlapping and overweighting of factors.
The system suffers from the following shortcomings:
(i) It is costly to install, and somewhat difficult to operate for anyone who is not acquainted with the general nature of job evaluation techniques.
(ii) Wage levels change from time to time, and their minor inconsistencies may be adjusted to bring all the jobs into alignment. Jobs in which discrepancies are too wide are discarded as key jobs.
(iii) Money rates, when used as a basis of rating, tend to influence the actual rate more than the abstract point.
(iv) The system is complex and cannot be easily explained to, and understood by, every day non- supervisory organisational employee.
(v) The use of five factors is a growth of the technique developed by its originations. Yet using the same five factors for all organisations and for all jobs in an organisation may not always be appropriate.
Methods of Job Evaluation (Types of Job Evaluation Methods Commonly Used):
Most organizations that pay wages use job evaluation.
The following types of job evaluations methods are commonly used:
(i) The Ranking Method:
In the ranking method of job evaluation, the raters simply rank the various jobs examined No attempt is made to determine the critical factors in each job. Instead, an overall judgment is made of the relative worth of each job, and the job is ranked accordingly. Because of the difficulties in ranking a large number of jobs at one time, the paired comparison technique of ranking is sometimes used.
With this technique, decisions are made about the relative worth of one or two jobs at a time. Since, each job is compared with every other job, however, the number of comparisons to be made increases rapidly with the addition of each job to the list.
The chief disadvantage of the ranking method is that there are usually no agreed- up guidelines as to what elements or factors the organization considers valuable. Thus, there are no “yardsticks” for measuring job- value and the underlying assumptions of those doing the ranking may never be brought into the open.
There is obvious danger that the rankings will be done in very subjective fashion and will be used on impressions rather than objective information. This method, then contrasts with the other two methods, in which job factors can be estimated, discussed, and modified as part of the evaluation process.
(ii) Job Grading:
The Job grading method or job classification method does not call for a detailed analysis of job factors. It is based on the job as a whole. The essential requirement of the job- grading method is to frame grade descriptions to cover discernible differences in degree of skill, responsibility and other job characteristics.
We arrange the job grades in the order of their importance in the form of a schedule. The lowest grade may cover jobs requiring greater physical work under close supervision, but carrying little responsibility. Each succeeding grade reflects a higher level of skill and responsibility with less and less supervision.
The method is simple and inexpressive. Organizations with small number of jobs, this method yields satisfactory results. However, job grade descriptions are generally vague and cannot be quantified. This method poses difficulty in convincing employees about the inclusion of a job in a particular grade because of vagueness of grade descriptions.
(iii) Point Method:
The point method of job evaluation uses several factors common to the jobs being evaluated. Scales divided into point distances are used to determine the degree to which these factors are present in a given job. Once all the scales have been applied to each job being studied, the points chosen for each scale are added to provide a total for each job. The sum of points determines the relative worth of the job. It should be recognized that these scales are used to measure the job and not the job incumbent.
This system requires a detailed examination of the jobs involving the steps such as:
i. First we have to determine and cluster the jobs to be evaluated. The jobs that require similar, similar workers characteristics or traits and the work on the same kind of material are placed in the same cluster or family.
ii. Then the raters select a number of pre-determined factors. The number of factors used varies from company to company. Most commonly used factors include education and training, experience, physical skills and effort; planning for the supervision of other; external contacts, internal contacts, confidential information and working conditions. Overlapping factors are avoided.
iii. To break down each factor into degrees or levels, and to assign a point value to each level or degree;
iv. Determination of relative values or weights to assign to each factor;
v. To assign money values to points.
(iv) The Factor Comparison Method:
The faction comparison method begins with the selection of factors such as mental requirements, skill requirements, physical- exertion, responsibility, and job conditions. These factors are assumed to be constant for all the jobs. Each factor is ranked individually with other jobs.
For example, all the jobs may be compared first by the factor ‘mental requirements’. Then the skills factor, physical requirements, responsibility, and working conditions are ranked. Thus, a job may rank near the top in skills but low in physical requirements. Then total point values are then assigned to each factor. The relative worth of a job is then obtained by adding together all the point values.
The merit of the factor- comparison is that jobs of unlike nature- for example, manual, clerical and supervisory – may be evaluated with the same set of factors. But the method is complicated and expensive.
The major steps in this system consist of the following:
(i) Clear-cut job descriptions are written and job specifications then developed;
(ii) Selection of Key-Jobs
(iii) Ranking of Key-Jobs
(iv) Valuing the factors
(v) Comparing all Jobs with Key Jobs;
(vi) Establishing the monetary unit value for all jobs.
