Job Evaluation Methods

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Everything you need to know about job evaluation methods. Job evaluation is a process used for arriving at reliable estimates of the value and importance of various jobs.

Job evaluation is a tool and a technique for evaluation and the ranking of jobs to help an organization to evolve a rational and scientific wage structure. It is a systematic method of appraising the value/worth of one job in relation to other jobs in an organization.

Job evaluation has as its function the establishment of fair and equitable wage and salary rates.

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According to the International Labour Office (ILO) “Job evaluation is an attempt to determine and compare the demands which the normal performance of a particular job makes on normal workers, without taking into account the individual abilities or performance of the workers concerned”.

The job evaluation methods are categorised into two:- A. Non-Quantitative and B. Quantitative Methods.

These are further sub-categorised into:

Some of the types of non-quantitative methods are:- 1. Ranking or Job Comparison and 2. Grading or Job Classification.

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Some of the types of quantitative methods are:- 1. Point Rating and 2. Factor Comparison.


Job Evaluation Methods: Non-Quantitative and Quantitative Methods

Job Evaluation Methods – 4 Frequently Used Methods: Job Ranking, Job Grading, Point Ranking and Factor Comparison (With Advantages and Limitations)

Job evaluation is the process of systematically analysing and assessing the various jobs to ascertain their relative worth in an organization. A systematic analysis and comparison defines an internal job hierarchy that ranks jobs in terms of their relative importance to the organization. In general, jobs that are more important to the organiza­tion command more worth, and employees in those jobs receive higher pay. Internal worth reflects a jobs importance in terms of its contribution to the overall attainment of organizational objectives.

Four frequently used methods of job evaluation are:

1. Job ranking.

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2. Job classification/grading.

3. Point ranking, and

4. Factor comparison.

These methods can be classified as descriptive (or non-quantitative) and analytical (or quantitative). Job ranking and job classification/grading methods are descriptive in nature because they make comparisons among jobs, and do not analyse factors comprising those jobs. Point ranking and factor comparison methods are analytical in nature as they select and analyse job factors, instead of whole jobs.

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These methods expanded in the following:

Method # 1. Job Ranking:

In this method, jobs are given ranks on the basis of their relative worth/importance to the organization— from highest (most challenging) to lowest. Employees in the highest jobs receive the highest pay. Two techniques can be used for ranking jobs under this method.

These are:

(i) Simple Ranking Technique:

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In this technique, a written job description is used for each job. Duties and responsibilities listed in job descriptions are separately studied, analysed, compared, and recorded. On the basis of this comparison, each job is assigned a rank depending upon its relative significance in the organization.

Job ranking can be done by a single individual knowl­edgeable about all the jobs or by a committee comprising managers and employee representa­tives. If all the members of the committee do not suggest similar ratings, then the average of all the ratings is calculated to determine the final rank orders. The job that gets the highest rank commands the maximum pay and the one with lowest rank gets the minimum pay.

(ii) Paired-Comparison Technique:

In this technique, each job is compared directly against every other job, using a matrix. Jobs are lists in both rows and columns. To use the matrix, raters compare a job in a row with the jobs in each of the columns. If the row-job is ranked higher than a column-job, a cross mark (X) is placed in the appropriate cell.

After all the jobs have been compared, raters total the X’s for a row-job which will establish its worth relative to other jobs.

Advantages of the Job Ranking Method:

(i) It is simple to understand, inexpensive, and easy to construct.

(ii) It involves little paper work and is also easy to implement.

Limitations:

(i) A problem with ranking is that it can be extremely subjective, leaving managers with the difficult task of explaining to the affected employees why one job is ranked higher than others.

(ii) The simple ranking technique gives no information about the distance between jobs, making it difficult to assign salary levels. Even though there may be agreement that, say, job A is more valu­able than job B, the magnitude of the difference is not known.

(iii) Since comparisons are made on the basis of job as a whole, it is easy for one or more of the factors of a job to bias the ranking given to a job, particularly if the job is complex.

Suitability – The ranking method is generally more appropriate in a small organization having relatively few easily defined jobs.

Method # 2. Job Classification/Grading:

The job classification or grading is a descriptive job evaluation method which groups jobs into a small set of classification based on the job descriptions, and then each job in the organization is put into the class description it best matches. Jobs within the same class or category are assigned the same pay grade.

Procedure:

(i) In the first step, the job evaluator sets up a few broad job classes or grades. A job class is a group of different jobs of similar difficulty or sophistication requiring similar level of work responsibility, knowledge, and skill.

(ii) In the second step, each job class is described in terms of a job description. This provides the cri­teria for determining the pay grades of jobs.

(iii) In the third step, each job is put in a particular class depending upon how well its characteristics match the class description. Jobs classified as being similar are assigned the same pay grade.

Advantages:

(i) The classification system is inexpensive, simple to construct, and easy to explain to employees.

(ii) This method also exhibits an element of objectivity as it provides specific standards for determining pay scales for jobs.

(iii) Flexibility is another advantage because this method can be applied to a large number and wide variety of jobs.

Limitations:

(i) This method assumes a rigid relationship between jobs and values. Jobs are forced to fit into cat­egories that are not entirely appropriate.

