Management Consultant
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i am not able to under stand the difference between the types of job evaluation clearly. can anybody can help in explaining in simple meaning
30th March 2009 From India, New Delhi
There are three basic methods of [COLOR=orange! important][COLOR=orange! important]job[/COLOR][/COLOR] evaluation: (1) ranking, (2) classification, (3) factor comparison.
Ranking Method
30th March 2009 From China


You can use job evaluations to:
Clarify job descriptions so that employees understand the expectations of their roles and the relationship of their roles to other jobs within the organization.
Attract desirable job candidates.
Retain high-potential employees.

What is job evaluation?
Job evaluation is a systematic process that you can use to determine the relative level, importance, complexity, and value of each job in your organization. With a successful job evaluation system, you can compare each job to other jobs within your organization.
It is best to perform job evaluation after work analysis. Job evaluation, in conjunction with work analysis, helps you develop a job description that is broad, descriptive, and flexible so that you can adapt the description to your organization's changing needs.
Assess employee contribution
Job evaluation helps you establish and qualify differences in employee contribution across jobs. These differences provide a foundation for employee compensation decisions. The job evaluation process measures the elements of a job and produces an overall score. In each case, you evaluate the job, not the employee who performs the job.
Assess job content and value
Typically, job evaluation assesses both the content of a job and the value of a job for your organization.
Job content refers to the type of work performed and the skills and knowledge necessary to perform the work.
Job value refers to the job's degree of contribution in meeting your organization's goals and the degree of difficulty in filling the job.
Factors in job evaluation
Job evaluators often assess jobs based on these factors:
Training level or qualifications requirements
Knowledge and skills requirements
Complexity of tasks
Interaction with various levels of the organization
Problem-solving and independent judgment
Accountability and responsibility
Decision-making authority
Degree of supervision required
Cross-training requirements
Working conditions
Degree of difficulty in filling job

Steps in job evaluation
The standard steps in job evaluation include:
Introduce the concept of job evaluation.
Obtain management approval for the evaluation.
Train the job evaluation selection team.
Review and select the job evaluation method.
Gather information on all internal jobs.
Use information to fully expand job descriptions.
Use the selected job evaluation method to rank jobs hierarchically or in groups.
Link the ranked jobs with your compensation system or develop a new system.
Implement the job evaluation and compensation systems.
Periodically review your job evaluation system and the resulting compensation decisions.

Analyze job evaluation methods
Before implementing job evaluation in your organization, select the most appropriate job evaluation method. Hundreds of job evaluation systems exist. Research the job evaluation methods and resources available online. 4 job evaluation systems are most commonly used:
Point evaluation
Factor comparison

Ranking jobs is the easiest, fastest, and least expensive approach to job evaluation. It is also most effective in smaller organizations with few job classifications. To rank positions, order jobs from highest to lowest based on their relative value to your organization.
The process of job ranking typically assigns more value to jobs that require managerial or technical competencies. More value is also assigned to jobs that supervise, exercise decision-making authority, or rely on independent judgment. For example, a job-ranking system might rank the job of CEO as the most valued job within the organization and the job of product assembler as the least valued.
Advantages Simplicity is the main advantage in using a ranking system. It is also easy to communicate the results to employees, and it is easy to understand.
Disadvantages Ranking jobs is subjective. Jobs are evaluated, and their value and complexity are often assessed on the basis of opinion. Also, when creating a new job, existing jobs must be reranked to accommodate the the new position.
Perhaps the simplest method of job evaluation is the ranking method. According to this method, jobs <link updated to site home> are arranged from highest to lowest, in order of their value or merit to the organization. Jobs also can be arranged according to the relative difficulty in performing them. The jobs are examined as a whole rather than on the basis of important factors in the job; and the job at the top of the list has the highest value and obviously the job at the bottom of the list will have the lowest value.
Jobs are usually ranked in each department and then the department rankings are combined to develop an organizational ranking. The following table is a hypothetical illustration of ranking of jobs.
Table: Array of Jobs according to the Ranking Method
Rank Monthly salaries
1. Accountant Rs 3,000
2. Accounts clerk Rs 1,800
3. Purchase assistant Rs 1,700
4. Machine-operator Rs 1,400
5. Typist Rs 900
6. Office boy Rs 600
The variation in payment of salaries depends on the variation of the nature of the job performed by the employees <link updated to site home> . The ranking method is simple to understand and practice and it is 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, 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.

