Methods of Job Evaluation: Ranking, Points, Factors, Advantage

In today’s corporate world the significance of job evaluation becomes very higher. Job evaluation is not only limited to deciding the salary or wages of the employee but today it also helps in improving performance, to avoid discrepancies and efficiency in work. There are various methods of job evaluation that are being used in organizations.

Due to the high significance and utility of job evaluation, it becomes very challenging for HR managers to select the best method so that they can correctly and efficiently measure the relative worth of the jobs in the organization.

Therefore, in this article, we provide a detailed explanation of what is job evaluation and all the types of job evaluation methods, and their advantage and disadvantage. These job evaluation methods seek to rank all the jobs in the organization and place them in a hierarchy that will reflect the relative worth of each.

► What is Job Evaluation?

Job evaluation is a process that is concerned with determining the relative worth of each job in relation to other jobs in an organization. It provides a rational, orderly hierarchy of jobs based on their worth to the company.

Job evaluation analyzes the difficulties faced by employees while performing their jobs and what is the importance of the work to the organization. The criteria or factors used to as evaluate a job’s worth are identified, defined, and weighted in the organization as per their job evaluation plan.

Also Read : What is Job Evaluation? (in detail)

► Techniques and Methods of Job Evaluation

Job evaluation is considered an important function of HRM which help to determine the relative worth of jobs in an enterprise. It plays a key role in establishing fair and standard pay differentials among jobs.

Job evaluation methods are classified into two categories which are further subdivided into two types –

✔ Quantitative Method

  1. Ranking System
  2. Job Classification or Grading Method

✔ Qualitative Method

  1. Points Rating System
  2. Factor Comparison System

Qualitative or Non-Analytical Methods

As per this method of job evaluation, all jobs in the enterprise are compared with each other. There is no attempt is made to break down or divide the jobs so that all aspects, demands, and components are analyzed completely and correctly.

1. Ranking System of Job Evaluation

The ranking method is one of the simplest methods of job evaluation. As per this method, the job raters compare and then rank one job against another without assigning point values. The job rater arranged the jobs from the most difficult to the simplest.

Again the job rater compares two jobs, one against another, and rank the more difficult job higher than the other job. and this process is continue until all jobs have been assigned their relative positions or rank.

Process of the Ranking Method

  • Data collection from job analysis
  • Selection of Raters
  • Ranking of jobs
  • Decide the pay structure

Advantage

  • It is a very simple and easy method
  • This method is economical
  • It takes very less time
  • This method is used in small firms where all jobs are well-known to job raters.

Disadvantage

  • It is subjective in nature because a committee rank the job hence it enhances the chance of human error.
  • The exact difference between different jobs is not determined because only rank is allocated to jobs.
  • Jobs are not broken down into different criteria.
  • This method fails to provide a yardstick or criteria for measuring the relative worth of one job against another.

✔ 2. Job Grading Method

The job grading method is also known as the job classification method. This method begins with the collection of information and data about various jobs with the help of job analysis and then all the jobs are put under different grades or classes that match them best based on the nature of the job, skill, responsibilities, experience, and another requirement. The job structure is divided into several classes or grades and each grade has its own wage rate.

The job grading method is slightly different from the ranking method because the grading method uses scale whereas in the rank method there is no involvement of the job.

For example, jobs may be graded as skilled, unskilled, clerical, managerial, executive, etc.

This method is mostly used in government departments for example RRB grade A jobs, RRB grade B jobs, RRB grade C jobs and etc.

Process

  • Preparing grade description
  • Selection of grade
  • Grading of job
  • Decide the wage structure as per the grade

Advantage

  • It is easy to understand.
  • It provides an opportunity for a systematic organizational structure.
  • It is more elaborate than the ranking method.
  • Does not require any technical skill to perform this method.
  • It takes into account all the factors that a job comprises.

Disadvantage

  • There is a high chance of human biases.
  • As the number of jobs increases then it becomes difficult to write grades or class descriptions are not easy with this method.
  • There may be a possibility that jobs are classified wrongly.
  • This method is not suitable for large organizations.

► Quantitative or Analytical Methods

✔ 1. Points Rating Method

The point rating method is the most sophisticated and widely used method in business organizations. In this method first job key factor is identified then the job is broken down into various job-related factors and placed weights or points on them.

Assigning points to factors and degrees – Evaluators examine each job on a factor-by-factor basis and ascertain the degree the job fits into each factor. The factors and degrees are weighted or assigned points.

Process

  • Determine critical job-related factors
  • Identify and define subfactors
  • Assigned respective points to factors
  • Preparing job evaluation manual

Adding points for all factors to ascertain the total point value for each job.

Advantage

  •  Their method provides no chance for subjective judgment in evaluating jobs, as the factors and degrees are elaborately explained
  •  This method provides an accurate evaluation as points for factors/degrees are decided before job evaluation is made.
  • This method is through a selection of an appropriate number of factors and degrees.

Disadvantage

  • It is a very complex method.
  • It is a very time-consuming method.
  • This method is very costly so many organizations do not adopt this method of job evaluation.
  • It needs the expertise to decide factors, degrees, and point values.
  •  It is difficult to change any factor, or degree after a manual point plan is formulated.

✔ 2. Factor comparison method

The factor comparison method has a lot of similarities to the point-raking method as it categorizes different job factors under created groups. In this method, the first key jobs are decided and jobs are divided into the key job factors, these factors are assumed to be constant for each set of jobs present to some degree in all jobs in organization present in the organization.

Generally, these key factors include mental requirements, physical requirements, skill requirements, working conditions, job responsibilities, supervisory responsibilities, etc. Thus, all jobs are compared to each other on the basis of key job factors that are present in all jobs. The same point is assigned to each factor and the total number of points indicates the job’s ranking.

The key jobs are ranked on a factor-by-factor basis and the organization ranks each of such key jobs from top to bottom, for each of the factors.

Conversion of ranking into money rates. Existing wage rates for key jobs are taken to find out the worth of each factor in each key job

Process

  • Identify the key jobs.
  • Defining the key factors that are present in all jobs.
  •  Rank the key job, factor by factor basis.
  • Decide the salary or monetary compensation for each factor and rank the key jobs.
  • Compare the factor ranking of each job with its monetary ranking.

Advantage

  • It provides a better basis for assessing the relative worth of each job when compared to the non-analytical methods.
  • This method is easy to understand.
  •  No training is required to implement this system.
  • This method is considered accurate because it compares other jobs with key jobs.

Disadvantage

  • It is a complex method.
  • It is a very costly method for job evaluation.
  • Communicating the job values assigned to the employees can also be challenging as they are often subjective.
  • Selection of key jobs and their key job factor is very difficult for the job evaluator.
  • Using the same criteria or key factors to measure all jobs in an organization may not be effective in situations when jobs vary within the organization.