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36 Cards in this Set

  • Front
  • Back

Advantages of Point Method

High degree of precision in measuring jobs

Can have a high degree of consistency

Orders jobs

Provides a relative value of each job

Jobs can be clustered into pay grades easier than other approaches

Large body of knowledge about point method

5 main steps of developing a job evaluation system using the point method

1. Identify key job characteristics (compensable factors) that differentiate the value of various jobs

2. Develop a measuring scale for each factor (scaling factors) so that the extent to which each factor is present in a job can be quantified

3. Weight each factor according to importance to the firm. This produces a system that can be used to provide a point total for each factor for each job

4. Apply the job evaluation system to every job included under the JE system.

5. Test the resulting job hierarchy for reliability, validity, and market fit, and make any necessary revisions to the JE system

Define compensable factors

Characteristics of jobs that are valued by the organization and differentiate jobs from one another

Four main categories of compensable factors




Working Conditions

How many factors should be used?

Depends on the broadness of groups of jobs

More complexity = more compensable factors

Generally between 8-12

What does it mean to scale factors?

set degrees (or levels) to each factor

The degrees represent gradations in the extent to which a certain factor is present in a particular job being rated

How do you weight the compensable factors?

Weight each compensable factor dividing total points between factors, then divide points between the degrees (either identical or varied)

How are factor weights derived?

statistical analysis

expert judgement

How does one apply the job evaluation system?

Make a chart outlining the hierarchy of jobs

How do you test the job evaluation system?

Test for reliability to determine validity

Once reliability is achieved, test for market fit through benchmarking

How do you test reliability?

Use different evaluators

Define validity

The extent to which a measuring instrument actually measures what we intend it to

Define reliability

The extent to which a measure instrument consistently produces the same measurement result when measuring the same thing

4 Main Pitfalls of the Point Method of Job Evaluation

1. Inconsistent Construct Formation

2. Factor Overlaps

3. Hierarchical Grounding

4. Gender Bias

When may factors fail to be well-defined and separate?

1. The factor is ambiguous

2. The degree may not be consistent with the factor definition

3. The definitions of the degree or level may not all be degrees of the same construct

What does hierarchal grounding mean?

The factors confuse the outcome with the process. Example: Responsibility for action explaining reporting hierarchy does not explain the degrees

What are the six ways that gender bias occurs when creating job evaluations with the point system?

1. Separate job evaluation systems for different job families

2. A factor is valued when it is found in "male jobs" but not in "female jobs"

3. Job content is confused with stereotypes

4. Factors found in female jobs are ignored

5. There is an insufficient range of degree statements

6. The job descriptions are biased

Other issues with job evaluation

Evaluators bias

Adversarial process between mgmt and employees

Define base pay structure

The structure of pay grades and pay ranges, along with the criteria for movement within pay ranges, that applies to base pay

Define pay grade

A grouping of jobs of similar value to the organization, typically grouped by point totals

Define pay range

The minimum and maximum pay rates (in dollars) for jobs in a particular pay grade

5 reasons for clustering jobs into pay grades

1. Use of grades recognizes that job evaluation is subjective process

2. Pay grades make it easier to justify and explain pay rates to employees

3. Pay grades simplify the administration of the pay system by eliminating need for separate rates for every job

4. Having jobs clustered within pay grades makes it easier for employees to move across jobs in the same pay grade

5. Pay grades create more stability for the pay system

Describe the ways to establish pay grade size?

Equal interval approach

Equal increase approach

Equal percentage approach


Define equal interval approach

Method to establish pay grade widths, in which the point spreads are equal for all pay grades

Define equal increase approach

Method to establish pay grade sizes, in which each pay grade increases in width by a constant number of points from the preceding pay grade

Define equal percentage approach

Method to establish pay grade sizes, in which each pay grade increase in width by an equal percentage from the preceding pay grade

Define broadbanding

The practice of reducing the number of pay grades by creating large or "fat" grades, sometimes known as "bands"

Four areas required to determine pay ranges

Establishing range midpoints

Establishing range spreads

Overlaps between pay ranges

Gaps Between pay ranges

Define intergrade differentials

The difference between the range midpoints of adjacent pay grades in a pay structure, expressed in dollars

Define intergrade differential percentage

Calculated by dividing the intergrade differential (expressed in dollars) of each pay grade by the midpoint (in dollars) of the previous pay grade

Define range spread

The difference between the maximum and the minimum pay level, in dollars, for a given pay range

Define range spread percentage

A percentage calculated by dividing the range spread for a given pay range by the minimum for that pay range

Define JND

The amount of pay increase necessary to be considered significant by employees receiving the increase

Define market line

A regression line that relates job evaluation points to market pay (in dollars) for the benchmark jobs

Define pay policy line

The intended pay policy for the organization, generated by adjusting the market line for the intended pay level strategy of the organization

Define correlation coefficient

A statistic that measures the extent to which plots of two variables on a graph fall in a straight line