The general purpose of job classification is to create and maintain pay grades for comparable work across your organization.
To conduct a job classification: First, write descriptions for a category of jobs; next, develop standards for each job category by describing the key characteristics of those jobs in the category; finally, match all jobs to the categories based on the similarity of tasks, the decision-making exercised, and the job's contribution to the organization's overall goals.
Universities, government employers and agencies, and other large organizations with limited resources typically use job classification systems. These types of organizations have many types of jobs at diverse locations and must maintain equitable and fair standards across all work settings.
Advantage Job classification is simple once you establish your categories. You can assign new jobs and jobs with changing responsibilities within the existing system.
Disadvantages Job classification is subjective, so jobs mightfall into several categories. Decisions rely on the judgment of the job evaluator. Job evaluators must evaluate jobs carefully because similar titles might describe different jobs from different work sites.
According to this method, a predetermined number of job groups or job classes are established and jobs are assigned to these classifications. 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 <link updated to site home> , Deputy office manager, Office superintendent, Departmental supervisor, etc.
(b) Class II - Skilled workers: Under this category may come the Purchasing assistant, Cashier, Receipts clerk, etc.
(c) Class III - Semiskilled workers: Under this category may come Stenotypists, Machine-operators, Switchboard operators, etc.
(d) Class IV - Semiskilled 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 system is very easy to understand and acceptable to almost all employees without hesitation. One strong point in favor of the method is that it takes into account all the factors that a job comprises. This system can be effectively used for a variety of jobs.
The weaknesses of the job classification method are:
Even when the requirements of different jobs differ, they may be combined into a single category, depending on the status a job carries.
It is difficult to write all-inclusive descriptions of a grade.
The method oversimplifies sharp differences between different jobs and different grades.
When individual job descriptions and grade descriptions do not match well, the evaluators have the tendency to classify the job using their subjective judgments.
Point evaluation is the most widely used job evaluation method. In a point evaluation system, you express the value of a particular job in monetary terms. You first identify compensable factors that a group of jobs possess. Based on these factors, you assign points that numerically represent the description and range of the job.
Examples of compensable factors are skills required, level of decision-making authority, number of reporting staff members, and working conditions.
Advantage This method is often viewed as less biased than other methods because the job evaluator assigns each job's total points before the compensable factors become part of the equation.
Disadvantages Subjective decisions about compensable factors and the associated points assigned might be dominate. The job evaluator must be aware of biases and ensure that they are not represented in points assigned to jobs that are traditionally held by minority and female employees.
This method is widely used currently. Here, jobs are expressed in terms of key factors. Points are assigned to each factor after prioritizing each factor in the order of importance. The points are summed up to determine the wage rate for the job. Jobs with similar point totals are placed in similar pay grades. The procedure involved may be explained thus:
(a) Select key jobs. Identify the factors common to all the identified jobs such as skill, effort, responsibility, etc.
(b) Divide each major factor into a number of sub factors. Each sub factor is defined and expressed clearly in the order of importance, preferably along a scale.
The most frequent factors employed in point systems are:
I. Skill (key factor): Education and training required, Breadth/depth of experience required, Social skills required, Problem-solving skills, Degree of discretion/use of judgment, Creative thinking;
II. Responsibility/Accountability: Breadth of responsibility, Specialized responsibility, Complexity of the work, Degree of freedom to act, Number and nature of subordinate staff, Extent of accountability for equipment/plant, Extent of accountability for product/materials;
III. Effort: Mental demands of a job, Physical demands of a job, Degree of potential stress.
The educational requirements (sub factor) under the skill (key factor) may be expressed thus in the order of importance.
Degree Define
1. Able to carry out simple calculations; High School educated
2. Does all the clerical operations; computer literate; graduate
3 Handles mail, develops contacts, takes initiative and does work independently; post graduate
Assign point values to degrees after fixing a relative value for each key factor.
Point Values to Factors along a Scale
Point values for Degrees Total
Factor 1 -2- 3- 4- 5
Skill 10- 20- 30 -40 -50 = 150
Physical effort 8 -16 -24 -32- 40 =120
Mental effort 5 -10 -15 -20 -25 =75
Responsibility 7 -14 -21 -28 -35 =105
Working conditions 6- 12 -18- 24- 30= 90
Maximum total points of all factors depending on their importance to job = 540

