1. The Factor Comparison Method
This method is a combination of the ranking and point system. Thomas E. Hitten was the first to originate factor comparison method of job evaluation. As originally developed this method involves ranking of jobs in respect of certain factors and usually involves the assigning of money wages to the job depending upon the ranking. This is more systematic and scientific method. Under this method, jobs are evaluated by some standards. In this method, instead of ranking complete jobs, each job is ranked according to series of factors. All jobs are compared to each other for the purpose of determining their relative importance by selecting four or five major job elements which are more common or less common to all jobs. These elements are not pre-determined. These are chosen on the basis of job analysis. The five factors which are commonly used are
(i) mental requirement
(iii) physical requirement
(iv) responsibilities and
(v) working conditions.
The number of factors may be more than five. Pay will be assigned in this method by comparing the weights of the factor required for each job, i.e., the present wages paid for key jobs may be divided among the factors weighted by importance. So the wages are assigned to the job in comparison to its ranking on each job factor.
The major steps in this system consist of the following:
Selection of factors: They may be skill, mental and educational requirements, physical requirements and responsibility, working conditions. The persons writing job specifications are generally provided with a set of dimensions within which they have to perform this important work.
Selection of key jobs: Key jobs serve as a standard against which all other jobs are compared. Generally a key job is one whose contents has become stabilized over a period of time and whose wage rate is considered to satisfactory and acceptable by the management and union. The key jobs should be a good sample representing the entire range. It is suggested that 15 to 20 jobs should be picked. All of these should be clearly describable and capable of analysis in terms of factors.
Ranking of Key jobs: Rank the selected jobs under each factor (by each and every member of the job evaluation committee) independently. Ranking is made individually and then a meeting is held to develop a consensus.
Assign money value: Money value is assigned to each factor so as to determine the wage rate for each key job. The basic pay for each 'key' job is allocated to each factor. This should reflect a range from the lowest to the highest.
Comparing all jobs with key jobs: All other jobs are compared with the list of key jobs. This is done to know their relative importance and position in the scale of jobs.
An illustration of how the factor comparison method works is given below:
Table: Ranking Jobs by Factor Comparison
Table: Allocation of Money Value to the different factors and Ranking of Jobs under the Factor Comparison Method
For example, if tool making is a benchmark job and its wage rate is 20 money units; it may be decided to assign nine of these to skill, five to mental requirements, two to physical requirements, three to responsibility and one to working conditions. Similarly, if the wage rate for another benchmark job. for example that of a machinist, amounts to 18 money units, eight of these may be allotted to skill, three to working conditions and so on.
- Factor comparison method permits a more systematic comparison of jobs than the non-analytical methods. It is a systematic, quantifiable method for which detailed step by step instructions are available.
- The system results in more accurate job evaluation as it is more objective because weights are not selected arbitrarily.
- It is flexible as it has no upper limit on rating that a job may receive on a factor.
- The reliability and validity of the system are greater than the same statistical measures obtained from group standardised job analysis plans.
- The procedure of rating new jobs by comparing with other standards or key job is logical and not too difficult to accomplish.
- It utilizes few factors and thereby reduces the likelihood of overlapping.
- t is a scheme that in corporate money value, determination of wage rates is automatic.
- This method is comparatively complicated to apply and it is difficult to explain to workers.
- It is costly to install, and somewhat difficult to operate for anyone who is not acquainted with the general nature of job-evaluation techniques.
- The use of present wages for the key jobs may initially create errors into the plan. The contents and the value of these jobs may change over a period of time and they will lead to future errors.
- It goes against the common belief that the procedure of evaluating jobs and fixing their wages should be kept separate.
- The use of five factors is a growth of the technique developed by its organisations. And using the same five factors for all organisation and for all jobs in an organisation may not always be appropriate.
- It is a very expensive method/system of job evaluation because experts have to be appointed particularly in selecting weights which are based in actual analysis.
2. Point Rating Method
This is the most widely used method for job evaluation. It along with factor comparison method, involves a more detailed, quantitative and analytical approach to the measurement of job worth. This method is widely used currently. In this method jobs are expressed in terms of key factors. Then various points are assigned to each factor in order of their importance. Then points are summed up to determine the wage rate for the job. Jobs with similar point totals are placed in similar pay grades. The point rating procedure has to clearly define from very start. By and large, its steps fall into two distinct stages, namely preparing and evaluation plan and schedule (by defining and weighting factors) and grading jobs by reference to this schedule. This involves the following steps:
- Listing of Jobs: The jobs have to be determined first which are to be evaluated. They are usually clustered. This should cover all the categories of jobs: skilled, unskilled, semi-skilled, professional, executives etc.
- Selecting and defining factors: Identify the factors common to all the identified jobs such as skill, effort, responsibility, job conditions etc. There should be sufficient number of factors to evaluate all aspects of the jobs. The number of factors will depend upon the nature of the jobs.
- Dividing the factors into degree: Once the factors are selected they must be divided into degrees to make them operational. The point method generally uses from four to six degrees for each factor. It is advisable to an even number of degrees in the development of point method and the same number of degrees should be used for each factor in order to maintain consistency in the job evaluation plan.
- Weighting the factors: The relative importance of each factor selected has to be determined. In other words, the factors must be weighted. There is no scientific or readymade method for weighting factors. It is generally done pragmatically and will depend upon the knowledge of the work of the enterprise. Weighting will also depend on the firm's objectives and policies.
- Allocations points to each degree: Once the relative importance of the factors has been determined in a preliminary way and the factors suitably divided into degrees, each degree must be assigned a numerical value. These are the values that will be used in determining the total point values of jobs.
- Evaluation of Jobs: Once the factor plan is adopted, it is usual to prepare an evaluation handbook explaining the procedure to be followed and summarising all the elements required for evaluation.
- Assign money value points: For this purpose points are added to give the total value of a job: its value of a job; its value is then translated into terms of money with a pre-determined formula.
- The point method is a superior and widely used method of evaluating jobs. It gives us a numerical basis for wage differentials. By analysing a job by factors it is usually possible to obtain a high measure of agreements on job value.
- Once the scales are developed, they can be used for a long time.
- It accounts for differences in wage rates for various jobs on the strength of job factors. Jobs may change over time, but the rating scale established under the point method remain unaffected.
- It has the ability of handling a large number of jobs and enjoys stability as long as the factor remains relevant.
- This method is a costly affair. The development and installation of the system calls of heavy expenditure.
- This is a complex method. Adoption of the whole procedure is a very difficult and time-consuming process.
- There may be wide fluctuations in the compensable factors with the change in technology, values of employees etc.
- Employees, trade union representatives, management and other interest parties may perceive differently in selecting a compensable factors, in giving weightage etc.