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Job evaluation methods Formal and systematic comparison of jobs to…
Job evaluation methods
Formal and systematic comparison of jobs to determine relative worth
Definition & Core Principle
What It Is
A formal and systematic comparison of jobs to determine the worth of one job relative to another
Basic Principle
Jobs requiring greater qualifications, more responsibilities, and more complex duties should receive more pay than jobs with lesser requirements
End Result
Creates a wage/salary structure or hierarchy showing pay rates for various jobs or groups of jobs
Two Approaches to Setting Pay Rates
1. Market-Based Approach
Conduct salary surveys to determine what others pay
Use market information to price jobs directly
Popular with smaller firms
Emphasizes external competitiveness.
2. Job Evaluation Method
Determine internal worth of each job.
Price jobs based on relative value.
Creates equitable pay based on both market and internal worth.
Emphasizes internal equity.
📊
Role of Salary Surveys
3 main uses:
Price benchmark jobs: Anchor jobs around which other jobs are slotted
Direct market pricing: Price positions directly based on comparable firm surveys.
Benefits data: Collect information on insurance, sick leave, vacations
Types of surveys
Informal:
Phone or Internet surveys for specific issues.
Formal:
Comprehensive surveys sent by large employers.
⚖️ Compensable Factors
Definition
Factors that establish how jobs compare to one another and determine pay for each job.
Common Factor Systems
Equal Pay Act: Skills, Effort, Responsibility, Working Conditions.
Hay Group Method: Know-how, Problem Solving, Accountability.
Walmart: Knowledge, Problem-Solving Skills, Accountability Requirements.
Context-Dependent
Factors used depend on the job and evaluation method (e.g., "decision making" for managers, not cleaners)
Method 1
Simplest Method
Ranks each job relative to all others based on overall factor like "job difficulty"
Characteristics
✅ Quick to implement
✅ Easy to understand
✅ Low cost
❌ Highly subjective
❌ No measure of "how much more valuable.
❌ Difficult with many jobs
🎯 Method 2: Point Method
Identifies compensable factors, assigns point values to degrees, evaluates each job, calculates total points
Implementation Steps
Select 4-10 compensable factors
Define 3-7 degrees per factor.
Assign point values to factors and degrees.
Develop clear factor degree definitions.
Evaluate each job on every factor.
Calculate total points per job.
📈 Wage Curves
Definition & Purpose
Shows pay rates for jobs relative to points/rankings assigned by job evaluation
Visual Representation
Vertical axis: Pay rates for jobs.
Horizontal axis: Point values for jobs.
Shows relationship between job value (points) and compensation.
🌍 International Compensation (Expatriates)
Home-Based Plan (Most Common)
Base salary tied to home country.
Add allowances for cost-of-living difference.
Add housing, schooling, hardship allowances.
Cover extra taxes beyond home country.
Good for short-term assignments.
Host-Based Plan
Base salary tied to host country.
Change salary to match host location rates.
Add cost-of-living and other allowances.
How Job Evaluation Connects to
Compensation Strategy
Internal Equity ↔ External Competitiveness
Job evaluation establishes internal worth while salary surveys provide external market data. Organizations must balance both to create fair and competitive pay structures.
Job Evaluation → Wage Curves → Pay Grades → Rate Ranges
Sequential process: Evaluate jobs → Plot on wage curve → Group into grades → Establish ranges within grades
Compensable Factors Bridge Job Content and Compensation
Factors translate qualitative job differences (skills, responsibilities) into quantitative measures that determine pay.
Karyme Solís Porraz - 00373762
References:
Dessler, G. (2020). Human resource management (16th ed.). Pearson Education.
https://elibro.net/es/ereader/anahuacbiblio/223035