Methods of Job Evaluation (With Advantages and Disadvantages):
1. Ranking Method:
This is the oldest and the simplest method of job evaluation. This has been considered as inexpensive and the most expedient method of evaluation. In this system a committee of several executives is constituted which studies the job descriptions and ranks them in order to importance beginning with the most important job to the least important job in the organisation. No specific factors are selected.
After ranking the jobs, they are placed into different salary ranges more or less on a pre-determined basis in their rank order. The jobs already have wage rates attached to them, the ranking system is used to judge whether they are equitable or not.
(1) The system is quite simple and fast.
(2) The organisation does not experience any difficult in installing this method.
(3) The workers understand the process; hence there is no problem in administering the system.
(4) The method is suitable for small organisations involving lesser number of jobs to be evaluated.
(5) Time taken in evaluating the job is less.
(6) This method does not involve much expenses.
(1) The method is not very accurate.
(2) There is no scientific approach in determining the ranks of the job.
(3) Importance of the job may arbitrarily be ranked which may result in difference in similar jobs and may be resented by the employees.
(4) In this, the fairness of the judgement cannot be advocated if there arises any dispute regarding the fixation of grades.
(5) If a new job is to the introduced in the organisation it becomes a matter of dispute as to which rank should be allotted to it.
(6) It is not useful for large organisation.
(7) It is the least used method.
2. Job Classification or Grading Method:
This system was evolved as an improvement over the ranking method. In this system- job descriptions and job specifications are widely used. The committee of executives goes through each job description and carefully weighs it in the light of certain factors like skill, responsibilities, experience and type of work etc. In this way each job is assigned a grade or class and for each grade or class; there is a pre-determined rate of wages. This system is widely used in government offices and departments.
The important advantages of this method are as follows:
(1) The installation of the system is comparatively easy as there does not arise any difficulty in explaining the system to the employee.
(2) Here, the evaluation is more accurate of the job descriptions since the analysis is based on job descriptions.
(3) If a new job is to be introduced in the organisation it is sufficient to associate it with a class of grade which is comparatively less difficult task.
(4) In an organisation where numbers of jobs are small, this method yields satisfactory results.
Following are its disadvantages:
(1) This system is not suitable for a large scale complex.
(2) In this, the jobs are classified by total contents and by factors that comprise them. It is therefore difficult to compile any comprehensive class specification for a large organisation with a number of complex jobs.
(3) The existing wage and salary rates affect the grading of the jobs. It is a natural tendency of the raters to justify the existing salary ranges. If the job description justifies the lowering of the grade of a particular job, it cannot be done because labour normally does not accept any adverse condition of service.
(4) This process is cumbersome and time consuming.
3. Factor Comparison Method:
It is a combination of the ranking and point system under this system; all jobs are compared to each other to determine their relative importance by selection of five major factors, more or less common to all jobs i.e. – (a) mental requirements (b) skill (c) physical requirements (d) responsibilities and (e) working conditions. Some key jobs are selected as standard jobs to compare the other jobs.
The step in evaluating the job under this method can be enumerated as under:
(a) First – Various factors are selected and defined clearly.
(b) Secondly – Select a few key jobs in the organisation and record their wages. Key jobs are these representative jobs which are assumed to be correctly or fairly paid.
(c) Thirdly – Wares are fixed for different factors of each key job.
(d) Fourthly – A comparison scale is developed. Each key job should be fitted to it, when all the key jobs have been evaluated and wages allocated in the manner, a job comparison scale in constructed.
(e) Fifthly – Jobs are evaluated factor by factor, in relation to key jobs, on job comparison scale. Then each job is to be evaluated and compared to other jobs in terms of each other, and
(f) Lastly – A wage structure is designed, adjusted and operated.
Important advantages of this method are as follows:
(1) More accurate job evaluation- This system results in more accurate job evaluation as it is more objective because weights are not selected arbitrarily.
(2) It is flexible in nature- As it has no upper limit on a rating that a job may receive on a factor.
(3) Utilisation of few factors- It utilizes few factors and thereby reduces the likelihood of overlapping.
(4) The producer of rating new jobs is logical- The procedure of rating new jobs by comparing with other standards or key job is logical and not too difficult to accomplish.
(1) It is costly to install- It is costly to install and somewhat difficult for anyone who is not acquainted with the general nature of job evaluation technique to grasp.
