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;
- Consideration of the job as a whole versus consideration of different components of a job; and
- 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:
- 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.
- In order to increase the reliability of ranking, this exercise is undertaken twice or thrice by the members.
- 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.
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.
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:
- 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.
- 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.
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.
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:
- 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.
- 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.
- 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.
- 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.
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.
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.
Credit: Compensation Management-CU