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Human Capital Management

DEFINITION
Job evaluation is the systematic process of assessing
and determining the value of jobs performed within
the organization and the relative value or worth of the
employee's efforts.
PURPOSE
The technique of job evaluation is used to determine
the appropriate compensation to offer.
FUNCTION
The systematic process of job evaluation includes an
in-depth analysis of all positions based on a specific,
common set of factors that can include skill,
education, experience, responsibility, decision-making,
problem-solving, mental demand, physical demand and
complexity.
School of Business and Management ITB

BENEFITS
Using a systematic process for determining the pay NON-ANALYTICAL Method
grade for different jobs helps to take the subjectivity
out of compensation decisions and increases employee Ranking
compliance. Classification
CONSIDERATIONS
Job evaluation reclassifications are often required
when the requirements of a position, usually regarding ANALYTICAL METHOD
either tasks or responsibilities or changes due to Factor Comparison
downsizing or expansion.
Point Method
MISCONCEPTION
Job evaluations are not assessments of employee
performance, rather an analysis of what a competent
employee in the job position should be paid.

Comparison Method Analysis Method

Entire Job Job Factors

Job Against Scale Point

Classification
Methods

Job Against Job Factor

Ranking
Comparison

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STEPS
WHAT
Rank jobs by or in clusters
Ranking method is the simplest and easiest job Department rankings are combined to develop an
evaluation method; organizational ranking
Jobs and the employees who perform those Use compensable factors
jobs are ranked from highest to lowest
depending on their quality and value to the Rank Monthly Salaries
organization
Accountant 3.000.000 IDR

HOW Accountant Clerk 1.800.000 IDR

All jobs are ranked with the same factor and Purchase Assistant 1.700.000 IDR
compensation is based on the ranking order. Machine Operator 1.500.000 IDR

ADVANTAGES
Simple
Very effective when there are relatively few
jobs to be evaluated (less than 30)

DISADVANTAGES
Difficult to administer as the number of jobs
increases.
Rank judgments are subjective.
Since there is no standard used for comparison,
new jobs would have to be compared with the
existing jobs to determine its appropriate rank.
In essence, the ranking process would have to be
repeated each time a new job is added to the
organization.

WHAT
The job classification method uses job classes
or job groups to provide more customization in
Class Grades Position
the evaluation.
Office Manager
I Executive Deputy Office Manager
HOW Department Supervisor

The groups are classes or grades and are II Skilled Worker

Purchasing Clerk
categorized by factors like independent Accountant Clerk

judgment used, skills required and physical III Semiskilled Worker Machine Operator
effort needed.
Separate classes may include office, clerical,
managerial, personnel, etc

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Advantages
Simple
The grade/category structure exists independent
of the jobs. Therefore, new jobs can be classified
more easily than the Ranking Method.

Disadvantages
Classification judgments are subjective
The standard used for comparison (the
grade/category structure) may have built in
biases that would affect certain groups of
employees (females or minorities)
Some jobs may appear to fit within more than
one grade/category

WHAT
STEPS
Comparison Method is more scientific and Select key jobs, representing wage/salary levels
complex than any other method. across the organization. The selected jobs must
It ranks each job for several compensation represent as many departments as possible
factors like skill needed, mental effort, physical Find the factors in terms of which the jobs are
effort, responsibility, working condition, evaluated (such as skill, mental effort, responsibility,
knowledge and difficulty, which are combined physical effort, working conditions, etc.)
into a total rating. Rank the selected jobs under each factor (by each
and every member of the job evaluation committee)
independently.
HOW Assign money value to each factor and determine the
wage rates for each key job.
Each job is ranked according to a specific set of
The wage rate for a job is apportioned along the
factors, such as physical effort, mental effort, or
identified factors.
responsibility, all of which have predetermined
All other jobs are compared with the list of key jobs
weights indicating their importance to success. and wage rates are determined

Factor Sub Factor Score ADVANTAGES

Experience 1 10
The value of the job is expressed in monetary
SKILL Education 1 10
terms
Ability 1 10
Can be applied to a wide range of jobs
Fiscal 1 10
RESPONSIBILITIES Can be applied to newly created jobs
Supervisory 1 10
Mental 1 10
EFFORT
Physical 1 10 DISADVANTAGES
Location 1 10 The pay for each factor is based on judgments
WORKING CONDITIONS
Hazards 1 10 that are subjective
The standard used for determining the pay for
Job Title Point
each factor may have build in biases that would
Administrator (Payroll) 7 affect certain groups of employees (females or
HR Officer 15 minorities)
HR Supervisor 24
HR Manager 32

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WHAT
The point method is a more quantitative
technique.
The objective of the point method is to award
points for various aspects of the job.

HOW
Select key jobs.
Identify the factors common to all the identified
jobs such as skill, effort, responsibility, and
working condition.
Divide each major factor into a number of sub
factors. Each sub factor is defined and expressed
clearly in the order of importance, preferably
along a scale.

The most frequent factors employed in point Degree Sub Factor

systems are: 1 Able to carry out simple calculations
2 Does all the clerical operations
Skill (key factor) 3 Handle mail, develop contacts, make initiative & does
Education and training required, experience required, work independently
social skills required, problem-solving skills, degree of 4 Etc
discretion/use of judgment, creative thinking
Responsibility/Accountability Point Values to Factor along a Scale
Responsibility, specialized responsibility, complexity of
the work, degree of freedom to act, number and Factor 1 2 3 4 5 Total
nature of subordinate staff, extent of accountability Skill 10 20 30 40 50 150
for equipment/plant, extent of accountability for
product/materials Physical Effort 8 16 24 32 40 120
Effort Mental Effort 5 10 15 20 25 75
Mental demands of a job, physical demands of a job, Responsibility 7 14 21 28 35 105
degree of potential stress.
Working Conditions Working
6 12 18 24 30 90
Conditions
Location, hazards, extremes in environment
Maximum total points of all factors depending on their importance to job 540

Find the maximum number of points assigned to

each job (after adding up the point values of all
sub-factors of such a job). This would help in
finding the relative worth of a job. For instance,
the maximum points assigned to an officers job in Conversion of Job Grade Point into Money Value
a bank come to 540. The managers job, after
adding up key factors + sub factors points, may Daily Wage Rate
Point Range Job Grades
be getting a point value of, say 650 from the job (IDR in thousand)
evaluation committee. This job is now priced at a 500-600 100-200 Officer
higher level. 600-700 200-300 Accountant
700-800 300-400 Manager 1 Scale
Once the worth of a job in terms of total points is 800-900 400-500 Manager 2 Scale
expressed, the points are converted into money
900-1000 500-600 Manager 3 Scale
values keeping in view the hourly/daily wage
rates. A wage survey, usually, is undertaken to
collect wage rates of certain key jobs in the
organization.

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ADVANTAGES
Superior & widely
Point values are assigned to all factors in a systematic
way, eliminating bias at every stage
Reliable
Jobs may change overtime, but the rating scales
established under the point method remain unaffected

DISADVANTAGES
Complex
Time consuming process
This may be too taxing, especially while evaluating
managerial jobs where the nature of work (varied,
complex, novel) is such that it cannot be expressed in
quantifiable numbers

Input Process Output

TheHay Method is based on the idea that
job can be assessed in terms of :
The knowledge required to do the job Input Process Output Working
The thinking needed to solve the problems Know How Problem Solving Accountabilities Condition
Thinking
commonly faced Technical know environment
Physical Effort
Freedom to act
The responsibilities assigned how (freedom to
Physical
think)
Environment
The working conditions associated with the job
Management
Thinking change Type of impact Sensory Attention
breath

Human relation Magnitude of

Mental Stress
skill impact

Level Explanation
Work of this kind is extremely simple, short cycle in nature, and typically
A. Basic involves manual effort. Familiarity with simple work routines; work
indoctrination.
Dimension Explanation Capable of carrying out uninvolved, standard procedures AND/OR using
B. Elementary
equipment or machines which are simple to operate.
Technical Know- Practical procedures and knowledge, Experienced in applying methods or procedures, which generally are well
How/ Cognitive specialized techniques, and learned skills C. Intermediate Skill
defined and straightforward, but with occasional deviations. Skill in the use
and/or Knowledge
of specialized equipment may be needed.

The real or conceptual planning, coordinating, D. Extended Skill

Accomplished in implementing practical procedures or systems, which are
Management moderately complex AND/OR specialized skills, which require some technical
directing, and controlling of activities and and/or Knowledge
knowledge (usually non-theoretical) to apply.
Breath/
resources associated with an organizational unit
Managerial A sound understanding of and skill in several activities which involve a variety
or function E. Diverse or
of practices and precedents OR a basic understanding of the theory and
Specialized
principles in a scientific or similar discipline.
Human Relation Active, practicing, person-to-person skills in the Extensive knowledge and skill gained through broad or deep experiences in a
F. Seasoned, Diverse
Skill area of human relationships or Specialized
field (or fields) which requires a command of EITHER involved, diverse
practices and precedents OR scientific theory and principles OR both.

Mastery of theories, principles, and complex techniques OR the diverse,

G. Broad or
cumulative equivalent gained through broad seasoning AND/OR special
Specialized Mastery
development.

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Level Explanation Level Explanation

This is the base level of interpersonal skill utilized by most individuals in the course
Performance of a task(s) highly specific as to objective and 1. Basic
of performing the job.
T. Maintaining courteous and effective working relationships with others to request or
content, and not involving the leadership of others. transmit information, ask questions or get clarification.

This level of interpersonal skill is required in jobs in which understanding and

Performance or direction of activities, which are similar as influencing people are important requirements in the job.
I. to content and objectives with appropriate awareness of Skills of persuasiveness or assertiveness as well as sensitivity to the other person's
point of view are often required to influence behavior, change an opinion, or turn a
other activities. situation around. The requirement for public contact does not necessarily demand
2. Important
this level of human relations skills, particularly if the purpose is to provide or solicit
Direction of an important unit with varied activities and information.
II. objectives OR guidance of an important sub-function(s) or In addition, positions which assign work and/or monitor and review work of other
employees (generally supervising AUPE positions), usually require at least this level
several important elements across several units. of skill.
Direction of a major unit with noticeable functional The highest level of interpersonal skill is usually required by positions in which
III. diversity OR guidance of a function(s) which significantly alternative or combined skills in understanding and motivating people are important
in the highest degree.
affects all or most of the organization. Jobs which require negotiating skills are often found at this level, but consideration
has to be given to the power bases being utilized.
3. Critical
Management of all units and functions within the For example, In negotiations between buyers and sellers of products, services,
IV. concepts, or ideas, less Human Relations skill may be required by the "buyer" who
organization. has the latitude to say "no" than by the seller who must turn the "no" to "yes". This
level of skill is usually required for positions accountable for the development,
motivation, assessment and reward of other employees.

Level Explanation
Is the amount and nature of the thinking required A. Highly Structured
Thinking within very detailed and precisely defined rules and instructions
AND/OR with continually present assistance.
in the job for analyzing, reasoning, evaluating,
Thinking within detailed standard practices and instructions AND/OR with
creating, exercising judgment, forming hypotheses, B. Routine
immediately available assistance or examples.

drawing inferences, arriving at conclusions. Thinking within well-defined, somewhat diversified procedures. There are
C. Semi-Routine many precedents covering most situations AND/OR readily available
You think with what you know assistance.

Thinking within clear but substantially diversified procedures. There are

D. Standardized
precedents covering many situations AND/OR access to assistance.
Thinking within a well-defined frame of reference and toward specific
Dimensions Explanation E. Clearly Defined objectives. This is done in situations characterized by functional practices
and precedents.
Thinking within a general frame of reference toward functional objectives.
The environment in which the F. Generally Defined This is done in situations characterized by nebulous, intangible or
Thinking Environment
thinking takes place unstructured aspects

Thinking within concepts, principles and broad guidelines towards the

The challenge presented by the G. Broadly Defined organizations objectives or functional goals. This is done in an
Thinking Challenge
thinking to be done environment that is nebulous, intangible, or unstructured.

Thinking within business philosophy AND/OR natural laws AND/OR

H. Abstract
principles governing human affairs.

Level Explanation
Identical situations requiring resolution by
Accountability is related to the opportunity which
1. Repetitive a job has to bring about some results and the
simple choice of known things.
Similar situations requiring search for solutions importance of those results to the organization
2. Patterned
within area of known things.
Differing situations requiring search for Dimension Explanation
3. Varied
solutions within area of known things
The nature of the controls that limit or
Variable situations requiring analytical, Freedom to Act extend the decision-making or
4. Adaptive interpretative, evaluative, and/or constructive influence of the job
thinking. the immediacy of the influence of the
Job Impact on End Results job on a unit or function of the
Novel or nonrecurring path-finding situations organization
5. Unchartered requiring the development of new concepts
the magnitude of the unit or function
and imaginative approaches. Magnitude
most clearly affected by the job

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Level Explanation Level Explanation

R
These jobs are subject to explicit, detailed instructions AND/OR constant Ancillary
personal or procedural supervision. One of several/many positions, which contribute to the end results
A
These jobs are subject to direct and detailed instructions AND/OR very close expected of the unit or functions OR informational, recording, or other
A facilitating services for use by others in achieving results.
supervision.
These jobs are subject to instruction and established work routines AND/OR Contributory
B
close supervision. One of few positions which contribute significantly to the end results
C expected of the unit or function OR interpretive, advisory, or other
These jobs are subject, wholly or in part, to standardized practices and
C procedures, general work instructions and supervision or progress and results. important supporting services for use by others in achieving results.

These jobs are subject, wholly or in part, to practices and procedures covered Shared
D
by precedents or well-defined policies, and supervisory review. Equal and joint control, with one other position, of the activities and
S
These jobs, by their nature and size, are subject to broad practices and resources which produce the results OR control of what are clearly most
E procedures covered by functional precedents and policies, achievement of a (but not all) of the variables which are significant in determining results.
circumscribed operational activity, and to managerial direction.
Primary
These jobs, by their nature or size, are broadly subject to functional policies Controlling impact - the position has effective control over the
F and goals and to managerial direction of a general nature. P significant activities and resources which produce the results and is the
sole position (at this level of Freedom to Act) which must answer for the
Subject to the guidance of broad organization policies, community or results.
G
legislative limits, and the mandate of the organization.

Level Explanation
Working Condition
Results usually affect an individual or are usually non-
M jobs which may require levels of physical
quantifiable in terms of department budget
(Minimal) Physical Effort activity, which may produce physical,
responsibility, revenues and expenditure authority.
stress or fatigue
Results are internally focused and affect a unit of the jobs which may include exposure to
1
department or may be externally focused and affect a unavoidable physical and environmental
(Very Small)
limited segment of clients outside the department. Physical Environment factors which increase the risk of
Results typically affect an entire department and may accident, ill health or discomfort to the
2 have some impact on other departments and/or are employee
(Very Small) externally focused affecting a large clientele within a jobs which may require concentrated
program or functional area. levels of sensory attention (i.e. seeing,
Sensory Attention
Results achieved primarily affect other departments, hearing, smelling, tasting, touching)
the University as a whole and significant client groups during the work process
3
external to University operations. Work performed may refers to exposure to factors inherent in
(Medium)
affect provincial or territorial clientele within a variety the work process or environment, which
Mental Stress
of programs or functional areas. increase the risk of such things as tension
or anxiety

Weight Degree Weight Degree Degree Degree Degree Degree

Sub Factors (%) Levels POINTS Level-1 Level-2 Level-3 Level-4 Level-5
HAY Factors

Knowledge 10.50 5 1050

Mental Skills 9.80 3 980 Knowledge and

Skills needed
Interpersonal and for the job
5.70 3 570
Communication Skills [Know-how]
Physical Skills 4.80 4 480
Initiative and
10.00 3 1000
Independence Demands
Involved in
Physical Demands 5.00 4 500
doing the job
Mental Demands 12.00 3 1200 [Problem
Solving]
Emotional Demands 3.80 2 380

Responsibility for People 8.00 3 800

Responsibility for
8.00 2 800
Supervision
Responsibilities
Responsibility for
of the job
Financial Resources 10.00 3 1000
[Accountability]
Physical Resources
Responsibility for
4.80 3 480
Physical Resources
Environmental
Working Conditions 7.60 4 760
Demands
Total 100% 42 10000

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The FES is the most common method used to

assign grades to nonsupervisory positions The five basic steps to evaluating a position
under the General Schedule. The General using FES are
Schedule is the broadest subdivision of the Prepare a position description in FES format
federal classification system Select the most appropriate FES standard
Assign point values to each of the nine FES factors

The FES is a method that can be used to Use the FES point conversion table to convert the

determine the grade of positions that are not point total to a grade
classified in the General Schedule Maintain records of the process

Factor Level Maximum Point % Total

1. Knowledge 9 1850 41.3
Total GS -
2. Supervisory Controls 5 650 14.5
Point Grade
3. Guidelines 5 650 14.5
4. Complexity 6 450 10.0
5. Scope and Effect 6 450 10.0
6. Personal Contact 4 110 2.5
7. Purpose of Contacts 4 220 4.9
8. Physical Demands 3 50 1.1
9. Work Environment 3 50 1.1
Total 4480 100

1-1 50

2-2 125

Total Point
1085

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Total Point
1085

Source: U.S. Office of

Personnel Management, 2010