Question

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In your own words, discuss the advantages and disadvantages of the point method of job evaluation. Briefly describe the main steps in developing such a job evaluation system.

Answer 1

Job evaluation is a systematic approach and method through which the compensation and HR professionals can determine the pay rates for a job while also ensuring that the pay is externally competitive and internally equitable. The point method of job evaluation is one of the most popular and widely used techniques for evaluating a job and for deciding the pay for it. In this method, the worth of a job is determined by analyzing certain compensable factors. These factors can be responsibilities, skills, effort and working conditions among others. The advantages of the point-based job evaluation method are given below.

Expression In Monetary Terms- The worth or value of a job can be expressed in monetary terms. Therefore, a company will be able to analyze and evaluate the financial implications of the job and pay structure more accurately.

Can Be Applied To All Jobs- The point-based system can be applied to many different kinds of jobs. The system of evaluation considers many different aspects of a job including responsibilities, working conditions, skills and others that are omnipresent for various kinds of jobs (including the white color and blue-collar jobs) being actually done and accomplished worldwide.

Fit For New Jobs- The system can also be applied to a job that is newly created. Therefore, a company is not required to spend time, effort, and cost towards conceptualizing and implementing a new pay and job evaluation structure each time it creates a new job.

Deep Analysis- The method also carries out a more realistic and accurate appraisal of all the jobs. It carries out a deeper analysis of the various factors of the job and also assigns points to each of them. Therefore, it reviews the worth of not only the job but other minute aspects related to it as well.

The Disadvantages of the point-based job evaluation system and method are given below.

Subjective Approach- Determining the compensation, pay, and value of the various aspects or factors of a job (like skill or working conditions) may be based on subjective judgments. Because there is no specific calculation or standard involved, the pay grade varies in lieu of the opinion of HR professionals and those responsible for compensation. The subjective assessment may not evaluate the worth of the factors in relation to a given benchmark or scale.

Bias- There may also be a built-in bias in the point-based system. The standards that are used for determining the pay for the various factors may be manipulated to favor certain employees.

Step-By-Step Approach of Developing The Point Based System

The main steps involved in developing a job evaluation system based on the point-based method are given below.

Deciding On, And Identifying The Compensable Factors

As the first step of the development of the job evaluation system that is based on points, the analyst will identify the different compensable factors, which will be common for all the jobs that are being evaluated. In most cases, these factors are skills, effort, responsibilities, and working conditions, among others. These factors also have different sub-factors. For instance, the skill can be further categorized into factors including education, experience, and abilities. Responsibilities can be categorized into supervisory or physical responsibilities while efforts can be mental or physical. The working conditions can have factors including hazards, location, and environmental extremes among others.

Assignment Of Points To The Factors

The compensation analyst or HR professional will now divide each of these factors into different levels and will assign certain points to each of the levels. Obviously, lower levels will have lesser points allocated to them. For instance, the “experience” subfactor within the skill category can be divided into levels including no experience, 1 to 3 years of experience, and 4 to 8 years of experience. The levels can be assigned points like 10 points, 30 points, and 50 points respectively. Those with more than 8 years of experience make get 100 points.

The point-spread may vary in between the levels of the different factors and sub-factors in accordance with the relevance. For instance, there will be a lesser point spread between a postgraduate diploma and an undergraduate degree, when compared to point spread between school and college education.

Weighting

The main compensable factors are weighted according to their importance for a job. For instance, skill and experience may be more important for an AC service technician job when compared to a college degree. The weight of the factor is multiplied to the points to get to the real worth or value of a job factor, in a point system for job evaluation. For instance, if a job gets 50 points for experience, and experience has been assigned a weight of 1.5, the net or total points gained would be:

50 x 1.5=75.

On the other hand, if education has been assigned a weight of 1 and the job gets 70 points for it, the net points for the factor will be:

1X70=70.

Job Categorisation

In the final step, all the points of a given job are summed up and it is grouped with jobs having similar point totals. These jobs will now lie under the same job pay-grade. The pay will be according to the worth of the job and remain externally competitive. The pay grade system and categories will also remain equitable.