(2) Use of present wages may make the plan erratic- The use of present wages for the key jobs may initially build errors into the plan. The contents and the value of these jobs may change over a period of time and this will lead to future errors.
(3) Job evaluation is made by experts and management is to rely upon them-Therefore, the programme cannot be developed by the management independently, without the help of specialists.
(4) Due weightage to each factor is very difficult to allot- It is very difficult to allot due weightage to each factor.
4. Point Method:
Under this method, a job manual is used which lays down the factors upon which each job should be rated. It provides scales and yardsticks by which each degree or each factor is to be valued. In other words, jobs are divided into a number of factors- which in turn are further sub-divided into grades or degrees.
Each degree is awarded certain points and when such points for all the degrees are totaled they indicate the importance of the job in the organisation. Consequently a suitable wage rate proportional to the total points is determined.
Further, this method describes several job elements and prescribes the weightings to be applied to each such element. It includes a scale for each element by means of which varying degrees are to be appraised. These degrees determine the number of points to be credited to the job. The total of such points establishes the point value of the job.
There are four major factors common to all point method of rating:
1. Skill –
a. Education and training
c. Judgement and Initiative
2. Effort –
3. Responsibilities towards material, equipment, machinery tools and follow workers
4. Working conditions –
a. Exposure to hazards
b. Dust, smoke, fumes and noise
c. High temperature
d. Glare and harmful radiations etc.
(1) This system is most suitable for large enterprises.
(2) It presents an objective study of job-evaluation technique.
(3) This method is more effective because even the major factors are sub-divided which ensures accuracy of evaluation.
(1) Point values result in developing a ceiling and floor for each job. The award of point values results in developing a ceiling and floor for each job.
(2) In this method, the pre-determined point value is arbitrary; therefore, there is a possibility that the scale may be incorrectly established at the initial stage of the installation of the programme. If this happens all of these succeeding works will reflect these errors and some of the jobs may be over or under valued.
Methods of Job Evaluation (With Merits and Demerits):
Job evaluation is the systematic process of assessing and determining the value of jobs performed within the organization and the relative value or worth of the employee’s efforts. The four major methods of job evaluations are job ranking, job classification, factor comparison, and the point method.
1. Job Ranking:
The job ranking method is the simplest and easiest job evaluation method; jobs and the employees who perform those jobs are ranked from highest to lowest depending on their quality and value to the organization.
The variation in payment of salaries depends on the variation of the nature of the job performed by the employees. The ranking method is simple to understand and practice and it is the best suited for a small organization. Its simplicity, however, works to its disadvantage in big organizations because rankings are difficult to develop in a large and complex organization.
Moreover, this kind of ranking is highly subjective in nature and may offend many employees. Therefore, a more scientific and fruitful way of job evaluation is called for to overcome the problems.
Ranking method has the following merits:
i. It is the simplest method,
ii. It is quite economical to put it into effect,
iii. It is less time consuming and involves little paper work.
The method suffers from the following demerits:
i. The main demerit of the ranking method is that there are no definite standards of judgment and also there is no way of measuring the differences between jobs,
ii. It is very difficult to manage when there are a large number of jobs.
2. Job Classification:
The job classification method uses job classes or job groups to provide more customization in the evaluation. This method also uses scales to measure performance rather than comparing and ranking employees.
This method places groups of jobs into job classes or job grades. Separate classes may include office, clerical, managerial, personnel, etc.
Following is a brief description of such a classification in an office:
(a) Class I – Executives:
Further classification under this category may be Office manager, Deputy Office manager, Office superintendent, Departmental supervisor, etc.
(b) Class II – Skilled Workers:
Under this category may be the Purchasing assistant, Cashier, Receipts clerk, etc.
(c) Class III – Semi-Skilled Workers:
Under this category may be Steno typists, Machine-operators, Switchboard operators, etc.
(d) Class IV – Semi-Skilled Workers:
This category comprises Daftaris, File clerks, Office boys, etc.
The job classification method is less subjective when compared to the earlier ranking method.
The main merits of grading method of job evaluation are as follows:
i. This method is easy to understand and simple to operate.
ii. It is economical and, therefore, suitable for small organizations.
iii. The grouping of jobs into classifications makes pay determination problems easy to administer.
iv. This method is useful for Government jobs.
The demerits of this method include the following:
i. The method suffers from personal bias of the committee members.
ii. It cannot deal with complex jobs which will not fit neatly into one grade.
iii. This method is rarely used in an industry.
