Methods of Job Evaluation

For fixing compensation to different jobs, it is essential that there is  internal equity and consistency among different job holders. Job evaluation is the process of determining the relative  worth of different categories of jobs by analyzing their responsibilities and,  consequently, fixation of their remuneration.  The basic objective of job evaluation is to determine the relative  contributions that the performance of different jobs makes towards the  realization of organisational objectives.

There are four basic methods of job evaluation: ranking method, job  grading method, point method and factor comparison method. Out of these, first  two methods are non-quantitative and also known as traditional, non-analytical  or summary methods. The last two methods of job evaluation are quantitative, also known as  analytical methods, and use various  quantitative techniques in evaluating a job.

The basic difference between qualitative and quantitative methods of job evaluation is in terms of;

1. Consideration of the job as a whole versus consideration of different  components of a job; and
2. Judging and comparing jobs with each other versus assigning numerical  scores on a rating scale.

Usually, in practice, a combination of different methods is followed.  Based on this concept, some other methods have also been developed.

1. Ranking Method

In the ranking method of job evaluation, a whole job is compared with others and rank is  provided on the basis of this comparison. The usual process followed in this  method is as under:

1. On the basis of job analysis, each member of the job evaluation committee  ranks each job independently either against the benchmark job or against all  other jobs. The ranking is provided to the job on the basis of this comparison.
2. In order to increase the reliability of ranking, this exercise is undertaken twice  or thrice by the members.
3. If there are significant differences of opinions among the members about the  ranking of a particular job, the matter is settled by mutual consultation, or by  working out the average.

Merits

Ranking method has certain facial merits. Some of these merits are as follows:

• The method is comparatively simple, easily understandable, and mostly  acceptable by labor unions. It is suitable for comparatively smaller  organisations which may not like to undertake more laborious exercises.
• The method is less costly to undertake and maintain as compared to other  systems.

Demerits

Since ranking method of job evaluation is qualitative and non-analytical. It suffers from the following limitations:

• Ranking method is judgmental and, therefore, it is affected by personal  preferences of job evaluators.
• This method ranks various jobs in order of their relative worth. It does not  specify the real difference between two jobs. For example, the exact  difference between job ranked at first and the job ranked at second cannot be  specified.

2. Grading Method

Job grading method also known as job classification method establishes  various grades for different categories of jobs. For example, jobs of an operative  may be classified as unskilled, semi-skilled, skilled and highly-skilled. The  process followed in this method is as under:

1. At the initial stage. a number of job classes or grades is decided on the basis  of job analysis. Job grades can be determined on either of two bases. First,  all jobs may first be ranked and their natural classes may be determined. The  description of each job class is prepared covering all jobs falling in a class.  Second, the job evaluation committee may prepare a series of job class  description in advance on the basis of which various jobs may be graded.
2. Different characteristics of each job are matched with description of job  class and a job is placed in the class with which it matches best.

Merits

Grading system of job evaluation particularly in government jobs is  quite popular as this has certain merits over the ranking method. These are as  follows:

• It is quite simple to operate and understand as the relevant information  is provided by job analysis which serves other purposes too.
• Job evaluation done on grading method makes wage and salary  determination easier as these are fixed in terms of various grades of  jobs.

Demerits

This system of job evaluation suffers with the following limitations:

• Job grade description is vague and personal biases may distort job  grading as the method is not based on any scientific analysis.
• There are chances of employees’ resistance when new clusters of jobs  are prepared. This is evident by the fad that government employees  agitate when recommendations of a new pay commission come.

3. Point Method

Point method of job evaluation is widely used in business organisations.  It is an analytical and quantitative method which determines the relative worth  of a job on the basis of points alloted to each specific factor of a job. The sum  total to these points allotted to various job factors is the worth of the job. This  total is compared with that of other jobs and relative worth of various jobs is  determined.

Read More:  Point Rating Method of Job Evaluation

4. Factor Comparison Method

This method, also known as key job method, was originally developed at  the Philadelphia Rapid Transit Company, USA by Eugene J.Benge in 1926 to  overcome two major problems faced in point method of job evaluation. viz.  determining the relative importance of factors and describing their degrees. In  this method, each factor of a job is compared with the same factor of the other  jobs or the key job either defined or existing one. When all factors are  compared, the final rating is arrived at by adding the value received at each  comparison. For this purpose, Benge identified five factors – mental effort, skill,  physical effort, responsibility and working conditions. The procedure for factor  comparison method of job evaluation is as follows:

1. At the initial stage, some key jobs which are well recognized are selected. These jobs should be from a cross-section of  departments. These should represent all levels of wages and salaries which  are considered fair, both internally as well as externally.
2. Various factors of the jobs which are to be considered for comparison,  should be identified. These factors may be mental requirement. Skills,  physical requirement, responsibility and working conditions.
3. Each factor of a job is compared with the same factor of the key job and  rank is awarded. This exercise is repeated for all other factors.
4. The relative worth of a job is determined by adding the ranks obtained by  different factors of a job. Sometimes, the rank is expressed in terms of  monetary values and these values are added together to get the correct wage  rate for the job.

Merits

The factor comparison method is more systematic and analytical as  compared to any other method and offers following merits:

• It provides more accurate information about the relative worth of a job as  different comparable factors are compared with key jobs.
• Since only limited number of factors relevant for the effective job  performance are compared, there are reduced chances of overlapping.
• Since the evaluation is more systematic and analytical, its logic can be  accepted by trade unions and workers.

Demerits

However, factor rating method has its own operational problems which  restrict its adaptability. The major problems are as follows:

• This method is quite costly and time consuming to install and difficult to  understand by those not fully conversant with job evaluation process.
• If wage rates are adopted for making comparison, the system may  become obsolete very soon as there may not be proportionate increase in  wages for all jobs.
• This system considers only limited factors of job for comparison. This may  be a positive point so far as avoidance of duplication and simplicity of  procedure are concerned, but may ignore other factors which may be  important for the performance of the job.