Job evaluation

Job EvaluationJob Evaluation

Kenneth M. York

School of Business Administration

Oakland University

ORG434: Advanced HRM

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Job EvaluationJob 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


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Job Evaluation:Job Evaluation:The Point MethodThe 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


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• 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.


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• 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


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• 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


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• 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.


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• 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


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

Job Knowledge 25 100 175 250Judgment & Decision Making 10 33 55 78 100Independent judgment 25 100 175 250Accountability 20 65 110 155 200Working conditions 5 20 35 50Mental 15 42 69 96 123 150


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• Evaluate benchmark jobs to determine Job Evaluation Point Totals…– Benefits supervisor = 700– Training material development specialist =

650– Job evaluation specialist = 460– Compensation manager = 920


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• 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


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• 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