Job evaluation is a systematic and objective process used by companies to compare jobs within their organization to assess the relative value or worth of each job. This is unrelated to performance reviews, as the goal is to evaluate the job itself, not the person who is performing the job.
Job evaluation typically occurs early in the process of creating a compensation system for an organization. The goal is to make a comparison between jobs to assess their relative worth for the purpose of establishing a logical pay structure. It may be compared to or used in conjunction with market pricing, which uses the labor market to set the value of jobs. An effective job evaluation system determines the best rate of pay for a position and develops a broad job description that adapts to a company’s needs as they change over time. There are a number of ways to approach job evaluation, but there are four primary methods that all HR professionals should know.
The four primary methods of job evaluations used to set compensation levels are point factor, factor comparison, job ranking, and job classification. The first two are quantitative and the latter two are non-quantitative. The difference between the two is: In quantitative methods, the key factors of a job are selected and then measured. In non-quantitative methods, a job is compared as a whole with other jobs in the organization.
Point factor comparison
This approach breaks down jobs into compensable factors identified during a job analysis. Points are assigned to the factors, and a pay structure is established for the position. The jobs with the highest points garner the highest pay. By comparing the jobs, the rank order of importance of each can be established.
The factor comparison method represents a combination of ranking and points factor methods. Jobs with similar responsibilities within the organization are identified to set benchmarks. Identifiable factors for. . .