Job evaluations are performed for several reasons, most commonly to determine the monetary value of a job with a company. A second common reason is to discover overlapping jobs that cause two or more workers to perform the same duty. Thirdly, evaluations can uncover work flow gaps that can slow production. Two of the most common job evaluation methods are job ranking and the points method.
Job ranking is the simplest and easiest job evaluation method. Jobs and employees who perform those jobs are ranked from highest to lowest, depending on their quality and value to the organization. This method entails the comparison of jobs against other positions within the organization. Jobs are evaluated based on content and value. Job content refers to the type of work performed, and the skills and knowledge needed to perform the work. Job value refers to how well the job meets the organization's goals and the difficulty in filling the job.
Job ranking is the easiest and least expensive method of evaluation. It is very effective in small organizations, where there are few job classifications. This method is easy for employees to understand.
The main disadvantage to job ranking is that it's based on judgment and isn't scientific. Rankings are based on the opinions of evaluators and can seem unfair to those performing the jobs. A major limitation is that evaluators have to redo the ranking system for every new job or position that's created.
According to Microsoft, point evaluation is the most widely used method. This method is based on certain compensable factors within a company. Depending on the industry, job evaluators may assess jobs based on one or more of these factors: training level, qualification requirements, knowledge and skills requirements, complexity of tasks, interaction with other areas in the organization, problem-solving tasks that require independent judgment, accountability, responsibility, decision-making authority, degree of supervision required, cross-training requirements, working conditions and degree of difficulty. Points are then assigned to each factor. The number of points each position is worth equals an assigned monetary value.
This method may be considered less biased by employees because evaluators assign a job’s total points before assessing compensable factors.
The evaluator must be familiar with each job to accurately assign a point value to each compensable factor. The process of assessing and assigning points to compensable factors is a time-consuming and expensive method to implement.