Job Evaluation
Kenneth M. York
School of Business
Administration
Oakland University
Job Evaluation
• The process of determining how much a
job should be paid, balancing two goals
– Internal Equity: Paying different jobs
differently, based on what the job entails
– External Competitiveness: Paying
satisfactory performers what the market is
paying
ORG434: Advanced
HRM
2
Job Evaluation:
The Point Method
• Job Analysis to determine…
– The tasks performed in a job
• The Job Description
– The knowledge, skills, and abilities needed
to perform the job
• The Job Specification
ORG434: Advanced
HRM
3
Job Evaluation:
The Point Method
• Example: Software Engineer
– Job Description
• The Software Engineer designs, develops, tests and
maintains one or more of our products or internal
applications. The software engineer works as a member
of an engineering team developing, designing, and
maintaining one or more of our products or internal
applications. This position reports to the appropriate
Project Manager.
– Job Specification
• Bachelor's or undergraduate degree in Computer
Science, Information Systems, Electrical Engineering or
equivalent experience. Masters or graduate degree is
desirable. Understand Intranet and Internet technologies:
ORG434: Advanced
http, firewall.
4
HRM
Job Evaluation:
The Point Method
• Develop a list of compensable factors…
– A set of standards the organization uses to
distinguish among jobs for pay purposes
– Examples of commonly used compensable
factors:
–
–
–
–
–
–
–
ORG434: Advanced
HRM
Degree of responsibility, supervision
Knowledge needed to perform the job
Discretion in performing the job, independent judgment
Job conditions
Effort
Hazard
Consequence of error
5
Job Evaluation:
The Point Method
• Define the degrees of each factor
– Judgment and Decision Making: This factor identifies the
extent to which the job requires judgment and responsibility
in the making of decisions.The importance of the decisions
and the extent to which standard policies and procedures
provide guidance in decision making will be considered.
• 1st Degree: Work requires decision making involving the
analysis of the facts of a situation and the determination
of what actions should be taken within the limits of
standard procedures; only unusual or seldom recurring
situations require referral. Judgment could affect the
work of others or cause minor inconvenience. Typical
errors are generally confined to a single team or phase of
operations.
University of
ORG434: Advanced
HRM
Wisconsin-Oshkosh
6
Job Evaluation:
The Point Method
• 3rd Degree: In consultation with team members decide
specific work projects to perform, and proceed to plan,
coordinate, and commit resources required to accomplish
work; associates develop or establish procedures or
policies. Judgment requires accuracy because errors
could potentially result in inaccurate reports, incomplete
or misleading information, unsound recommendations, or
incorrect decisions. Consequences could adversely
affect operations or services causing significant losses of
time, resources and potentially have a long term impact
on a team.
• 6th Degree: Assists board in the development of
policies, general procedures and corporate goals. Errors
in judgment could jeopardize the viability of the company.
ORG434: Advanced
HRM
7
Job Evaluation:
The Point Method
• Create a matrix of points for the degrees of
each factor…
– Judgment and Decision Making:
–
–
–
–
–
–
1st degree = 50 points
2nd degree = 100 points
3rd degree = 225 points
4th degree = 350 points
5th degree = 500 points
6th degree = 700 points
– Communication, Work Environment, Coaching,
Innovation, Knowledge – Education - Experience
ORG434: Advanced
HRM
8
Job Evaluation:
The Point Method
Factors - Degrees
1st
2nd
3rd
4th
5th
Job Knowledge
25 100
175 250
Judgment & Decision Making
Working conditions
10 33
25 100
20 65
5 20
55 78 100
175 250
110 155 200
35 50
Mental
15
Independent judgment
Accountability
ORG434: Advanced
HRM
42
69
6th
96 123 150
9
Job Evaluation:
The Point Method
• Evaluate benchmark jobs to determine
Job Evaluation Point Totals…
– Benefits supervisor = 700
– Training material development specialist =
650
– Job evaluation specialist = 460
– Compensation manager = 920
ORG434: Advanced
HRM
10
Job Evaluation:
The Point Method
• Collect salary survey data on
benchmark jobs…
– Benefits supervisor = $60,393
– Training material development specialist =
$58,403
– Job evaluation specialist = $43,155
– Compensation manager = $79,958
ORG434: Advanced
HRM
11
Job Evaluation:
The Point Method
• Do a regression analysis to find the pay line
for the benchmark jobs…
– Dependent variable is salary survey data
– Independent variable is job evaluation point total
– Calculate salaries for benchmark and other jobs
using the regression equation…
• Salary = 79.67*JETotal + 6101.09
• Example: Compensation Director = 79.67*1120 +
6101.09 = $95,333
ORG434: Advanced
HRM
12