APPENDIX: CHAPTER 11 Quantitative Job Evaluation Methods THE FACTOR COMPARISON JOB EVALUATION METHOD The factor comparison technique has many variations and appears to be the most accurate, the most complex, and one of the most widely used job evaluation methods. It entails deciding which jobs have more of certain compensable factors than others. With the ranking method, you generally look at each job as an entity and rank the jobs. With the factor comparison method, you rank each job several times—once for each compensable factor you choose. For example, jobs might be ranked first in terms of the factor “skill.” Then they are ranked according to their “mental requirements.” Next, they are ranked according to their “responsibility,” and so forth. Then these rankings are combined for each job into an overall numerical rating. Here are the required steps. Step 1. Obtain Job Information This method requires a careful, complete job analysis. First, job descriptions are written. Then job specifications are developed, preferably in terms of the compensable factors the job evaluation committee has decided to use. For the factor comparison method, these compensable factors are usually (1) mental requirements, (2) physical requirements, (3) skill requirements, (4) responsibility, and (5) working conditions. Typical definitions of each of these five factors are presented in Figure 11A-1. Step 2. Select Key Benchmark Jobs Next, 15 to 25 key jobs are selected by the job evaluation committee. These jobs will have to be representative benchmark jobs. Step 3. Rank Key Jobs by Factor Here, evaluators are asked to rank the key jobs on each of the five factors (mental requirements, physical requirements, skill requirements, responsibility, and working conditions). This ranking procedure is based on job descriptions and job specifications. Each committee member usually makes this ranking individually, and then a meeting is held to develop a consensus on each job. The result of this process is a table, as in Table 11A-1. It shows how each key job ranks on each of the five compensable factors. Step 4. Distribute Wage Rates by Factors This is where the factor comparison method gets a bit more complicated. In this step, the committee members have to divide up the present wage now being paid for each key job, and distribute it among the five compensable factors. They do this according to their judgments about the importance to the job of each factor. For example, if the present wage for the job of common laborer is $4.26, our evaluators might distribute this wage as follows: Mental requirements $0.36 Physical requirements $2.20 Skill requirements $0.42 11-1 11-2 Appendix Quantitative Job Evaluation Methods Responsibility $0.28 Working conditions $1.00 Total $4.26 They make such a distribution for all key jobs. Step 5. Rank Key Jobs According to Wages Assigned to Each Factor Here, you again rank each job, factor by factor, but the ranking is based on the wages assigned to each factor. As shown in Table 11A-2, for example, FIGURE 11A-1 Sample Definitions of Five Factors Typically Used in Factor Comparison Method for the “mental requirements” factor, the welder job ranks first, whereas the security guard job ranks last. Each member of the committee first makes this distribution working independently. Then the committee meets and arrives at a consensus concerning the money to be assigned to each factor for each key job. Step 6. Compare the Two Sets of Rankings to Screen Out Unusable Key Jobs You now have two sets of rankings for each key job. One was your original 1. Mental Requirements Either the possession of and/or the active application of the following: A. (inherent) Mental traits, such as intelligence, memory, reasoning, facility in verbal expression, ability to get along with people and imagination. B. (acquired) General education, such as grammar and arithmetic; or general information as to sports, world events, etc. C. (acquired) Specialized knowledge such as chemistry, engineering, accounting, advertising, etc. 2. Skill A. (acquired) Facility in muscular coordination, as in operating machines, repetitive movements, careful coordinations, dexterity, assembling, sorting, etc. B. (acquired) Specific job knowledge necessary to the muscular coordination only; acquired by performance of the work and not to be confused with general education or specialized knowledge. It is very largely training in the interpretation of sensory impressions. Examples (1) In operating an adding machine, the knowledge of which key to depress for a subtotal would be skill. (2) In automobile repair, the ability to determine the significance of a certain knock in the motor would be skill. (3) In hand-firing a boiler, the ability to determine from the appearance of the firebed how coal should be shoveled over the surface would be skill. 