Factor Comparison A set of compensable factors are identified as determining the worth of jobs.

Typically the number of compensable factors is small (4 or 5). Examples of compensable factors are: 1. 2. 3. 4. Skill Responsibilities Effort Working Conditions

Next, benchmark jobs are identified. Benchmark jobs should be selected as having certain characteristics. 1. equitable pay (not overpaid or underpaid) 2. range of the factors (for each factor, some jobs would be at the low end of the factor while others would be at the high end of the factor). The jobs are then priced and the total pay for each job is divided into pay for each factor. See example matrix below:
Job Evaluation: Factor Comparison

Job Secretary Admin Assistant Supervisor Manager

Hourly Rate $9.00 $11.00 $15.00 $21.00

The hourly rate is divided into pay for each of the following factors: Pay Pay Pay Pay for Working . for Skill for Effort for Responsibility Conditions 4.50 5.50 6.00 9.00 2.00 2.50 3.50 3.50 2.00 2.50 4.00 7.00 0.50 0.50 1.50 1.50

This process establishes the rate of pay for each factor for each benchmark job. Slight adjustments may need o be made to the matrix to ensure equitable dollar weighting of the factors. The other jobs in the organization are then compared with the benchmark jobs and rates of pay for each factor are summed to determine the rates of pay for each of the other jobs.
Advantages

Disadvantages

The value of the job is expressed in monetary terms. Can be applied to a wide range of jobs.

The pay for each factor is based on judgements that are subjective. The standard used for determining the pay for each factor may have build in biases that would affect certain groups

Can be applied to newly created jobs.

of employees (females or minorities).

There are three basic methods of job evaluation: (1) ranking, (2) classification, (3) factor comparison. While many variations of these methods exist in practice, the three basic approaches are described here. Ranking Method Perhaps the simplest method of job evaluation is the ranking method. According to this method, jobs 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. 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. Classification Method 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) (b) (c) (d) Class I - Executives: Further classification under this category may be Office manager, Deputy office manager, Office superintendent, Departmental supervisor, etc. Class II - Skilled workers: Under this category may come the Purchasing assistant, Cashier, Receipts clerk, etc. Class III - Semiskilled workers: Under this category may come Stenotypists, Machineoperators, Switchboard operators, etc. 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. Factor Comparison Method 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: Table: Merits and Demerits of Factor Comparison Method Merits 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. Demerits 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.

Point method 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. Table: 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 (Bank Officer) 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, usually, is undertaken to collect wage rates of certain key jobs in the organization. Let's explain this: Table: 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 (Robbins, p.361). 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