(ii) Grade definitions tend to remain inflexible and unresponsive to the technological and organizational changes affecting the role and job. This can perpetuate inappropriate job hierarchies in the organization.

(iii) Because job classification is not an analytical system, it is not effective as a means of estab­lishing comparable worth and is unacceptable in equal value cases. It can cause a feeling of inequity among the employees.

(iv) Deciding about the number of classes is another problem. If there are too few classes, it will be difficult to differentiate job value and the resulting wage levels. Too many classes make writing job descriptions almost impossible.

Suitability – This method is suitable for small organizations believing in broad-banding the jobs.

Method # 3. Point Ranking:

The point ranking method is an analytical (quantitative) job evaluation method that determines a job’s relative worth by calculating the total points assigned to it. Essentially, the point system requires jobs to be evaluated quantitatively on the basis of factors or elements—commonly called compensable factors— that constitute the job.

The more common compensable factors that serve to rank jobs include the skill required, the physical and mental effort needed, the state of working conditions, and the amount of responsibility involved in the job. On the basis of job description or interviews with job holders, points are assigned to the degrees of various compensable factors required to do the job. When these are aggre­gated, the job has been evaluated.

Procedure:

(i) In the first step, the raters select the jobs that need evaluation. If the number of jobs is very large, the raters can group jobs into broad categories and select a few representative jobs from each category.

(ii) In the second step, compensable factors are identified/selected. Compensable factors are those job dimensions or job requirements that the raters choose for use in establishing the relative value of jobs. The factors so chosen should be standardized, measurable, and acceptable to both the raters and the employees.

The selected compensable factors may be divided into their sub-categories for detailed analysis. For example, the compensable factor of job knowledge may have sub-factors such as formal education, work experience, training, and judgement.

(iii) In third step, maximum weights/points are assigned to compensable factors. Weights are assigned to factors on the basis of their relative importance. For example, if the factor ‘job knowledge’ is twice more important than the factor ‘formal education’ and if 25 maximum points/weights are assigned to education, then the job knowledge factor will be assigned 50 points.

(iv) In the fourth step, the different degrees of each compensable factor present in the job are decided. The number of degrees used will depend upon the nature of job. For example, for the compensable factor ‘working conditions,’ the degrees may be in this order – working environment (first degree), accidents (second degree), discomfort (third degree), and so forth.

(v) In the fifth step, point values are assigned to degrees. The point values assigned to different degrees should not exceed the total value assigned to the respective compensable factor. Point values for different degrees may be decided and allocated on the basis of arithmetic progression, which illustrates the example of evaluation points for a clerical job, based on a 500-point system. In this, the factor of education has been assigned values for different degrees; the 5th degree has been assigned the maximum points (250). No degree can be assigned more than the maximum points decided for a factor.

(vi) In the sixth step, points assigned to the different factors are added up. For determining the worth of a job, it is placed in the range of score and grade. The range of scores and grades is predeter­mined—for example, from 100 to 150 points, say it is grade one; from 151 to 200 points, say it is grade two; and so forth. A given job is placed in a particular grade, depending on the total number of points it secures.

In the final step, the job grades are priced with reference to the prevailing market wage rates.

Advantages:

(i) The point method provides evaluators with defined yardsticks that help in achieving a degree of objectivity and consistency in making their judgements.

(ii) It is a comprehensive method of job evaluation as it involves consideration of the major compensable factors, and also the different degrees of those factors. This provides greater reliability to the job evaluation results.

(iii) This method helps in determining wage differentials according to the content of the job. This lends credibility to pay grades and provides a sense of equity among the employees.

Limitations:

(i) It may appear to be a very objective approach, but it does involve subjective judgement. Bias or subjectivity can enter at several steps in the process—for example, in selecting compensable fac­tors, assigning weights to factors, defining factor degrees, and establishing the degree of each fac­tor present in a job.

(ii) The range of points allotted and matching them with the job grades is a source of doubt and ineq­uity. For example, a score range of 100 to 150 for grade 1 and the next range of 151 to 200 is grade 2. A variation of one point makes all the difference.

Method # 4. Factor Comparison:

The factor comparison method, like the point ranking method, is also analytical (quantitative) in nature and permits the job evaluation process to be accomplished on a factor-by-factor basis. The only differ­ence between the two is that in the factor comparison method, the compensable factors of the job to be evaluated are compared against the compensable factors of the key or benchmark jobs within the organization, which serve as the job evaluation scale.

Key jobs are those jobs that are important for wage-setting purposes and are widely known in the labour market. The compensable factors of key jobs are skill, mental requirements, physical exertion, responsibility, and working conditions. These factors are assumed to be constant for all the jobs. Each factor is ranked individually with other jobs. Then, total point values are assigned to each factor. The worth of a job is then obtained by adding together all the point values.

Procedure:

(i) Step number 1 involves the selection and definition of factors common to all the jobs. Different organizations can have different sets of factors suiting their requirements. The most commonly accepted factors are skill, mental effort, physical effort, responsibility, and work­ing conditions.

(ii) Step number 2 involves the selection of key or benchmark jobs. Since the soundness of the rating system rests on the selection and definition of key jobs, they must be selected with great care and according to certain standards. The selected key jobs should be stable, fair, well understood by the raters, and should have representative wage rates.