3. Physical Requirements A. Physical effort, as sitting, standing, walking, climbing, pulling, lifting, etc.; both the amount exercised and the degree of the continuity should be taken into account. B. Physical status, as age, height, weight, sex, strength, and eyesight. 4. Responsibilities A. For raw materials, processed materials, tools, equipment, and property. B. For money or negotiable securities. C. For profits or loss, savings or methods’ improvement. D. For public contact. E. For records. F. For supervision. (1) Primarily the complexity of supervision given to subordinates; the number of subordinates is a secondary feature. Planning, direction, coordination, instruction, control, and approval characterize this kind of supervision. (2) Also, the degree of supervision received. If Jobs A and B gave no supervision to subordinates, but A received much closer immediate supervision than B, then B would be entitled to a higher rating than A in the supervision factor. To summarize the four degrees of supervision: Highest degree—gives much—gets little High degree—gives much—gets much Low degree—gives none—gets little Lowest degree—gives none—gets much 5. Working Conditions A. Environmental influences such as atmosphere, ventilation, illumination, noise, congestion, fellow workers, etc. B. Hazards—from the work or its surroundings. C. Hours. Source: Jay L. Otis and Richard H. Leukart, Job Evaluation: A Basis for Sound Wage Administration, p. 181. © 1954, revised 1983. Reprinted by permission of Prentice Hall, Upper Saddle River, NJ. Appendix Quantitative Job Evaluation Methods Mental Physical Skill Working Requirements Requirements Requirements Responsibility Conditions Welder Crane operator Punch press operator Security guard a1 1 3 2 4 4 1 3 2 1 3 2 4 1 4 2 3 TABLE 11A-1 Ranking Key Jobs by Factorsa 2 4 3 1 is high, 4 is low. ranking (from step 3). This shows how each job ranks on each of the five compensable factors. The second ranking reflects for each job the wages assigned to each factor. You can now draw up a table like the one in Table 11A-3. For each factor, this shows both rankings for each key job. On the left is the ranking from step 3. On the right is the ranking based on wages paid. For each factor, the ranking based on the amount of the factor (from step 3) should be about the same as the ranking based on the wages assigned to the job (step 5). (In this case they are.) If there’s much of a discrepancy, it suggests that the key job might be a fluke. From this point on, such jobs are no longer used as key jobs. (Many managers don’t bother to screen out unusable key jobs. To simplify things, they skip over our steps 5 and 6, going instead from step 4 to step 7; this is an acceptable alternative.) Step 7. Construct the Job Comparison Scale Once you’ve identified the usable, true key jobs, the next step is to set up the job comparison scale (Table 11A-4. Note that there’s a separate column for each of the five comparable factors.) To develop it, you’ll need the assigned wage table from step 4. For each of the factors for all key jobs, you write the job next to the appropriate wage rate. Thus, in the assigned wage rate table (Table 11A-2), the welder job has $4.00 assigned to the factor “mental requirements.” Therefore, on the job comparison scale (Table 11A-4) write “welder” in the “mental require- ments” factor column, next to the “$4.00” row. Do the same for all factors for all key jobs. Step 8. Use the Job Comparison Scale Now all the other jobs to be evaluated can be slotted, factor by factor, into the job comparison scale. For example, suppose you have a job of plater that you want to slot in. You decide where the “mental requirements” of the plater job would fit as compared with the “mental requirements” of all the other jobs listed. It might, for example, fit between punch press operator and inspector. Similarly, you would ask where the “physical requirements” of the plater’s job fit as compared with the other jobs listed. Here, you might find that it fits just below crane operator. You would do the same for each of the remaining three factors. An Example Let us work through an example to clarify the factor comparison method. We’ll just use four key jobs to simplify the presentation—you’d usually start with 15 to 25 key jobs. Step 1. First, we do a job analysis. Step 2. Here we select our four key jobs: welder, crane operator, punch press