Compensation Guide: A Manual on Compensation Practice and Theory
Evaluating Jobs
Chapter 3 emphasizes the important role of job evaluation in compensation systems. It describes the process of job analysis and provides guidelines for writing job descriptions. The four most commonly used methods of job evaluations are described and compared. They are: Ranking, Classification, Factor Comparison, and the Point Method.
Glossary
Classification
is a job evaluation method based on job descriptions into which jobs are categorized by class descriptions such as “managerial” or “clerical” to name a few. Jobs are classified by comparing each job to the existing job classes and/or job families of characteristically similar positions and selecting the pay grade that best matches them. This method is popular with the services sector.
Factor Comparison
is a more complex job evaluation method in which jobs are assessed using a set of compensable factors (i.e., skill, responsibilities, effort and working conditions) and then ranked based on the value to the organization. Jobs are compared within the organization to the benchmark jobs and their rates of pay for each factor to determine job salaries.
Job Analysis
is the process of identifying and determining information about a job for the purpose of writing descriptions. Factors considered include duties, tasks, responsibilities, and skill requirements, among others.
Job Class
(job grade) represents a group of jobs that are substantially similar, justifying a common name, similar selection processes and similar compensation.
Job Description
is a written summary of a job which identifies the position and describes its tasks, major duties and responsibilities and minimum qualifications and abilities required to perform the job.
Job Evaluation
is a systematic process that compares jobs and ranks them based on their relative worth to the organization. It is used to create a job structure for the organization and establish compensation standards.
Job Family
is made up of related jobs distinguished by levels of knowledge, skills, and abilities (competencies) as well as other factor required of the jobs.
Point Method
(Point Value; Point Evaluation), is a quantitative job evaluation process that assigns points to each job, based on compensable factors. These points are then scaled and weighted, and a total score tabulated for each job. A job’s total points determine its relative value to the organization and hence its location in the pay structure.
Ranking
is a simple job evaluation method that ranks jobs from highest to lowest based on the overall value of the job to the organization.