(iii) Step number 3 involves the apportionment or allocation of each key job’s current wages to each compensable factor. The wage rate assigned to each of the different compensable factors depends on the importance of the factor.

(iv) Step number 4 involves the placing of key jobs on a factor comparison chart. Once the wage rates are assigned to the compensable factors of each key job, this information is transferred to the factor comparison chart.

(v) The final step involves the evaluation of other non-key jobs in the organization chart that serve as a benchmark.

Advantages:

(i) It is a step-by-step formal, relatively more analytical and objective method of job evaluation.

(ii) It is tailored specifically to suit the requirements of individual organizations. Each organization can develop its own key jobs and factors. This provides uniqueness to the organizations evaluation system.

Limitations:

(i) It is complex, difficult to use, and time-consuming to establish and develop.

(ii) The procedure is rather cumbersome and requires constant updating; hence, the relative infrequency of its use.


Job Evaluation Methods – 2 Important Categories: Non-Quantitative and Quantitative Methods

There are four types of job evaluation methods.

These can be divided into two categories:

(I) Non-quantitative methods-

1. Ranking or job comparison.

2. Grading or job classification.

(II) Quantitative or Analytical methods-

3. Point rating.

4. Factor comparison.

The first category covers the simple methods which apparently make no use of detailed job factors and so they are called non-analytical methods. But they remain in the minds of the evaluators and thus affect the results.

The job is treated as a whole and job descriptions are often utilised. But the methods under the second category use detailed analysis of job and so are called analytical methods. Job factors are selected and measured and job specifications are definitely given consideration.

Now, we shall discuss these methods:

1. Ranking Method:

The job ranking method is the simplest of all the methods. A committee of several executives is constituted which evaluates the job descriptions and ranks them in order of importance beginning with the most important job to the least important job in the organisation. No specific factors are used for consideration.

The purpose of ranking is to determine whether a job involves the same level of duties, responsibilities and requirements as others in the series or a higher or lower level than they do. By comparing the jobs, the rank order of importance of each job can be determined. In this method, jobs are not split up into their component parts. Instead, comparison is made on the basis of whole jobs.

Three techniques are generally used for ranking purpose, namely:

(i) Utilising job descriptions;

(ii) Making paired comparisons; and

(iii) Ranking along a number line.

(i) Utilising Job Descriptions:

When this procedure is followed, each rater is given a set of job descriptions, one for each job to be ranked. The job descriptions are then studied and analysed. The differences between them are noted with respect to the key points selected for comparison.

The rater determines which job in the series requires least amount of various characteristics used for comparison, and places that job in the lowest rank position. He then determines which job requires next higher amount of characteristics and places it next to preceding job’s rank and so on. Sometimes, two or more jobs fall in the same rank position. In such cases, they are assigned the same rank position.

After each rater has assigned the ranks independently, their rankings can be compared. This comparison is usually made by having the raters meet as a committee and discuss with each other their respective rankings. Final rankings may be done by majority vote or averaging the rankings of raters.

The method described above involves independent ranking first and then integration with the rankings of the other raters.

(ii) Making Group Comparisons:

In this method, a rater is required to keep in mind all the jobs being ranked in order to place them in their correct relationship to each other. But this task may become difficult as the number of jobs increases. Distinguishing features among jobs may be overlooked or forgotten. This would result in less accurate evaluation. To do away with this weakness, “paired comparison method” has been suggested.

This method involves the following steps:

(a) First of all, each job is paired with every other job in the series. Suppose there are four jobs say, refund clerk, transfer clerk, adjuster and collection clerk, their pairs will occur as follows-

Refund Clerk………….. Transfer Clerk

Transfer Clerk…………. Adjuster

Collection Clerk………. Refund Clerk

Refund Clerk………….. Adjuster

Transfer Clerk…………. Collection Clerk

(b) Next, the rater examines each pair and determines which of the two is more difficult in terms of characteristics selected as guides. Thus, he has to keep only two jobs in mind at a time. He then underlines the more difficult job as done above.

(c) How many times a particular job is rated more difficult than others is counted. Suppose in the above example, refund clerk is scored three times, adjuster twice and collection clerk once.

Accordingly ranking can be:

Refund Clerk – 1 (Highest rank)

Adjuster – 2

Collection Clerk – 3

Transfer Clerk – 4 (Lower rank)

(3) Ranking along a Number Line:

This method is, in fact, an extension of job descriptions and paired comparison method. Here ranks obtained from job descriptions or paired comparisons are spaced along a number line.

For example, job A, the highest ranked job, is placed at the end of abscissa, as shown below:

Now, another job, says B, is picked up, and a decision is made regarding its closeness to the highest ranked job which is A in the present case. On the basis of the closeness of job B to A, the former is located at some selected distance from A. In the above figure, B is placed near 80. Similarly, other jobs can also be spaced by considering their closeness with the highest ranked and preceding job.

To establish the rates of pay for these specific jobs, the rates of pay can be associated with those jobs in the rank order. Presumably the jobs already have wage rates attached to them, the ranking system is used to judge whether they are equitable. By arranging the jobs in an array, necessary adjustments can be made in wage rates to correct any apparent discrepancy.