operator, and security guard. Step 3. Based on the job descriptions and specifications, here we rank key jobs by factor, as in Table 11A-1. Step 4. Here, we distribute wage rates by factor, as in Table 11A-2. Hourly Wage Mental Requirements Physical Requirements Skill Requirements Responsibility Working Conditions Welder $9.80 Crane operator 5.60 Punch press operator 6.00 Security guard 4.00 4.00(1) 1.40(3) 1.60(2) 1.20(4) 0.40(4) 2.00(1) 1.30(3) 1.40(2) 3.00(1) 1.80(3) 2.00(2) 0.40(4) 2.00(1) 0.20(4) 0.80(2) 0.40(3) 0.40(2) 0.20(4) 0.30(3) 0.60(1) a1 11-3 is high, 4 is low. TABLE 11A-2 Ranking Key Jobs by Wage Ratesa 11-4 Appendix Quantitative Job Evaluation Methods TABLE 11A-3 Comparison of Factor and Wage Rankings Mental Physical Skill Working Requirements Requirements Requirements Responsibility Conditions Welder Crane operator Punch press operator Security guard aAmount bRatings Aa 1 3 2 4 $b 1 3 2 4 Aa 4 1 3 2 $b 4 1 3 2 Aa 1 3 2 4 $b 1 3 2 4 Aa 1 4 2 3 $b 1 4 2 3 Aa 2 4 3 1 $b 2 4 3 1 of each factor based on step 3. based on distribution of wages to each factor from step 4. TABLE 11A-4 Job (Factor) Comparison Scale Mental Requirements Physical Requirements Skill Requirements Responsibility Working Conditions .20 .30 ………. ………. ………. ………. ………. ………. Crane operator ………. .40 .50 .60 .70 .80 .90 1.00 1.10 1.20 1.30 1.40 1.50 1.60 1.70 1.80 1.90 2.00 2.20 2.40 2.60 2.80 3.00 3.20 3.40 3.60 3.80 4.00 4.20 4.40 4.60 4.80 ………. Welder…… Sec. Guard…… Sec. Guard…… Crane Operator Punch Press Operator Welder ………. ………. ………. ………. Sec. Guard Punch Press Operator (Plater) Sec. Guard ………. Crane Operator ………. Punch Press Operator (Plater) ………. Punch Press Operator Sec. Guard…… (Inspector)…… (Inspector)…… …….…. (Plater) ………. ………. Crane Operator (Inspector) ………. ….…. (Inspector)…… Crane Operator…… (Plater) ………. Punch Press Operator Welder ………. ………. ………. ………. Welder Welder (Inspector) (Plater) Appendix Quantitative Job Evaluation Methods Step 5. Then we rank our key jobs according to wage rates assigned to each key factor. These rankings are shown in parentheses in Table 11A-2. Step 6. Next, compare your two sets of rankings. In each left-hand column (marked A) is the job’s ranking from step 3 based on the amount of the compensable factor. In each right-hand column (marked $) is the job’s ranking from step 5 based on the wage assigned to that factor, as in Table 11A-3. In this case, there are no differences between any of the pairs of A (amount) and $ (wage) rankings, so all our key jobs are usable. If there had been any differences (for example, between the A and $ rankings for the welder job’s “mental requirements” factor) we would have dropped that job as a key job. Step 7. Now we construct our job comparison scale as in Table 11A-4. For this, we use the wage distributions from step 4. For example, let us say that in steps 4 and 5 we assigned $4.00 to the “mental requirements” factor of the welder’s job. Therefore, we now write “welder” on the $4.00 row under the “mental requirements” column as in Table 11A-4. Step 8. Now all our other jobs can be slotted, factor by factor, into our job comparison scale. We do not distribute wages to each of the factors for our other jobs to do this. We just decide where, factor by factor, each of our other jobs should be slotted. We’ve done this for two other jobs in the factor comparison scale: They’re shown in parentheses. Now we also know what the wages for these two jobs should be, and we can also do the same for all our jobs. A Variation There are several variations on this basic factor comparison method. One converts the dollar values on the factor comparison chart (Table 11A-4) to points. (You can do this by multiplying each of the dollar values by 100, for example.) The main advantage in making this change is that your system would no longer be “locked in” to your present wage rates. Instead, each of your jobs would be compared with one another, factor by factor, in terms of a more constant point system. Pros and Cons The factor comparison method is (in one form or another) a very widely used job evaluation method. It has several advantages: First, it is an accurate, systematic, quantifiable method for which detailed step-by-step instructions are available. Second, jobs are compared to other jobs to determine a relative value. Thus, in the job comparison scale you not only see that a welder requires more mental ability than a plater; you also can determine about how much more mental ability is required—apparently about twice as much ($4.00 versus $1.70). (This 11-5 type of calibration is not possible with the ranking or classification