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

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

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: http, firewall.

4
 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:
– 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
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.

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
8
HRM
 Job Evaluation:
The Point Method

Factors - Degrees 1st 2nd 3rd 4th 5th 6th

Job Knowledge 25 100 175 250

Judgment & Decision Making 10 33 55 78 100
Independent judgment 25 100 175 250
Accountability 20 65 110 155 200
Working conditions 5 20 35 50
Mental 15 42 69 96 123 150
ORG434: Advanced
9
HRM
 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
10
HRM
 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
11
HRM
 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
12
HRM