Ranking method is suitable for organisations of relatively smaller size. In such organisations, the job raters would be in a better position to grasp the job descriptions without experiencing much difficulty. This method is very simple since the raters are fully familiar with the job and workers also understand the process, and installation of this system is not a difficult task.

However, the ranking method has limited usefulness. A lot of subjective judgement is required to determine the relation and position of jobs in the rank order. In addition, judgement is needed in determining what the pay rates should be since no statistical method of interpolation is employed.

If the job descriptions are not accurate, serious errors in ranking can occur. There will be arbitrary ranking which might result in differences in similar jobs which are likely to be resented by the employees.

2. Job Grading or Classification Method:

This method is considered to be an improvement over ranking method in that a predetermined scale of values is provided. This method involves – (i) establishment of job classes or grades, (ii) definition of each grade; and (iii) classification of individual jobs according to how well their characteristics match those of the different grade definitions.

The job evaluation committee goes through each job description and carefully weighs it in the light of certain factors like skill, experience, etc. In this way, it assigns each job to a particular grade or class.

For each grade or class, there is a different rate of wage. In fact, this method arrives at a series of classes or grades, which is precisely the point at which both the point and factor-comparison systems also arrive. It is also a relatively simpler and inexpensive system to operate.

The main disadvantage of the job grading method is that broad generalisations must be used in defining grades. Another difficulty is that grading approach usually requires multiple systems for different types of jobs, e.g., description of office jobs differs widely from those of production jobs. Moreover, the installation of this method is not appropriate for big organisations.

Difficulties encountered with the use of this method of job evaluation resulted in the development of other plans which are based upon the principle of breaking jobs into their components and evaluating them in terms of these components. This is merely the technique of subdividing a complex problem into its parts so that it may be more readily resolved. Since by this approach some of the judgmental errors are compensated, the result is a more accurate and homogeneous answer.

3. Point Method:

This is the most widely used method of job evaluation. It, alongwith factor comparison system, involves a more detailed, quantitative and analytical approach to the measurement of job worth. Under this method, a quantitative evaluation of different jobs in terms of various job factors is made.

Maximum point values are assigned to each of the job factors required to be considered. Then each job is awarded points for each of the factors. The wage level appropriate for each job is fixed on the basis of total points scored by it.

In contrast to the ranking and grading methods, which measure jobs as whole jobs, the point system is a more analytical approach and deals with job factors. A job factor is a specific requirement levied upon the job-holder which he must contribute, assume or endure. The major factors are – skill, effort, responsibility and working conditions. These factors or points are later converted into money value.

The procedure for the design of ‘Point Method’ is discussed below:

i. List the type of jobs to be evaluated.

ii. Determine the factors to be used in this method like skill efforts, initiative, etc., and define them properly.

iii. Determine the number of degrees to be allocated to each factor and prepare a suitable definition of each.

iv. Assign points to each degree of each factor.

v. Select a certain number of key jobs, say 10-15, and evaluate each in terms of scale so constructed.

vi. Design the wage structure.

The above steps are discussed below:

i. Listing of Jobs:

The jobs in any organisation range from the top executive down to watchman, each involving different skills like conceptual, human and technical. There may be some unskilled jobs also. There should be separate evaluation program for the jobs of executives, professionals, skilled, semi-skilled and unskilled employees.

Executive and other responsible jobs are more liable to be influenced by ambition, character, personality, dependability and other less tangible traits and they make it difficult to write adequate job descriptions and specifications.

But such qualities are not so important in case of clerical and shop floor jobs. So there is a psychological disadvantage in using the method to evaluate the jobs of both groups since the former group requires a greater degree of managerial skills and the latter group requires manual skills in greater degree.

ii. Number of Factors:

It is very difficult to lay down the exact number of factors which should be used for evaluating a job. But there should be sufficient number of factors to evaluate all aspects of the jobs. The number of factors will depend upon the nature of the jobs. If too many factors are used, the plan will become burdensome and clumsy.

But if too less factors are used, the evaluation will not be fair because some phase of a job may be ignored. So sufficient number of factors relating to the job under review should be considered according to the needs of the organisation and the type of job.

Definition of Factors:

After the selection of factors to be used, they should be properly defined and definition of each should be put in writing so that the persons using these may have the clear idea. The definitions should be positive statements and expressed in simple and unambiguous language.

iii. Determination of Degrees:

Each factor of job evaluation should further be subdivided into degrees. The point method generally uses from four to six degrees for each factor. It is advisable to use an even number of degrees in the development of point method and the same number of degrees should be used for each factor in order to maintain consistency in the job evaluation plan.

iv. Allocation of Points to Degrees:

For assigning points to the degrees determined, a committee may be appointed to determine the weights of the factors in terms of percentages and estimating what percentage should be allocated to each factor. The committee will determine how 100% can be apportioned among the various factors.

The percentage that is assigned to each factor will become the number of points for the first degree of each factor. In order to determine the number of points to be allocated to succeeding degrees of each factor, it is necessary to extend the points assigned to the first degree in an arithmetic progression.

v. Evaluation of Jobs:

After the construction of scales, the task of evaluation can be started. The job analysis information should be studied carefully and compared with degree definitions. The next step is to decide at which degree the job falls and obtain the points. This should be done with each factor and the points so obtained should be totaled. This will give worth of the job in terms of points.

vi. Designing the Wages Structure:

Management takes a decision about the kind of wage structure it wishes to have.