methods.) Third, this is also a fairly easy job evaluation system to explain to employees. Complexity is probably the most serious disadvantage of this method. Although it is fairly easy to explain the factor comparison scale and its rationale to employees, it is difficult to show them how to build one. In addition, the use of the five factors is an outgrowth of the technique developed by its originators. Using the same five factors for all organizations and for all jobs in an organization may not always be appropriate. THE POINT METHOD OF JOB EVALUATION The point method requires identifying several compensable factors (like skills and responsibility), each with several degrees, and also the degree to which each of these factors is present in the job. A different number of points is usually assigned for each degree of each factor. So once you determine the degree to which each factor is present in the job, you need only add up the corresponding number of points for each factor and arrive at an overall point value for the job.1 Here are the steps. Step 1. Determine Clusters of Jobs to Be Evaluated Because jobs vary widely by department, you usually will not use one point-rating plan for all jobs in the organization. Therefore, the first step is usually to cluster jobs, for example, into shop jobs, clerical jobs, sales jobs, and so forth. Then the committee will generally develop a point plan for one group or cluster at a time. Step 2. Collect Job Information This means performing a job analysis and writing job descriptions and job specifications. Step 3. Select Compensable Factors Here, select compensable factors, like education, physical requirements, or skills. Often each cluster of jobs may require its own compensable factors. Step 4. Define Compensable Factors Next, carefully define each compensable factor. This is done to ensure that the evaluation committee members will each apply the factors with consistency. Examples of definitions are presented in Figure 11A-2. Step 5. Define Factor Degrees Next, define each of several degrees for each factor so that raters may judge the amount or degree of a factor existing in a 11-6 Appendix Quantitative Job Evaluation Methods job. Thus, for the factor “complexity” you might choose to have six degrees, ranging from “job is repetitive” through “requires initiative.” (Definitions for each degree are shown in Figure 11A-2.) The number of degrees usually does not exceed five or six, and the actual number depends mostly on judgment. Thus, if all employees either work in a quiet, air-conditioned office or in a noisy, hot factory, two degrees would probably suffice for the factor “working conditions.” You need not have the same number of degrees for each factor, and you should limit degrees to the number necessary to distinguish among jobs. Step 6. Determine Relative Values of Factors The next step is to decide how much weight (or how many total points) to assign to each factor. This is important because for each cluster of jobs, some factors are bound to be more important than others. Thus, for FIGURE 11A-2 Example of One Factor in a Point Factor System executives the “mental requirements” factor would carry far more weight than would “physical requirements.” The opposite might be true of factory jobs. The process of determining the relative values or weights that should be assigned to each of the factors is generally done by the evaluation committee. The committee members carefully study factor and degree definitions and then determine the relative value of the factors for the cluster of jobs under consideration. Here is one method for doing this: First, assign a value of 100% to the highest-ranking factor. Then assign a value to the next highest factor as a percentage of its importance to the first factor, and so forth. For example, Decision making 100% Problem solving 85% Knowledge 60% Example of One Factor in a Point Factor System (Complexity/Problem Solving) The mental capacity required to perform the given job as expressed in resourcefulness in dealing with unfamiliar problems, interpretation of data, initiation of new ideas, complex data analysis, creative or developmental work. Level Point Value Description of Characteristics and Measures 0 0 Seldom confronts problems not covered by job routine or organizational policy; analysis of data is negligible. Benchmark: General secretary, switchboard/receptionist. 1 40 Follows clearly prescribed standard practice and demonstrates straightforward application of readily understood rules and procedures. Analyzes noncomplicated data by established routine. Benchmark: Statistical clerk, billing clerk. 