3. Factor Comparison:
The factor comparison method is more scientific and complex than any other method. Each job is ranked according to a specific set of factors, such as physical effort, mental effort, or responsibility, all of which have predetermined weights indicating their importance to success.
The steps involved in factor comparison method may be briefly stated thus:
i. Select key jobs (say 15 to 20), representing wage/salary levels across the organization. The selected jobs must represent as many departments as possible.
ii. Find the factors in terms of which the jobs are evaluated (such as skill, mental effort, responsibility, physical effort, working conditions, etc.).
iii. Rank the selected jobs under each factor (by each and every member of the job evaluation committee) independently.
iv. Assign money value to each factor and determine the wage rates for each key job.
v. The wage rate for a job is apportioned along the identified factors.
vi. All other jobs are compared with the list of key jobs and wage rates are determined.
Following is a specimen of base rate and its allocation scheme:
Suppose, a ‘toolmaker’ job is to be evaluated. After comparison, it is found that its skill is similar to electrician (5), mental requirements to welder (10) physical requirements to again electrician (12), working conditions to mechanist (24) and responsibility also to mechanist (4). Thus, the wage rate for the job of toolmaker will be Rs. 55 (Rs.5 + Rs. 10 + Rs. 12 + Rs.24 + Rs.4).
This method enjoys the following merits:
i. It is more objective method of job evaluation, ii. The method is flexible as there is no upper limit on the rating of a factor.
iii. It is fairly easy method to explain to employees.
iv. The use of limited number of factors ensures less chances of overlapping and over-weighting of factors.
v. It facilitates determining the relative worth of different jobs.
The method, however, suffers from the following drawbacks:
i. It is expensive and time-consuming method.
ii. Using the same factors for evaluating jobs may not always be appropriate because jobs differ across and within organizations.
iii. It is difficult to understand and operate.
4. Point Method:
The point method measures performance through scales and job factors rather than focusing on entire job functions and ranking employees against each other. The point method is usually seen as the most reliable and valid evaluation method by employees compared to more subjective methods such as the job ranking method.
The method has the following merits:
i. It is the most comprehensive and accurate method of job evaluation.
ii. Prejudice and human judgment are minimized.
iii. Being the systematic method, workers of the organisation favour this method.
iv. The scales developed in this method can be used for long time.
v. Jobs can be easily placed in distinct categories.
The drawbacks of the method are as follows:
i. It is both time-consuming and expensive method.
ii. It is difficult to understand for an average worker.
iii. Lot of clerical work is involved in recording rating scales.
iv. It is not suitable for managerial jobs wherein the work content is not measurable in quantitative terms.
Methods of Job Evaluation (2 Main Ways of Evaluating Jobs):
There are two main ways of evaluating jobs:
(1) Non- analytical and
(2) Analytical and
Analytical methods break jobs down into their constituent parts for assessment purposes; non-analytical methods evaluate jobs as whole.
The non-analytical methods are also called as non-quantitative or summary methods; and the analytical methods are also known as quantitative methods.
(1) Non-Analytical Methods:
(i) Job Ranking:
This is the oldest and the simplest method of job evaluation. Each job is assessed as a whole in relation to the others. Jobs thus evaluated are listed in terms of their importance. There is no analysis other than the opinion and decision of the evaluators.
Job ranking has another form called paired comparison where there is an element of scoring which measures whether a job is more important than, less important than or as important as another job, so producing a final logue table of jobs.
Job ranking is a very straight forward method of evaluation, easy to implement and understand. It is useful when the jobs to be evaluated are reasonably homogeneous but less practicable when they have a widely varied content – for instance, it is difficult to compare the skill and contribution of an electrician with that of an accounts clerk.
Job ranking method may be appropriate to the needs of a very small organization. For little bit larger organizations, paired comparison form of job ranking may be applied using benchmark jobs. Bench mark jobs, which form a representative sample, are selected in the first place, and compared and ranked. After this initial rank order, remaining jobs are then compared with the bench marks and slotted into place. The hierarchy is thus established so that grades can be determined and money values allocated.
(ii) Job Classification or Grading:
This method differs from job ranking in that it does not first rank the jobs and then divide them into an appropriate number of grades. It reverses the order defining and deciding the number of grades, and then allocating jobs to them. The grades are defined in terms of skill and responsibility and each job analysis studied to see into which category it falls.
Job classification systems are simple and cheap to administer but this method is not appropriate where the work is not reasonably typical or covers a very wide range of responsibility.