There are two kinds of wage structures in vogue:

(a) The same amount of wages are paid to each job falling in any particular job class. The rates do not vary within a particular job class.

(b) The wages change not only between different job classes but also within each job class.

Adjusting the Existing Wage Structure:

The wage structure designed in the preceding step is the one to which the existing wage structure must conform. Those who are getting less than what they should as per the new wage structure should get a wage raise. But those who are getting more should not have their wages reduced.

Instead such jobs should be “red circled” so that when the occupant leaves the organisation, the job in question is either eliminated or changed or when the new person occupies it, he is given “appropriate” wages.

To sum up, point method of job evaluation is more effective because even the major factors are sub-divided which ensures accuracy of evaluation. The possibility of inaccuracy of job evaluation is likely to arise if the predetermined point values do not exhibit true values. If this is so, this initial determination of point values may lead to further inaccuracies.

4. Factor Comparison Method:

Thoman E. Hitten was the first to use factor comparison method of job evaluation. This method determines the relative rank of the jobs to be evaluated in relation to monetary scale. It is often used for evaluating white collar, professional and managerial positions, although it is equally suitable for grading other jobs as well.

It is essentially a combination of the ranking and point systems. Like rank order method, it rates jobs by comparing one job with another and, like the point system, it is more analytical in the sense of subdividing jobs into compensable factors. Final ratings are expressed in terms of number.

In this method, five factors are generally evaluated for each job. These are comparatively fewer than the point system but are nevertheless sufficient, because each factor is defined broadly. The number of factors may be more than five also. The five factors which are customarily used are mental requirements, skills, physical requirements, responsibilities and working conditions.

The evaluation of job under this method consists of following steps:

1. Select the factors and define them clearly.

2. Select the key job which would serve as standard against which all other jobs are compared. A key job is one whose contents have become stabilized over a period of time and whose wage rate is considered to be presently correct by the management and the union.

3. Allocate wage for each key job to different factors.

4. Develop a job comparison scale and insert key jobs in them. When all of the key jobs have been evaluated and wages allocated in this manner, a job comparison scale can be constructed.

5. Evaluate the job in question 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 factor.

6. Design, adjust and operate the wage structure.

The advocates of factor comparison method point out that it usually results in accurate job evaluation. It is relatively more objective because weights are not selected arbitrarily. It is flexible also and has no upper limit on the rating that a job may receive on a factor. The point system does have ceilings on the factors.

Another advantage of this method is that it utilises few factors and thereby reduces the likelihood of overlap. The procedure of rating new jobs by comparing with other standard or key jobs is logical and not too difficult.

Factor comparison method suffers from certain limitations also. The use of present wages for the key jobs may initially build errors into the plan. The content and the value of these jobs may change over a period of time and this will lead to future errors.

It is a very expensive system of job evaluation because experts have to be engaged particularly in selecting weights which are based in actual analysis. Since this method is complicated, an average worker cannot understand its functioning.


Job Evaluation Methods – 4 Traditional Systems of Job Evaluation (With Merits and Demerits)

There are four basic job evaluation methods. These are traditional systems of job evaluation.

They are:

1. Ranking system

2. The grading or job classification system

3. The point system

4. The factor of comparison system.

The first two systems are known as non-analytical or qualitative or summary systems since they are using non-quantitative or summary system in order of difficulty and sample.

The last two systems are called the analytical or quantitative systems since they use quantitative technique, listing the job. They are more complex and time consuming.

The major differences between those methods are:

(i) Consideration of the job as a whole -Versus- compensable factor, and

(ii) Judging and comparing jobs with each other rather than assigning numerical scores on a rating scale. Plans commonly used represent variations of those methods.

1. Mechanism of Ranking System:

Under this system all jobs are arranged in 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 sequential order. It is not necessary to have job description despite it being useful.

At times, a series of grades or zones is established and all the jobs in the organisation arranged in order of preference. A common practice is to arrange all the jobs .according to their requirements. Usually the method is adopted to rank the job according to the whole job, rather than a number of compensation factors.

Normally the committee of raters discusses on the ranking system. Then the differences are resolved and final ranking of job is prepared. While doing this, some of the factors like supervision of subordinates, cooperation of the staff of other departments, minimum educational qualifications, experience and training and likelihood of errors while executing the job.

Merits and Demerits of Ranking Method Merits:

a) The method is quite simple and easy to understand and employees can follow it easily.

b) It is most suitable for small sized organisations.

c) It does not involve high cost, hence less expensive.

d) It is less time consuming. A few forms are to be filled-in by the rater, so less work involved.

Demerits:

a) Ranking is done on subjective judgement.

b) There is every possibility of bias judgement in ranking of jobs.

c) It is silent on how jobs are different from one another.

d) It only gives rank but does not specify the degree of importance attached to each job.

2. Grading Method:

This method is also a Non-quantitative method. It is known as job classification method. This is improvisation of ranking method. Predetermined scale or grade is provided in this method. These grade classification are determined in advance by an authorised committee appointed for the purpose.

