Module 6: Quantitative Job Evaluation Methods Flashcards
Two major objectives of job evaluation
- Develop internal standards of comparison
- Measure relative job values within the organization
Why is Job Component method and Point Factor method quantitative (or Factor)?
Job Component and Point Factor are quantitative because they use points or monetary units to determine a numerical score for each job.
What are Nonquantitative or Whole job evaluation methods?
Ranking
Classification
Compensable Factors
A compensable factor is any criterion used to provide a basis for judging value in order to create a job worth hierarchy. The elements used to measure job worth. Intrinsic elements in jobs that add value to the organization and for which it wants to pay.
The generic compensable factors are skill, effort, responsibility, and working conditions.
Generic Factor Group definitions - SKILL FACTORS
Skill factors: require a short description when used in a job evaluation plan.
Examples: experience. knowledge. manual dexterity. analytical ability. creativity/ingenuity. interpersonal communications. job complexity.
Generic Factor Group definitions - EFFORT FACTORS
Physical demands (lifting, etc) Mental exertion (concentration, etc)
Generic Factor Group definitions - RESPONSIBILITY FACTORS
- impact on the organization
- directing the work of others
- independent action/decision making
Generic Factor Group definitions - WORKING CONDITIONS FACTORS
- hazardous or dangerous environment (working with chemicals)
- adverse conditions (temperature extremes)
- unpleasant environment (strong or unpleasant odors)
Factors definition
Factors are individual component aspects of job content within generic factor groups (the components within the factor group “skill” include experience and knowledge, among others)
Degrees definition
Degrees are measurement scales or yardsticks which identify specific levels of a factor
Examples of Terms
Generic factor group: skill
Specific factor name: experience
specific factor description: this factor measures the time normally required on related work and on the job training for the job being evaluated for an individual to attain satisfactory performance standards under normal supervision.
Degrees
1st degree - less than three months
2nd degree - three months up to and including 12 months
3rd degree - more than one year up to and including three years
4th degree - more than three years up to an including 5 years
5th degree - more than five years
Selecting Compensable Factors
Identify the organizations internal values
- formal documentation: mission statement, business strategy, HR philosophy.
- discussions with senior management
Review the job content of the work group to be covered by the plan
- common characteristics
- diverse characteristics
- industry specific considerations
- unique aspects
Identify 5-12 potential factors for consideration by management
- committee process
- individual interviews with key managers or employees
- statistical analysis
- combination of the above
Obtain key managements support and stakeholder acceptance
Determine factors to be used
- select effective factors - factors should:
- differentiate job value, avoid measuring the same or similar job characteristics more than once
- have a logical relationship to overall job value
- be common to all jobs being evaluated
- cover all major aspects of job requirements for which the organization is willing to pay
- be manageable, limit factors used to a reasonable number
- **failure to do the above increases administrative time without adding meaningful information and may create systematic bias for or against certain jobs
Include all important factors
-failure to do this may inadvertently discriminate for or against certain jobs, or may produce a job worth hierarchy inconsistent with internal values
Defining compensable factors
- develop a clear and comprehensive definition for each factor
- define the highest and lowest levels of each factor present in the work group to be covered by the plan
- create intermediate levels from lowest to highest by defining a logical progression that reflects reasonable differences
What to consider when defining compensable factors
- create a job worth hierarchy consistent with managements perception of relative job worth
- establish proper number of levels
- too many levels
- forces artificial distinctions between degree levels
- requires highly detailed job documentation
- increases administrative time
- encourages requests for re-evaluation which results in grade creep
- too few levels
- does not adequately differentiate important aspects of job value
- may not fully cover the range of work performed
- overlapping levels
- difficult to select the appropriate level
- adjacent level descriptions are too similar
Weighting compensable factors
- consider the nature of the work performed by the job groups covered under the plan
- rank the factors selected in order of priority for the organization
- develop initial factor weights as a percentage, derived by statistical analysis, management judgment, or a combination of the two
- review with key management and other stakeholders, as appropriate
Job Component method
a statistical job evaluation that uses multiple factor regression analysis.
statistically developed: as opposed to the simpler ranking methods described earlier, the job component method uses statistical analysis to determine job value.
identifies factors/factor weights that explain market levels: the job component method is used to identify the specific factors and factor weights that help to explain the market pay levels of benchmark jobs
may be used to evaluate nonbenchmark jobs: once a statistical model has been developed under the job component method, nonbenchmark jobs can then be evaluated using the model.
Job Component method overview
Step one: select and define compensable factors and job content to be measured
step two: develop a structured questionnaire to collect data on independent factors, such as work experience, level of education, budget, duties, and responsibilities.
step three: administer and evaluate questionnaires.
step four: collect market data for benchmark jobs
step five: input the data from questionnaires and/or organizational records on selected benchmark jobs along with market data into computer
step six: conduct a multiple factor regression analysis on the data to determine which factors should be included in the initial compensation model.
