Looking to Benchmark Pay?
We will now examine three of these methods in-depth: Job ranking (because it is the simplest), the point factor method (because it typically produces high-quality results and may be defensible in a court of law), and market pricing (because it is the most widely practiced methodology).
Job Ranking
Whole Job Ranking is the simplest form of job evaluation. Jobs are ranked from highest to lowest in importance. All you must do is identify the most important job, then identify the next most important job, and so on. Continue this process until all jobs are arranged in a hierarchy. This approach will work fine for small companies with few jobs but has also been used by some very large organizations.
| Example |
|---|
| President |
| Vice President, Marketing |
| Director, Production |
| Senior Engineer |
| Engineer |
| Associate Engineer |
Advantages
- Simplest to administer
- Easiest to explain
- Takes less time
- Costs less money
Disadvantages
The primary disadvantage of job ranking is its use of adjacent ranks, which suggests that there are equal differences between jobs. This is very unlikely.
Other disadvantages flow from the way the method is often used. For example, ranking has been done without first securing good job descriptions. This approach can succeed only if evaluators know all the jobs. But that's virtually impossible in an organization with many jobs or with frequently changing jobs.
Another disadvantage is that evaluators are asked to keep the "whole job" in mind when ranking jobs. This undoubtedly results in different bases of comparison among evaluators.
It also permits evaluators, whether they realize it or not, to be influenced by other factors, such as:
- present pay rates
- job incumbents' competence
- prestige of jobs
This difficulty can be overcome by selecting and defining one or more compensable factors and asking evaluators to use them as the basis for job comparison. Even then, unfortunately, factor definitions are often so general that rankings are highly subjective.
Recommended implementation
To yield the advantages cited and minimize the disadvantages of the job ranking method, we recommend the following steps:
| 1. Obtain Job Information | As we have noted, the first step in job evaluation is job analysis. You must secure adequate information and write detailed job descriptions. |
|---|---|
| 2. Select Evaluators |
Select evaluators who will make unbiased judgments. Train them in the job evaluation process. Less training is required for ranking than for other methods of job evaluation. Although it is not necessary to select people who know all the jobs well, a knowledge of the jobs and functions is valuable as well as being unbiased. If all the jobs in the organization are to be ranked, it may be wise to start with the executive team, and then key benchmark jobs which represent the framework for the company. Afterwards, all other jobs can be evaluated based on this hierarchy. Another approach is to rank jobs by department and later fit together the rankings. |
| 3. Select Compensable Factor(s) | Although ranking is referred to as a "whole job" approach, different evaluators may use different attributes to rank jobs. If judgments are to be reliably comparable, compensable factors must be selected and defined. Even as broad a factor as job difficulty or importance is sufficient, so long as it is carefully defined in operational terms. Make sure that evaluators understand the factors on which jobs are to be compared. This will help ensure that rankings are made on that factor. |
| 4. Rank Jobs |
There are 3 ways to complete the rankings:
Straight ranking is feasible for a limited number of jobs (20 or less). Alternation ranking or paired comparison tend to produce more consistent results. Straight ranking involves ordering cards (one for each job) on which job titles or short job briefs have been written. In case more information is needed by raters, it is useful to have the actual job description at hand. In alternation ranking, raters are given a form on which a list of job titles to be ranked are recorded at the left and an equal number of blanks appear at the right. The raters are asked to record at the top of the right-hand column the job title they adjudge the highest, and cross out that title in the list to the left. Then they record the lowest job in the bottom blank and the remaining jobs in between, crossing out the job titles from the left-hand list along the way. In paired comparison, raters compare all possible pairs of jobs. One way to do this is with a pack of cards on which job titles have been recorded, as in straight ranking. Raters compare each pair of jobs at least once. The card of the job adjudged higher is checked after each comparison. After all comparisons have been made the raters list the jobs, starting with the job with the most check marks and ending with the job with the least. |
| 5. Combine Ratings | It is advisable to have several raters rank the jobs independently. These rankings are then averaged, yielding a composite ranking that is sufficiently accurate. |
Job ranking is usually used in small organizations. It can work in larger organizations when the number of jobs is limited. Microsoft Excel makes it possible to use paired comparison for any number of evaluators, jobs, and even factors, but other disadvantages remain. Unless job ranking is based on good job descriptions and at least one carefully defined factor, it is difficult to explain and justify in work-related terms.
Although the job hierarchy developed by ranking may be better than paying no attention at all to job relationships, the job ranking method's simplicity can produce results of low quality.
Memory Jogger
A major disadvantage of the job ranking method is: