Job Classification System Versus Points Factor System

Introduction

The job classification system and the points factor system are just 2 out of 4 job evaluation methodologies.

We must understand that in these job evaluation methodologies, we are paying against the position within a hierarchical structure and not for the competencies of the job holder. The rationale is that paying for irrelevant skill or experience that contributes nothing to performanceis simply a waste of money and ultimately will reduce perceived equity.

Job evaluation is not an exact science but merely a systematic guide for making salary grade decisions. There is no substitution for good judgement. If strict application of the job evaluation procedure gives an odd or inconsistent result, particularly for jobs that are on the borderline between two grades, judgement should be used to place the job in the salary grade that makes the most sense for the good of the organization.

Compensable Factors

Point factors are also called “compensable factors.” A compensable factor is any skill, responsibility, effort or physical demand for which an employer is willing to pay an employee. Typically an employer’s compensable factors encompass four major categories:

Salary Formula 21A

Source: Point Factors and Job Evaluation, published by the Clssification and Compensation Unit, Division of Human Resources, West Virginia University

Every employer or every consultant would a varied system based on these 4 factors, as shown below

Salary Formula 21B

Source: Step by Step to Equity Mini Kit published by Pay Equity Commission, Ontario, Canada

Salary Formula 21C

Diagram: Mercer HEPC system. Source: Point Factors and Job Evaluation, published by the Clssification and Compensation Unit, Division of Human Resources, West Virginia University

We will NOT discuss the creation of a point value system here. You can read it up at payequity.gov.on.ca website.

Factor Points Job Evaluation System: Using Points for Assign Job Grade

Once a grade structure is in place, it is easy to slot jobs into grades. The points factor job evaluation system is one method to assign jobs to grades by using the number of points assigned for the job. Here, we have constructed a table to assign point ranges to grades.

JOB EVALUATION POINTS GRADE
100 to 132 1
133 to 175 2
176 to 230 3
231 to 304 4

 

Factor Points Job Evaluation System: Paying for Points

As an alternative to the above method, we can make use of the specific point total for each job to build a pay range for the specific point rather than assigning it to a grade. Using job evaluation points in this way is called the “Pay for Points” system.

Here is an example: If we used the job grade system mentioned earlier, 2 different jobs, one with 140 points and one with 142 points would fall into grade 2, using the above table. This means that both jobs would have the same salary midpoint. However, if we choose to pay by points, we can use a formula such as

Salary Midpoint = points x 100 + 2000

In this case, the job with 140 points would be have a midpoint of $16,000 while the job with 142 points would have a midpoint of $16,200.

Source: The Basics of Salary Grades written by David Creelman, Speediware Corporation (Speedeeo website)

The following diagrams are just to show you the wage curve. It is not related the above example just given.

Salary Formula 21D

Salary Formula 21E

Source: Chapter 11 Establishing Strategic Pay Plans, Human Resource Management By Gary Dessler

You may wish to note that U.S. Bureau of Labor Statistics published National Compensation Survey Guide for Evaluating Your Firm’s Jobs and Pay on May 2013 (See Bls.gov website)

Job Classification and Position Classification

Job classification (or job class for short) is a group of positions that are similar enough in job duties, responsibilities, and necessary qualifications that an organization could properly place them under the same job title and treat them alike for the purpose of HR management; that is classes contain similar jobs.

Comparing, grades are jobs that are similar in difficulty but otherwise different. When job evaluation is used, raters categorize jobs into groups of classes of jobs that are of roughly the same value for pay purposes. Hence jobs are classed by the amount or level of compensable factors they contain.

Position classification is the act of sorting positions into job classes.

Job Classification Job Evaluation System

According to this method, a predetermined number of job groups or job classes are established and jobs are assigned to these classifications. Jobs are thus said to be classified into an existing grade/category structure or hierarchy.

Each level in the grade/category structure has a description or job grading standard and associated job titles. The classification of a position is decided by comparing the whole job with the appropriate job grading standard. The standards only identify and describe those key characteristics of occupations which are significant for distinguishing different levels of work. Each job is assigned to the grade/category providing the closest match to the job’s current responsibilities and duties.

This method places groups of jobs into job classes or job grades. The Tower Watson Grading System is an example of a job classification system. This methodology was previously known as Watson Wyatt Global Grading System.

It publishes a guide titled “Levels Guides, Position Descriptions, Global Grades”. You can find a copy at University of Virginia website.

Another company that deploys a job classification methodology is Culpepper Compensation Consulting Services.

Salary Formula 21F

Source: Tower Watson Global Grading System

The job classification method is less subjective when compared to the earlier ranking method. The system is very easy to understand and acceptable to almost all employees without hesitation. One strong point in favor of the method is that it takes into account all the factors that a job comprises. This system can be effectively used for a variety of jobs.

 

The weaknesses of the job classification method are:

  • Even when the requirements of different jobs differ, they may be combined into a single category, depending on the status a job carries.
  • It is difficult to write all-inclusive descriptions of a grade.
  • The method oversimplifies sharp differences between different jobs and different grades.
  • When individual job descriptions and grade descriptions do not match well, the evaluators have the tendency to classify the job using their subjective judgments.

Source: Open learning world website

 

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