The limitations of points rating are that it is time consuming to introduce and can be complex and costly to undertake. In addition it can be seen to be inflexible in times of rapid change and can imply an arithmetical precision which is not justified. Factor Comparison Factor Comparison is similar to Points Rating, being based on an assessment of factors, though no points are allocated. Use of the Factor Comparison method is not as widespread as the Points Rating systems, because the use of points enables a large number of jobs to be ranked at one time.
Proprietary brands There are a number of job evaluation schemes offered by management consultants. By far the most popular is the Hay Guide Chart Profile Method, which is a factor comparison scheme. It uses three broad factors (know-how, problem solving and accountability) each of which is further divided into sub-factors, although these cannot be scored individually. Definitions of each level have been produced for each sub-factor to guide evaluators and ensure consistency of application. Internal benchmarking
Internal benchmarking is what people often do intuitively when they are deciding on the value of jobs, although it has never been dignified in the job evaluation texts as a formal method of job evaluation. It simply means comparing the job under review with any internal job that is believed to be properly graded and paid, and placing the job under consideration into the same grade as that job. The comparison is often made on a whole-job basis without analysing the jobs factor by factor. Market pricing
Market pricing is the process of assessing rates of pay by reference to the market rates for comparable jobs and is essentially external benchmarking. Strictly speaking, market pricing is not a process of job evaluation in the sense that those described above are – they only deal with internal relativities and are not directly concerned with market values, although in conjunction with a formal job evaluation scheme, establishing market rates is a necessary part of a programme for developing pay structure.
However, the term ‘market pricing, in its extreme form is used to denote a process of directly pricing jobs on the basis of external relativities with no regard to internal relativities. This approach was widely publicized in the US in the mid-1990’s as a reaction to what was regarded as too much emphasis on internal relativities (‘a job is worth what the market says its worth’) accompanied by over-bureaucratic job evaluation. It sat alongside attempts at developing broad-banded pay structure (i. e. structure with a limited number of grades or brands).
This approach has board level appeal because of the focus on competitiveness in relation to the marketplace for talent. The acceptability of market pricing is heavily dependant on the quality and detail of market matching as well as the availability of robust market data. It can therefore vary from analysis of data by job titles to detailed matched analysis collected through bespoke surveys focused on real market equivalence. Market pricing can produce an indication of internal relativities even if these are market driven.
But it can lead to pay discrimination against women where the market has traditionally been discriminatory. It does not satisfy UK equal pay legislation. Market pricing can be done formally by the analysis of published pay surveys, participating in ‘pay clubs’, conducting special surveys, obtaining the advice of recruitment consultants and agencies and, more doubtfully, by studying advertisements. In its crudest form, market pricing simply means fixing the rate for a job at the level necessary to recruit or retain someone.
To avoid a successful equal pay claim, any difference in pay between men and women carrying out work of equal value based on market rate considerations has to be ‘objectively justified’. ‘Tailor made’ or ‘off the peg’ A prime consideration in deciding which analytical job evaluation scheme to select lies in the choice of factors and weightings. The benefit of proprietary ‘off the peg’ schemes is that they normally have been well tried and tested and there is therefore a saving in time.
In addition, many are linked to mechanisms for checking salary levels. The benefit of ‘tailor made’ schemes is that the factors and definitions more accurately reflect the range of jobs to be evaluated and are arrived at through consensus; consequently they are more likely to be acceptable to the workforce. Care, however, has to be taken in designing the scheme and in particular in avoiding discrimination when weighting the factors. Designing job evaluation schemes Both analytical and non-analytical schemes can be developed.
Organizations can develop a system themselves, use consultants, buy a consultancy’s off-the-shelf package, or employ the consultancy to tailor the package to suit the organisation. The Hay Guide Chart-Profile Method is the most widely used scheme, but there are many other schemes developed by other consultancies. What is chosen will depend on the size of the organisation and the aim of the job evaluation exercise. It is possible to use different schemes for different types of employee.