(2) Analytical Methods:
Here jobs are assessed and numerical values given under a number of separate headings such as decision-making, working conditions, knowledge required and so on. In this way, by comparing total numerical values, assessors can gauge how much more difficult and responsible one job is than another; very different jobs can be compared.
(i) Factor Comparison:
Factor comparison method is less common today but continues to hold attraction for some. It is a combination of the ranking and point system. Under this system, all jobs are compared and ranked on each of a number of factors which are common, more or less, to all jobs.
Factors are not predetermined, they are chosen on the basis of job analysis. The factors which are customarily chosen are mental effort, skill, physical effort, responsibility, working conditions. Each factor is then weighted to take into account of its overall importance.
Under this method, a few jobs are selected as key jobs which serve as standard against which all other jobs are compared. Key job is one whose contents are stabilised over a period of time and whose wage rate is considered to be presently correct by the management and the union.
However, through the procedure of rating jobs by comparing with key jobs is logical and not too difficult to accomplish, the basis for payment is not easy to determine. Another variation of analytical method called as the points method has become more popular.
(ii) Points Rating:
This is the most widely used method of job evaluation. Points rating enables evaluators to give a points score to each job. There is no standardized points system available for all organizations.
Under this method, a job manual is used which lays down the factors upon which each job should be rated. It also provides scales and yardsticks by which each degree of each factor is to be valued. It describes several job elements and prescribes the weightings to be applied to each such element.
It includes a scale for each element by means of which varying degrees are to be appraised. These degrees determine the number of points to be credited to the job. The total of such points establishes the point value of the job. The total number of points so assigned to a job are converted into money value.
This method requires a careful and detailed examination of the jobs. It requires identifying a number of compensable factors i.e. characteristics of jobs or the values for which an employer pays money. For instance, mental effort, physical effort, skill, responsibility, working conditions.
The number of factors used in any system will vary with the organization. Each factor has to be specified for instance what type of skill. The actual number of factors to be considered depends on the organizational preferences and may vary from five to even twenty or over.
This method also requires to determine the degree to which each of these factors is present in the job. For instance, degree of importance has a wide range like intensity (of skill?), difficulty (of jobs?), length (of experience?), etc. Once the degree of each factor is determined, the corresponding numbers of points of each factor are added and an overall point value is obtained.
Points rating method has three important features:
(1) Compensable factors;
(2) Factor degrees numerically scaled; and
(3) Weights reflecting the relative importance of each factor.
Steps in the Point Method:
Step 1 – Selecting Job Factors:
A job factor or component is a specific requirement levied upon the job holder, which he must contribute, assume, or endure. The usual four main factors are skill, responsibility, effort, and working conditions. Others can be education and training, experience, professional qualifications etc. Factors selected should be common to all jobs.
Step 2 – Defining the Factors:
Explicit definitions must be prepared for each factor so that people using the plan will have the same concept of what aspects are covered by the factor. Positive statements in simple language make the concepts more clear.
Step 3 – Defining the Degrees in Each Factor:
Each factor is broken down into degrees, four to five being a reasonable range. Each degree needs to be defined clearly and concisely, preferably in some quantifiable manner. For example- experience, which is one of the most commonly used job factors, may be sub-divided into five degrees.
Step 4 – Determining Relative Values or Weights of Job Factors:
As all factors will not have equal importance to the needs of an organization, they must be weighted. For instance, for executives, the “mental efforts” factor would carry more weight than “physical effort”. In case of shop- floor worker, the opposite might be true.
Step 5 – Assigning Money Values to Points:
For this purpose, points are added to give the total value of a job; its value is then translated into terms of money with a pre-determined formula. The figure demonstrates the points assigned to factors of national Metal trades Association System.
The point method is most commonly used and effective method of job evaluation because every major factor is broken down into minor ones which ensures accuracy of evaluation. Once the scales are developed, they can be used for a long time. Factors are rated by points which make it possible for one to be consistent in assigning money values to total job points.
This method is most objective and arbitrary judgements are largely minimized. Workers acceptance is favourable as this method is very systematic. It has the ability of handling a large number of jobs and enjoys stability as long as the factors remain relevant.
However, there are certain limitations. The development and installing of the system ‘incurs heavy expenditure. The task of defining job factors and factor degrees is extremely complex and time-consuming. The manual plays a large part in the success or failure of this system of job evaluation.
Inspite of these limitations, this method enjoys widest acceptance and greatest popularity probably because its greater accuracy possibly justifies the heavy expenditure of time, money and efforts.