Grades or scales are determined on the basis of information supplied by job analyst. The committee, after carefully studying the job description evaluates job in the light of competence, knowledge and experience. The committee then assigns class or grade to each job.

The classification, is used as a standard for fixing pay-scales. Jobs can be classified into several grades or classes such as ‘skilled’, ‘unskilled’, general clerk, accounts clerk, steno typist, office superintendent and Class I, II, III and IV employees, etc. This system of job evaluation is quite simple.

Merits of Grading Method:

a) This method is quite simple. It can easily be followed by the employees.

b) This is the most flexible method.

c) This can be applied to variety of jobs.

d) This is applied in grading of government services. Govt., jobs are divided into Class I, II, III and IV.

e) Various jobs are grouped into classes or grades. This makes easy for salary administration.

Demerits of the Method:

a) This method is affected by personal bias, committed members create the role of matching grade with job.

b) It is less flexible therefore not suitable for large organisations having multiplicity of jobs.

c) Due to increase in jobs, their grading became difficult.

d) The method depends greatly on jobs, their grading became difficult.

3. Point Method/System:

This is the most widely used type of job evaluation plan. Under this system a manual is prepared stating various factors like, education, skill, competence, knowledge, training, responsibility, job conditions, complexity, hazards, coordination, physical and mental efforts, mechanical ability etc.

The jobs are rated on the basis of these factors which work as the indicator for evaluation. In all the jobs, some of the factors are within comparison of these factors and other provides the degree of their importance. The necessary point value is allotted to each factor. Thereafter, the job is evaluated on the total of these points. The point value is allotted to each degree.

Job can be then evaluated after going through job analysis properly and allotting the points and having the sum total of them. This provides relative worth of jobs. Thereafter the wage structure is finalised.

Before the wage structure is fixed, the following process can be strictly followed:

i) Identification and evaluation of job

ii) Number of factors according to jobs

iii) Division of Factors

iv) Allotment of point values, and

v) Job evaluation.

i) Identification and Evaluation of Job:

The first step in the programme is that all the job right from top executive level to the bottom peon level in the organisation are determined and evaluated. Each job requires some kind of skill, technical, managerial, conceptual, physical, etc. All these jobs are grouped according to functions, characteristic or the same kind of work. There will be separate evaluation of executive, professional, technical and non-technical jobs.

ii) Number of Factors (According to Jobs):

A number of factors applied to evaluate the job is a difficult exercise, as it differs according to the job. There are many factors to carry out the job. They involve skill, competence, mental ability, responsibility, condition of job, problems and hazards.

Personnel having mechanical ability, complicity of experience, training and so on for evaluating a job. Some of the factors are taken to consider that are sufficient for better judgement. Using too many factors and considering less factors will be unfair, as it cannot provide the desired results.

iii) Division of Factors:

Factors are divided into degrees and paid values are also assigned degrees before breaking them into degrees. They should be defined by clearing all confusions to keep consistency, the even number of degrees for each factor should be used.

iv) Allotment of Point Values:

Allotting point values to degrees, the job is entrusted to committee for carrying out the same. It can weigh the factors in terms of percentage. The percentage of the factor becomes points. The same is to be distributed among the degrees of the factors according to their relative importance. Thereafter it is prepared for evaluation of job.

v) Job Evaluation:

Jobs can be evaluated after completing the process of job analysis, assigning points and taking entire total. This provides relative worth of jobs. After the job is evaluated, wage structure is finally fixed.

Merits of Point System:

(i) This system provides numerical process of ascertaining wage differentials. Analysis gives advantage of measuring the value of job.

(ii) It is a correct method of job evaluation. Workers of an organisation also support the system.

(iii) It is free from bias and manipulation.

(iv) It directs the job to appropriate categories.

(v) It is advisable for big organisation, where a large number of jobs are available.

Demerits:

(i) It is very expensive method. Therefore suitable only for large organisations.

(ii) It takes lot of time to determine job factors and their comparative advantages.

(iii) Assigning point value to factors is also difficult.

(iv) It is not a simple method to understand.

(v) Considerable clerical work is involved in recording rating scales. This method despite its demerits is widely used, for its precision.

4. Method of Factor Comparison:

This method is usually used for evaluating professional and managerial positions. This system enables some compensable factors. It is a compensation of rank­ing and method of point. It rates job by comparing rather than ranking method and makes analysis in subdividing jobs into compensable factors like in point method.

The evaluated relative rank gets money value. In this method each job is exclusively ranked for each compensable factor. Every job factor is defined in an exhaustive manner. Spe­cifically most of the common factors used in jobs evaluation have the skills, physical and mental requirements, working condition and responsibility.

The procedure followed in evaluating jobs under the system has the following points to be noted carefully:

(i) Job factors when selected are to be properly defined.

(ii) Always key jobs are selected, these are the jobs which are being considered for final selection. These jobs are in disagreement with employees and management with regard to the range viz., entire high level, low level and paid jobs may not be considered at all times.

(iii) Wages are fixed on various compensational factors of every key job.

This system is commonly used for evaluating professional and managerial posts.

