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

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

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

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

Job Evaluation: The Point Method

Factors - Degrees
Job Knowledge Judgment & Decision Making Independent judgment Accountability Working conditions Mental
ORG434: Advanced HRM

1st

2nd

3rd

4th

5th

6th

25 100 10 33 25 100 20 5 15 65 20 42

175 250 55 78 100 175 250 110 155 200 35 50 69 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