Using Job Evaluation in Your Organization

TYPES OF JOB EVALUATION PLANS

There are five main types of job evaluation programs:

Market pricing is the most commonly used methodology for job evaluation with approximately 80% of companies utilizing market pricing as their primary job evaluation method. Point factor is the next most common methodology with between 15% to 18% of companies primarily using a point factor approach.

Point factor plans may increase over the near term as a result of the new California Fair Pay Act. It has similar provisions to the Paycheck Fairness Act, which is still pending before Congress.

• Job Ranking: Jobs are compared using a single global factor that combines all parts of the job.
• Job Classification: This method defines categories of jobs and slots jobs into these classes.
• Factor Comparison: Job-to-job comparisons are made using several specific factors.
• Point Factor: Jobs are compared using rating scales of specific factors.
• Market Pricing: The value of each job is determined through an analysis of the external job marketplace as typically reported through salary surveys.

Comparing Job Evaluation Methods

Each of these five job evaluation methods has different strengths and weaknesses based on their approach. The following gives a snapshot look at the strengths of each.

Which method produces the best results?

The method that yields the best results depends on the circumstances. If time or money is a concern or if employee acceptance is your primary goal, then your circumstances may dictate using one method over another.

For example:

• Market pricing is clearly the most prevalent job evaluation methodology in the market today.
• Job ranking takes less time and costs less money, but decisions on ranking may be very subjective and difficult to defend in a court of law. Inconsistencies among organizational units are quite possible.
• Factor comparison is not widely used but may be fair, cost effective, and of value for hourly jobs in a manufacturing setting.
• The point factor method is expensive, complex, and difficult to explain. A well-designed point factor method such as Korn Ferry Hay has been successfully defended in a court of law. The point factor method is also considered to be a strong evaluation method for minimizing pay equity issues.