Advantages of this System:

i. It is a systematic method with step-by-step instructions to follow.

ii. Jobs are compared with another to ascertain relative value.

iii. It is quite an easy system to follows

iv. The value assigned to a particular factor has no limit, and as such

v. Validity and also the dependability of the system are greater than the same statistical measures obtained from standardised analysis plan.

vi. Limited number of factors lead to reduce the possibility of confusion, overlapping and over-weighting of factors.

Disadvantages of the System:

i. It is not economical to install the system and it is rather difficult to operate for the individual who is void of necessary knowledge or operating the system.

ii. Money rate when used as the basis of rating tend to influence the actual rate more than the abstract point.

iii. The use of five factors being the growth of technique developed by the organisation, still using the same factors for all organisations and all jobs in the organisation may not always be quite considerable or appropriate.


Job Evaluation Methods – Non-Quantitative and Quantitative Methods (With Merits and Demerits)

The job evaluation committee members who are doing the job evaluation must rate the job and the employee. There are four methods of job evaluation as under-

Basically methods are divided into two categories:

1. Non – quantitative methods- It consists of:

I. Ranking or job comparison method.

II. Grading or job comparison method.

2. Quantitative methods- It consists of:

I. Point method

II. Factor-comparison method

In the first category the methods are very simple which make no use of detailed job factors. The job is treated as a whole and job description rather than job specification are often utilized. But in the second category methods, a detailed approach is used i.e. job factors are selected and measured but job specification are definitely given consideration.

Method # 1. Non-Quantitative:

i. Ranking or Job Comparison Method:

Ranking method is a simplest and oldest method of job evaluation. A committee of several executives is constituted which evaluates the job descriptions and ranks them in order of importance beginning with the most important job to the least important job in the business organization.

There are no specific factors selected for consideration under this method the job description are arranged in rank and according to the value of the work as judged by the analysis. To establish the rates of pay for these specific jobs, the rates of pay can be associated with those jobs in the rank order.

In ranking the jobs generally the attention is given to a number of factors, for example nature and volume of work, difficulties of work, monotony of work, responsibility involved, supervision required, knowledge and experience required, working conditions etc.

This method is suitable for small organizations.

Merits/Advantages:

(1) It is very simple to execute.

(2) It requires less time than any other method. This method can easily be installed.

(3) It is very economical, because it requires less time, cost and labour.

(4) It is a rational method appreciated and easily accepted by the workers.

Demerits/Disadvantages:

(1) There is no use of detailed job factors and moreover there is no scope for points.

(2) There is no full use of job analysis means job descriptions and job specifications.

(3) In this method only key jobs are used for rating purposes.

(4) It is not at all suitable for large organizations.

(5) If the job descriptions are not accurate serious errors in ranking can occur.

II. Grading or Job Classification Method:

In fact this method is an improvement over ranking method. It involves the establishment of job classes or grades. The committee members goes through each job descriptions and weights carefully in the light of certain factors like skill, experience, responsibilities involved, nature, type of work and assigns each job to a particular grade or class and for each grade or class there is different rates of wage.

On the basis of such classification the minimum and maximum limits of wages and salaries can be fixed for each of the classes of jobs. For instance grading of jobs are unskilled, skilled, routine, creative, executive, administrative, policy makers, supervisors, clerks etc.

Firstly it was introduced in America by passing the Classification Act, the provisions of the Act made obligatory to all types of jobs such as clerical, administrative etc. This method is now very popular in the government department, in various countries all over the world. Under this method wage or salary range is determined and finally established for each such class of job.

Merits:

(1) It is also a simple method and is based on logic and rationality.

(2) All the jobs within one grade are equally valued in money terms.

(3) This method is economical. Its installation and execution is not costly.

(4) It requires least time for its installation.

(5) It suits to small and medium size business organizations.

Demerits:

(1) The main disadvantage of this method is it requires multiple systems for evaluating the different types of jobs, for example description of office jobs differs from the production jobs.

(2) It is not suitable to large business organizations.

(3) There is complexity in preparing grade description.

(4) It is subjective in nature, there is possibility of personal bias or prejudice being reflected in the determination of job values and the pay scales for the employees.

Method # 2. Quantitative:

I. Point Method:

It is very popular and widely used method by the modern large scale business organizations. This method involves not only factor comparison but involves a more details of quantitative and analytical approach to the measurement of jobs worth. Under this method a quantitative evaluation of different jobs in terms of various factors is made.

Maximum point values are assigned to each of the job factors, which is considered carefully. Afterwards each job is awarded points for each of the factors. The appropriate wage level for each job is fixed on the basis of total points scored by it. The worth or value of a job depends on the aggregate of such points assigned.

This method is more analytical in approach and deals with various job factors such as skill, efforts, responsibility and working conditions. All these factors or points are later converted into money value.

The Procedure of Point Method:

(1) Listing the type of jobs to be evaluated:

In fact different jobs are required varying skills, efforts, working conditions, therefore first of all few representative jobs are selected for evaluation.