BASE PAY = CONSTANT + COEFFICIENT (EXPERIENCE) + COEFFICIENT (EDUCATION + COEFFICIENT (BUDGET)
step seven: test the model using the formula created from selected benchmark jobs, input additional benchmark data to verify results, adjust the model if necessary to produce the desired job worth hierarchy.
step eight: run all jobs for which there is no pay data through the final model to produce the complete job worth hierarchy
Advantages and Disadvantages of Job Component Method
Advantages:
- objective
- comprehensive
- most statistically accurate
- involves management in selection of compensable factors
- streamlines administration
- results in database of information
- ease of reporting
Disadvantages:
- time consuming for front end question development
- complex therefore difficult to communicate to employees
- often perceived as black box
- expensive
Point Factor Method
- uses defined factors and degrees to establish job value
- job descriptions are compared to the definitions of degrees in order to determine the most appropriate level
- the corresponding points for that level are then awarded to the job and combined for all factors to derive a total score
Point Factor Method Overview
step 1: select compensable factors to be used to evaluate the jobs
step 2: define factors and degree levels within each factor - weight each factor as a percent of 100
step 3: assign points to each degree level
step 4: analyze and describe jobs in terms of the compensable factors
step 5: determine which degree levels of each factor best fits the job and assign respective point values
step 6: total points for each job and arrange a job worth hierarchy based on total points
Point Factor - Steps 1 and 2
- consider the job group
- use management judgment or statistical analysis
Point Factor - Step 3
assign points. a point factor plan can be set up in several ways.
Dimension:
- single: used when the factor is dependent on only one variable (years of experience)
- multiple: used when the factor is dependent on multiple variables (business judgment is dependent on both decision making/impact and scope/complexity)
- *to accurately judge this factor, each subfactor must be evaluated as it related to the main factor
Progression:
- arithmetic: typically used in a single dimension approach. assigns a point factor to each level of the dimension.
- geometric: typically used in a multiple dimension approach. assigns a percent increase to each level of dimension. as a percentage, the points assigned to each dimension progressively increase. for example: page 150 shows an increase of 9 points between level 1 and 2, and an increase of 24 points between level 7 and 8. the result allocates more points for increasing knowledge.
Example: Single dimension, arithmetic progression
Defines factors and degree levels within each factor and assigns points to each level.
Example: experience factor
-this factor measures the time normally required on related work and on the job training for an individual to attain satisfactory performance standards under normal supervision. As years of experience increase, job points increase.
see book for chart
Example: Multiple dimension, geometric progression
Business judgment: this factor measures the scope and complexity of job content, as well as decision making responsibility and impact
see book for chart
Point Factor - Step 4
Analyze and describe jobs in terms of compensable factors
select an appropriate job analysis technique that will describe jobs in terms of their compensable factors
Point Factor - step 5
degree definition and value
compare job documentation to degree definitions
determine which degree definition of each factor best fits the job and assign respective point values
Point Factor - step 6
Job worth hierarchy
total the point for each job and arrange a job worth hierarchy based on total points
Job A - 950 points
Job B - 600 points
Job C - 500 points
Job D - 350 points
Advantages and Disadvantages of Point Factor method
Advantages:
- relatively reliable
- relatively objective
- easy to evaluate new or revised jobs
- compensable factors can be tailored to the company
- the degree of difference between jobs is apparent
- responsive to pay equity laws and comparable worth parameters
Disadvantages:
- expensive to develop or purchase
- time consuming to design and implement
- cumbersome if many jobs are to be evaluated
- creates inflexible hierarchy
- ability to evaluate and score the job to achieve a specific level
Documenting the job evaluation process
Market pricing:
- specific surveys and why they were used
- measure of central tendency used
- practice of selecting the most representative survey number to serve as the going market rate (may vary from job to job, depending on whether averages are skewed)
- method of aging the data from multiple surveys to common point in time
- method for developing market composite for each job
For internal job evaluation methods it is important to document the process used to evaluate the jobs:
- methodology used
- names of evaluators (amount)
- dates of evaluations
- any thought process used to evaluate the positions
Q: identify the two quantitative job evaluation methods
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Q: define the terminology associated with compensable factors and describe the process involved in selecting, defining, and weighting them
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Q: name the generic compensable factor groups and identify commonly used evaluation factors for each
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Q: explain the job component method, the steps involved, and its advantages and disadvantages
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Q: explain the point factor method, the steps involved, and its advantages and disadvantages
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Quiz: What are the two quantitative job evaluation methods? A) ranking and classification. B) job component and point factor. C) market based and job content
job component and point factor
Quiz: What should one do when selecting compensable factors? A) identify the organizations internal values. B) identify measures used for evaluating performance. C) identify several measures for each job characteristic. D) identify the top performers in the job group
identify the organizations internal values
Quiz: which of the following is considered one of the generic compensable factor groups? A) values. B) behavior. C) knowledge. D) working conditions
skill, effort, responsibility, working conditions
Quiz: which method of job evaluation uses multiple factor regression analysis that may be used to predict salary or grade levels for nonbenchmark jobs? A) market pricing. B) ranking. C) job component. D) point factor
job component
Quiz: what is one of the steps in the point factor job evaluation method? A) define the budget that will be needed. B) define the degree levels within each compensable factor. C) define as many levels as possible within each factor to ensure an adequate degree of distinction. D) determine the dependent and independent variables in the regression analysis for each degree level.
define the degree levels within each compensable factor
Quiz: what is one of the advantages of the point factor job evaluation method? A) it is inexpensive to develop and or purchase. B) it creates a flexible job worth hierarchy. C) it is responsive to pay equity laws. D) it can be implemented quickly and easily.
it is responsive to pay equity laws