2 80 Frequently confronts problems not covered by job routine. Independent judgment exercised in making minor decisions where alternatives are limited and standard policies established. Analysis of standardized data for information of or use by others. Benchmark: Social worker, executive secretary. 3 120 Exercises independent judgment in making decisions involving nonroutine problems with general guidance only from higher supervision. Analyzes and evaluates data pertaining to nonroutine problems for solution in conjunction with others. Benchmark: Nurse, accountant, team leader. 4 160 Uses independent judgment in making decisions that are subject to review in the final stages only. Analyzes and solves nonroutine problems involving evaluation of a wide variety of data as a regular part of job duties. Makes decision involving procedures. Benchmark: Associate director, business manager, park services director. 5 200 Uses independent judgment in making decisions that are not subject to review. Regularly exercises developmental or creative abilities in policy development. Benchmark: Executive director. Source: Richard W. Beatty and James R. Beatty, “Job Evaluation,” Ronald A. Berk (ed.), Performance Assessment: Methods and Applications (Baltimore: Johns Hopkins University Press, 1986), p. 322. Appendix Quantitative Job Evaluation Methods 11-7 TABLE 11A-5 Evaluation Points Assigned to Factors and Degrees Decision making Problem solving Knowledge First-Degree Points Second-Degree Points Third-Degree Points Fourth-Degree Points Fifth-Degree Points 41 35 24 82 70 48 123 105 72 164 140 96 204 174 123 Next, sum up the total percentage (in this case 100% + 85% + 60% = 245%). Then convert this 245% to a 100% system as follows: Decision making: 100 ÷ 245 = 40.82 = 40.8% Problem solving: 85 ÷ 245 = 34.69 = 34.7% Knowledge: 60 ÷ 245 = 24.49 = 24.5% Totals 100.0% Step 7. Assign Point Values to Factors and Degrees In step 6, total weights were developed for each factor in percentage terms. Now assign points to each factor as in Table 11A-5. For example, suppose it is decided to use a total number of 500 points in the point plan. Because the factor “decision making” had a weight of 40.8%, it would be assigned a total of 40.8% × 500 = 204 points. Thus, it was decided to assign 204 points to the decision-making factor. This automatically means that the highest degree for the decision-making factor would also carry 204 points. Then assign points to the other degrees for this factor, usually in equal amounts from the lowest to the highest degree. For example, divide 204 by the number of degrees (say, 5); this equals 40.8. Then the lowest degree here would carry about 41 points. The second degree would carry 41 plus 41, or 82 points. The third degree would carry 123 points. The fourth degree would carry 164 points. Finally, the fifth and highest degree would carry 204 points. Do this for each factor (as in Table 11A-5). Step 8. Write the Job Evaluation Manual Developing a point plan like this usually culminates in a point manual or job evaluation manual. This simply consolidates the factor and degree definitions and point values into one convenient manual. Step 9. Rate the Jobs Once the manual is complete, the actual evaluations can begin. Raters (usually the committee) use the manual to evaluate jobs. Each job based on its job description and job specification is evaluated factor by factor to determine the number of points that should be assigned to it. First, committee members determine the degree (first degree, second degree, and so on) to which each factor is present in the job. Then they note the corresponding points (see Table 11A-5) that were previously assigned to each of these degrees (in step 7). Finally, they add up the points for all factors. Raters generally start with rating key jobs and obtain consensus on these. Then they rate the rest of the jobs in the cluster. “Packaged” Point Plans Developing a point plan can obviously be a time-consuming process. For this reason, a number of groups (such as the National Electrical Manufacturer’s Association and the National Trade Association) have developed standardized point plans that contain ready-made factor and degree definitions and point assessments for a wide range of jobs. They can often be used with little or no modification. Pros and Cons Point systems have their advantages, as their wide use suggests. This is a quantitative technique that is easily explained to and used by employees. On the other hand, it can be difficult to develop a point plan, and this is one reason many organizations have opted for ready-made plans.