(2) Selection of number of factors to be used:

In fact it is very difficult to list out the exact number of factors which should be used for evaluation of a job. The number of factors will depend upon the nature of the job. A sufficient number of factors relations to the job should be considered. The most commonly used factors are skill, effort, responsibility and job conditions

(3) Determination of degrees on job factors:

After selection of job factors, degrees on the job factors are determined. The each factor of job should be then subdivided into degrees. Under this method four to six degrees for each factor is used. Such degrees need to be well defined.

(4) Allocation of Points to Degrees:

After determining the degrees on the job factors, a job evaluation committee assigns the points to the degree. If the maximum points are 100 these may be divided among the job factors, for example.

The points allotted to each factor then it is divided into sub-factors and point values are assigned to them and then on the basis of aggregate the grades of these factors are fixed.

(5) Definition of Factors:

After the selection of factors and sub-factors to be used they should be properly defined so that the person using these may have the clear idea. All these definitions should be expressed in simple and unambiguous language.

(6) Assigning Money Value:

After deciding the relative worth of the job the next step is by taking into consideration the prevailing wage rates, is assigning the money value of the job.

Thus point method of job evaluation is more effective, simply because even the major factors are sub-divided which ensures accuracy of evaluation.

Merits:

(1) Under the point method there is a least scope for bias and personal judgment.

(2) It is a popular method and widely accepted by large business organisations.

(3) Wage differentials are determined on systematic, scientific and logical basis.

(4) There is a consistency in point scores and money values on the job factors.

(5) It is a comprehensive and accurate method of job evaluation in comparison to other methods.

Demerits:

(1) It is a costly and time consuming method.

(2) It is a complicated method, an average employee cannot understand it.

(3) If the points are assigned accurately, there are chances of committing errors in money value also.

(4) This method cannot be adapted to managerial jobs simply because the job factors in it are not measurable.

II. Factor Comparison Method:

It is essentially a combination of the ranking and point method of job evaluation. This method is also known as weight-in-money or Benge Plan. Eugene Benge originated it in 1928. This method is often used for evaluating white collar, professional and managerial positions. This method consists of analyzing the jobs on the basis of the five factors. It means under this methods five factors are generally evaluated for each job.

The five factors which are customarily used are as follows:

(1) Mental Requirement:

This factor is gauged on the basis of some inherent mental traits such as concentration of attention (tension) intensity and frequency of thought necessary, intelligence, memory, reasoning, ability to express, to get along with people.

(2) Skill Requirement:

The measurement of this job requirement is divided into three considerations, that is –

(I) Length of training required for an average employee to reach acceptable Proficiency.

(II) The variety and complexity of the operations or activities of the job.

(III) The dexterity and manual skill necessary to perform job satisfactorily and the job knowledge acquired for the performance of the job.

(3) Physical Requirement:

This factor gauges fatigue, the laboriousness of the job and its posture requirements. Moreover physical effort such as climbing, walking, pulling, lifting and physical status such as age, height, weight, sex, strength, eye sight etc.

(4) Responsibility:

It is judged by the probable product damage value, the job is responsible for the possible or probable damage for equipment, tool and fixture, raw materials, processed materials and other relevant property, responsibility towards profit or loss, supervision.

(5) Working Conditions:

This factor gauged by atmosphere ventilation, illumination, noise congestion, eye strain, physical contact with oil, accident, hazard from the work and its surroundings, hours of work, health due to dust or fumes etc.

The jobs are ranked according to the each of the above factors. One factor being taken at a time, each job compared with the other with respect to its worth on this factor alone. After all the jobs have been rated on each factor, a wage rate for job is determined by obtaining the sum of the money weighing determined for each of the five job factors. These wage rates then becomes the basis for determining the wage scale.

The Procedure of Factor Comparison Method:

The following are the steps involved in this method:

(1) Well Defined Factors- All the five factors such as mental requirement, physical requirement, skill responsibilities, and working conditions should be well defined.

(2) Selecting the Key jobs- The key jobs so selected should range from the lowest paid to the highest. The key jobs should be exact and well understood.

(3) Determining the Rate of Wages for Key Jobs- The wages for each of the key jobs are allocated to different factors.

(4) Developing a job Comparison Scale- The next step is developing a job comparison scale with regard to all the key jobs.

(5) Evaluation of an each job factor by factor with the key jobs- Each job is evaluated factor by factor in relation to the key jobs and compared with other jobs in terms of each job factor.

Edwin Flippo advocated seven steps in this method which are as follows:

(1) Selection of job factors

(2) Selection of key Jobs

(3) Determination of rates of wages for key jobs

(4) Ranking of job factors in each key job

(5) Allocation of rates of each of the key jobs among the job factors

(6) Evaluation of all other jobs in the light of key jobs

(7) Designing the wage and salary structure.

This method can be frequently applied without change in basic structure to wide range of jobs including high ranking technical and administrative positions.

Merits:

(1) It is accurate and objective method

(2) Flexibility in wage and salary structure is possible.

(3) It is a reliable, valid rational and highly acceptable method of job evaluation.

(4) Assignment of money value to the job factors is not only proper but realistic one.

Demerits:

(1) This method is time consuming and expensive also

(2) It is complicated method as average employee is not able to understand.

(3) There is a possibility of change in the contents and values of key jobs in the changing situation and environment.

(4) Expert is required in the committee of job evaluation as a rater. In the absence of experts it is very difficult to operate.


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