UNIT 5

ANALYSIS AND VALUATION OF POSITIONS

The evaluation of positions allows to determine the relative value of each position, according to its
importance and contribution to the interests of an organization, in this process different factors that
depend on the frequency used are considered, such as, for example, responsibilities, required skills,
type effort, demands, etc.

There are currently four basic methods for job evaluation that are grouped into two categories:

Non-quantitative methods:

Ranking or comparison of positions

Gradation or classification of positions

Quantitative methods:

For points

Comparison of factors

The basic difference between these two methods is that, in non-quantitative methods, a position is
compared with other positions within an organization, while in the case of quantitative methods,
the key factors of a position are analyzed and are measured, compare the positions of one
organization with another.

The four most common job evaluation methods are listed below:

Ranking method or comparison of positions

The method of ranking or comparison of positions is the simplest form of evaluation of positions. In
this method, each position is viewed that is compared with other positions in the organization and
this comparison continues until all have been classified. Positions are classified according to their
importance, from the simplest to the most complex job or from the highest to the lowest.

The importance of the positions to assign their order is judged in terms of duties, responsibilities
and demands on the holder. The positions are classified as a "whole" instead of analyzing a series
of factors that compose it.

The application of the ranking or position comparison method involves the following procedure:

Analyze and describe the positions, highlighting the aspects to be used for the purpose of
comparison.

Identify the reference positions (10 to 20 positions, which should include the main areas and
departments). The reference positions are classified by identifying the extreme positions where the
position should be located, obtaining as the first result the list of reference positions ordered.

All the positions in the organization are classified around the reference positions until they are all
ranked in their order of importance.
Finally, all the positions arranged in groups or classifications are divided, considering the common
characteristics of the positions, such as similar tasks, skills or training requirements.

The method of ranking or comparison of positions is appropriate for small organizations where the
positions are simple and few. It is also suitable for evaluating managerial jobs where the content of
the job cannot be measured in quantitative terms. The simple classification method can be used in
the preliminary stages of the job evaluation exercise in an organization.

Advantage:

• It is the simplest method.

• It is very economical to put it into practice.
• It is less time consuming and involves little paperwork.

Disadvantages:

• The main drawback of the ranking or position comparison method is that there are no
defined judgment criteria and there is no way to measure the differences between the
different positions with an objective criterion.
• It is inoperative when there are a large number of positions.

Method of grading or classification of positions

The "grading method" is also known as the "classification method". This method of job evaluation
was popularized by the United States Civil Service Commission. Under this method, the grades of
work or classes are established by a body or committee authorized for this purpose. A grade or job
classification is defined as a group of different jobs of similar difficulty or requiring similar skills to
perform. Job grades are determined on the basis of information derived from job analysis.

Grades or classes are created by identifying a common denominator such as skills, knowledge, and
responsibilities. As an example, we can mention the classification of positions that the Public
Function in Mexico has, which includes the families of jobs that the government offers: Technician,
Administrative Support and services, Link A, Link B, Link C, High Level Link of Responsibility 2, High
Level Liaison of Responsibility 3, Head of Department 1, and so on.

Once grades are established, each position is placed in its appropriate grade or class depending on
how well its characteristics fit into a grade. In this way, a series of degrees of work is created. Then,
a different salary or salary rate is set for each grade.

Advantage:

• This method is easy to understand and easy to operate.

• It is inexpensive and therefore suitable for small organizations.
 • Grouping jobs into "classes or grades" makes wage determination problems easy to
manage.
• This method is useful for government positions.

Disadvantages:

• The method suffers from personal biases of the committee members.

• You can't handle complex jobs that don't fit perfectly into a grade.
• This method is rarely used in industry.

Method of evaluation of positions by points

The evaluation by points is the most used method for evaluating positions. Under this method,
positions are divided based on various factors such as skill, effort, training, knowledge, hazards,
responsibility, etc., then points are assigned to each of these factors.

Points are given to factors depending on their importance to perform the work, once assigned they
are added. Then, jobs with a similar total of points are placed in similar pay grades. The sum of
points gives an index of the relative importance of the jobs that are qualified.

The procedure followed in the determination of evaluation by points is:

➢ Determine the positions to evaluate. The positions must contain all the possible elements
that will be used by the method, as well as profiles, functions and levels of responsibility.
➢ Decide on the factors (mentioned above) that will be used to analyze and evaluate the
positions. The number of factors should be limited because too many factors can result in
an overly complex scheme with overlapping and duplication of factors.
➢ Define the factors clearly in writing. This is necessary to ensure that different job evaluators
interpret a particular factor in the same sense.
➢ Determine the degrees of each factor and assign the point value to each degree.
➢ The point values assigned to the different grades will have an arithmetic progression.
➢ Finally, the monetary values are assigned to the points. For this purpose, points are added
to give the total value of a position. Its value is then translated into monetary terms with a
predetermined formula.

Advantage:

• It is the most complete and accurate method of job evaluation.

• Human judgment and prejudice are minimized, that is, the system cannot be easily
manipulated.
• Being a systematic method, the collaborators of the organization favor this method.
• The scales developed with this method can be used for a long time.
• Positions can be easily placed in categories that obey a range of points.

Disadvantages:

• It is a time-consuming and expensive method.

 • It is difficult to understand for those who are not familiar with the subject.
• It takes a lot of office work to analyze, evaluate positions, and set scales.
• It is not always suitable for managerial jobs where the content of the positions is not
measurable in quantitative terms, although some methods include management.

Factor comparison method

It is a combination of the last two methods, that of classification and evaluation by points; Rate the
positions by comparing them and analyze the positions by comparable factors. Although this
method does not add points, it does consider factors that will be given a higher or lower value
according to the criteria established by a committee. This system is generally used to evaluate staff,
professional and managerial positions.

The process followed to evaluate positions under this method is:

1. First, key or benchmark positions are selected as standards.

Selected key positions should have standards content and market information taken from a reliable
source and should be a representative sample of all positions being evaluated - from the lowest
paying to the highest paying, from the most important even the least important - and covering the
full range of requirements for each factor, as agreed by the Committee representing workers and
management.

2. Factors common to all positions are precisely identified, selected and defined.

The factors common to all positions regularly are five: mental requirements, physical requirements,
skill requirements, working conditions and responsibility.

3. Once key positions are identified.

Common factors are also chosen, key positions are ranked based on selected common factors.

4. The next step is to determine a fair and equitable base rate of wages or salary.

Generally expressed per day, and then assigning a different weight to each factor that will translate
into a specific monetary value. This decision is regularly made by a committee that analyzes and
agrees on the weight of each factor.

5. The final step in this method is to compare and evaluate the remaining positions in the
organization. To illustrate, a "Turner" position must be evaluated. After comparison, it is found that
his skill is like that of the electrician (20), the mental requirements for the welder (40), the physical
requirements for the electrician (48), the working conditions for the mechanic (96) and the
responsibility also for the mechanic (12). Thus, the salary rate for the work of "Turner" will be 216
(20 for Ability + 40 for Mental Requirement + 48 for Physical Requirement + 96 for working
conditions + 12 for Responsibility).

Advantage:
 • It is a realistic and quantitative method of evaluating positions, and more precisely to
determine the monetary value of the job.
• The method is flexible as there is no upper limit on the rating of a factor.
• It is an easy method to explain to contributors.
• Using a limited number of factors (usually five) ensures less chance of factor overlap and
overweight.
• It facilitates the determination of the relative value of the different positions.

Disadvantages:

• It is an expensive and time-consuming method.

• Using the five factors to evaluate positions may not always be appropriate because jobs
differ between and within organizations.
• It is difficult to understand and operate.