Point factor method of job evaluation example

By Danielle Smyth Updated February 12, 2021

The human resources (HR) department at any company is constantly monitoring and evaluating how internal jobs relate to one another, including via the point value method or simple ranking method. After all, in today’s business world, where information about comparable salaries and compensation is becoming more readily available, it’s becoming increasingly important that individuals feel like they are being compensated on a fair scale as compared to their coworkers.

The HR department has a number of ways to track employees, job responsibilities and compensation. One of the most straightforward ways is to use the point method to evaluate jobs within the company and make sure the pay scales match. The Society for Human Resource Management explains that this system also forces companies to determine which roles are of most value to the company.

The writers at iEduNote explain that the point method involves assigning numerical values of "worth" to aspects of a number of similar jobs, and then comparing sums for each particular role depending on how the numerical calculation works out. The evaluation starts by identifying the parts of a role that should earn compensation, and then attempting to assign values as such. As an example, an HR representative might start out evaluating a department by assigning each rule a scale based on several factors.

The first of these is skill​.​ Skill can consist of education, previous experience and an employee’s ability to do the job. For some jobs, such as research roles, education may be the primary factor; for others, an employee’s past experience is the most important, and in some cases, neither matters as much as their actual skill at the role they are filling.

Responsibilities: Every job has a different set of responsibilities, but some are necessarily worth more compensation than others. For example, employees whose decisions have an impact on internal budgets have higher expectations laid upon them, and as such probably should earn a higher level of compensation.

Environment: For employees who physically work in conditions with risk, employers should consider a higher level of reward. For example, while technicians who work in a chemical facility may not compare to other positions in regards to education or experience, since they are the employees out in the field with potential exposure to chemicals and equipment, they should be given higher points than a technician working in an inside laboratory where the conditions are considered more temperate.

Effort/stress: This can be hard to quantify, but positions where employees frequently have to contribute significant physical or mental effort on sharp deadlines in order to meet their responsibilities should be recognized over positions where that sharp line of stress never comes into play.

Using these basic categories, the HR representative goes through each position and assigns it a set of numbers based on an established key. For example, education may be ranked 1 through 4, and responsibilities may be ranked 1 through 10. The system is developed by HR internally in a way that will fairly represent the entire axis of employees.

After numerical rankings have been assigned for each position, they are then weighted based on the position in question. For example, a research position might weigh education over other factors, meaning that the rating for education might be weighted by a factor of 1.5 as compared to the others; a position for sales might emphasize responsibilities over any sort of skill factor. It depends entirely on the views of the HR team set to evaluate these positions.

With the point method, each position is given a set of scores that can be given for every aspect identified as valuable. Then, HR assigns a value for each individual score. Once scores are calculated with regards to a weighting factor and summed, HR will have a basic ranking of each job as compared to the others based on their assigned ratings and weightings. From there, they can begin to compare salaries within departments and positions, and make sure they are assigning equal compensation to equal worth.

A set of compensable factors are identified as determining the worth of jobs.

Typically the compensable factors include the major categories of:

1. Skill
2. Responsibilities
3. Effort
4. Working Conditions

1. Skill
   1. Experience
   2. Education
   3. Ability
2. Responsibilities
3. Effort
4. Working Conditions
   1. Location
   2. Hazards
   3. Extremes in Environment

Jobs are then grouped by total point score and assigned to wage/salary grades so that similarly rated jobs would be placed in the same wage/salary grade.

Tips

1. Factors Use well defined factors.
2. Biases Examine the Factor points for inherent biases against females and minorities.

Grouping

Software

Point-factor based job evaluation is a quantitative form of job evaluation that uses defined factors and levels within them. Job requirements are compared to the definitions of the factor levels, with corresponding points assigned to the job based on the relevant level.

The job scores are added to determine a total and are used to create a job hierarchy by using either the original points (job ranking) or a translation into a grade structure (job grading). Put simply, the value of a job is judged based on the requirements of the core duties, tasks and generally labor involved.

Point-Factor Job Ranking explained

For a point-factor based job ranking, the requirements, responsibilities, and other aspects of a job - not the position holder as a person - are evaluated with a set of standardized and generalized factors. And, with the factors consisting of several levels, points are assigned to each level. To do this, the requirements of the job are compared with the factor-level explanation to determine which is the best fit. The total score shows the value of the position. Once the total score is calculated, the jobs can be placed in rank order.

Typically the compensable factors include the major categories of:

1. Skill / Qualification
2. Responsibilities
3. Effort
4. Working Conditions (uncommon in modern job evaluation systems)

Merits and Flaws of Point-Factor based Job Ranking

The issue of total objectivity arises when considering the precision with which level descriptions can be defined - and which information about the job is most relevant.

Some systems, often coming from the context of “scientific management” theories, create the illusion of objective “measurement” by using quantified jumps between levels. However the explanation of a 20% jump in communication requirements is seldom given.

There’s still an element of judgement required with point-factor job evaluation which impacts on true objectivity. But as the evaluators become more experienced at interpreting the factor plan and input of job descriptions, they start to gain greater clarity on the process and make more accurate judgements.

As such, the benefit of point-factor based job evaluation methods is that they can give you a clear marker you can use to increase the objectivity and consistency of your findings. You don’t need to worry about the oversimplified results you get from non-analytical job evaluation - and you can use them as a defence in equal value claims as long as they are based on proper job analysis and a system without inherent gender-bias.

That said, these methods are often complex and still rely on judgement for scoring the jobs themselves. It’s not easy to amend the scheme as circumstances change. But even so, point-factor methods are the most common forms of analytical job evaluation, with the International Labor Organization’s Scheme of Geneva from 1950 a popular though out-dated example of point-factor-based job ranking.

A modernized weighted factor plan was published by the ILO on page 78 of their 2009 brochure on gender neutral job evaluation.

Table - Example of a weighted factor plan

Detailed factor-level definitions are often available with commercial systems. But those proprietary systems can be quite cryptic, needing the specialized knowledge of consultants to operate.