4 Find the maximum number of points assigned to each job (after adding up the point values of all sub-factors of such a job). This would help in finding the relative worth of a job. For instance, the maximum points assigned to an officer’s job in a bank come to 540. The manager’s job, after adding up key factors + sub factors’ points, may be getting a point value of, say 650 from the job evaluation committee. This job is now priced at a higher level.
5 Once the worth of a job in terms of total points is expressed, the points are converted into money values keeping in view the hourly/daily wage rates. A wage survey <link updated to site home> , usually, is undertaken to collect wage rates of certain key jobs in the organization. Let’s explain this:
Conversion of Job Grade Points into Money Value
Point range Daily wage rate (Rs) Job grades of key bank officials
500-600 300-400 1 Officer
600-700 400-500 2 Accountant
700-800 500-600 3 Manager I Scale
800-900 600-700 4 Manager II Scale
900-1,000 700-800 5 Manager III Scale
Merits and Demerits
The point method is a superior and widely used method of evaluating jobs. It forces raters to look into all keys factors and sub-factors of a job. Point values are assigned to all factors in a systematic way, eliminating bias at every stage. It is reliable because raters using similar criteria would get more or less similar answers. "The methodology underlying the approach contributes to a minimum of rating error" . It accounts for differences in wage rates for various jobs on the strength of job factors. Jobs may change over time, but the rating scales established under the point method remain unaffected.
On the negative side, the point method is complex. Preparing a manual for various jobs, fixing values for key and sub-factors, establishing wage rates for different grades, etc., is a time consuming process. According to Decenzo and Robbins, "the key criteria must be carefully and clearly identified, degrees of factors have to be agreed upon in terms that mean the same to all rates, the weight of each criterion has to be established and point values must be assigned to degrees". This may be too taxing, especially while evaluating managerial jobs where the nature of work (varied, complex, novel) is such that it cannot be expressed in quantifiable numbers.
Job evaluators rank jobs that have similar responsibilities and tasks according to points assigned to compensable factors. The evaluators then analyze jobs in the external labor market to establish the market rate for such factors. Jobs across the organization are then compared to the benchmark jobs according to the market rate of each job's compensable factors to determine job salaries.
Advantage This method results in customized job-ranking.
Disadvantage Compensable factor comparison is a time-consuming and subjective process.
Comparison Method APPROACH
A more systematic and scientific method of job evaluation is the factor comparison method. Though it is the most complex method of all, it is consistent and appreciable. Under this method, instead of ranking complete jobs, each job is ranked according to a series of factors. These factors include mental effort, physical effort, skill needed, supervisory responsibility, working conditions and other relevant factors (for instance, know-how, problem solving abilities, accountability, etc.). Pay will be assigned in this method by comparing the weights of the factors required for each job, i.e., the present wages paid for key jobs may be divided among the factors weighed by importance (the most important factor, for instance, mental effort, receives the highest weight). In other words, wages are assigned to the job in comparison to its ranking on each job factor.
The steps involved in factor comparison method may be briefly stated thus:
Select key jobs (say 15 to 20), representing wage/salary levels across the organization. The selected jobs must represent as many departments as possible.
Find the factors in terms of which the jobs are evaluated (such as skill, mental effort, responsibility, physical effort, working conditions, etc.).
Rank the selected jobs under each factor (by each and every member of the job evaluation committee) independently.
Assign money value to each factor and determine the wage rates for each key job.
The wage rate for a job is apportioned along the identified factors.
All other jobs are compared with the list of key jobs and wage rates are determined.
An example of how the factor comparison method works is given below:
Merits and Demerits of Factor Comparison Method
Analytical and objective.
Reliable and valid as each job is compared with all other jobs in terms of key factors.
Money values are assigned in a fair way based on an agreed rank order fixed by the job evaluation committee.
*Flexible as there is no upper limitation on the rating of a factor

Difficult to understand, explain and operate.
Its use of the same criteria to assess all jobs is questionable as jobs differ across and within organizations.
*Time consuming and costly.
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3rd April 2009 From India, Mumbai
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