factor comparison method vs point method


Here, jobs are expressed in terms of key factors. It is essentially a combination of the ranking and point systems. The factor comparison method of job evaluation entails both the rating and point allocation methods. This method allows for customizable job evaluation, but it is also very time consuming. What is Factor Comparison? It is a very expensive method/system of job evaluation because experts have to be appointed particularly in selecting weights which are based in actual analysis. viz. This method, also known as key job method, was originally developed at the Philadelphia Rapid Transit Company, USA by Eugene J.Benge in 1926 to overcome two major problems faced in point method of job evaluation. It utilizes few factors and thereby reduces the likelihood of overlapping. Jeans does not participate in formal pay surveys. It is a systematic, quantifiable method for which detailed step by step instructions are available. Jobs may change over time, but the rating scale established under the point method remain unaffected. 6.2 Point rating method The point rating method is selected for study. In this method, … 2.3 Summary Any management method should be adapt to its times. Job Ranking. The persons writing job specifications are generally provided with a set of dimensions within which they have to perform this important work. Job evaluation refers to the measurement of the value of a job relative to other jobs. Under this method, rather than ranking complete jobs, each of … Money value is assigned to each factor so as to determine the wage rate for each key job. The factor points are then added to determine the position’s total point value. Factor Comparison is a method used to carry out Job evaluation. ADVERTISEMENTS: An organization has various options for selecting a pricing method. Just for above merits of factor point method, factor point method is widely used in salary management of USA and EU government or army or college at present time. This method is a costly affair. 1. The four major methods of job evaluations are: job ranking, job classification, factor comparison and the point method. Most consulting firms adopt this method, which was pioneered by Edward Hay in 1943. Ranking is made individually and then a meeting is held to develop a consensus. A more systematic & scientific method of job evaluation is the factor comparison method. If you've been running your business long enough, you know how the jobs rank in importance to the overall goal and mission of the company. Factor comparison is a complex quantitative method. Instead, the Presidents Assistant routinely looks over online job openings and conducts informal surveys among her friends in localorganizations. A technique for making an economic comparison of location alternatives is referred to as A. the transportation model. They may be skill, mental and educational requirements, physical requirements and responsibility, working conditions. FACTOR COMPARISON METHOD -A scientific method designed to rank job roles based on a breakdown of factors rather than the role as a whole. It is essentially a combination of the ranking and point systems. Jobs are then grouped by total point score and assigned to wage/salary grades so that similarly … Example factors - Pay will be assigned in this method by comparing the weights of the factors required for each job. Jeans does not have a formal wage structure, rate ranges and does not use compensable factors. Factors of factor comparison. Mental effort, physical effort, skills required supervisory responsibilities, working conditions, and other relevant factors. It should be recognised that a second system, the factor comparison method, was born out of the point method and the Hay method has been drawn from the womb of both the point method of 1924 and the factor comparison method of 1926 – this, after so many experiments and applications of both of these systems (see Sec.9, Note 4, for The organization can use any of the dimensions or combination of dimensions to set the price of a product. 3. Compare and contrast the following methods of job evaluation: ranking, classification, factor comparison and point method. 2. The procedure of rating new jobs by comparing with other standards or key job is logical and not too difficult to accomplish. In factor comparison, evaluators first rank jobs using a point assessment. Point Method. Is the Jeans company to a point where it should set up a formal salary structure based on a complete job evaluation? Does not consider market compensation rates. Contrary to popular belief, the method is not a point factor or points rating method. 2. Skill. Figure-4 shows different pricing methods: The different pricing methods (Figure-4) are discussed below; […] i) Education & Job Knowledge: Point ranking and factor comparison come under analytical category while Ranking and job-grading come under other category. Typically the number of compensable factors is small (4 or 5). It along with factor comparison method, involves a more detailed, quantitative and analytical approach to the measurement of job worth. This method is a combination of the weighted point and factor comparison methods. Factor Comparison/Point Method of Job Evaluation • This method is widely used and is considered to be one of the reliable and systematic approach for job evaluation in mid and large size organisations. It goes against the common belief that the procedure of evaluating jobs and fixing their wages should be kept separate. In this method, each job is given a rank on the basis of a number of factors. Job Evaluation: Methods: Factor Comparison A set of compensable factors are identified as determining the worth of jobs. This is the most widely used method for job evaluation. Ranking Method: The ranking method is the simplest form of job evaluation. - In other words, wages are assigned to the job in comparison to its ranking on each job factor. Point system and factor comparison methods are placed under Quantitative job evaluation. The system is usually applied when allocating managerial positions, white collar, and professional jobs. The system results in more accurate job evaluation as it is more objective because weights are not selected arbitrarily. 4. May work well for smaller companies. This is a complex method. t is a scheme that in corporate money value, determination of wage rates is automatic. 2. The Assistant explains, When we hire males, they have families, andthey are stronger and can work harder for longer hours. Why? (a) Point systems (b) Factor Comparison Method . The point method provides a comparable viewpoint to factors method by the usage of the factor comparison to effectively perform a job evaluation. Factor comparison method or Point method This method is widely used and is considered to be one of the reliable and systematic approach for job evaluation in mid and large size organisations. Jeans has always followed a policy of paying employees about 10% above what the Assistant feels are the prevailing rates. Werther, B.W and Davis, K (1998) point out that the factor comparison method involves the following steps: C. locational cost-volume analysis. Factor comparison method. B. the factor-rating method. Factor comparison utilizes several evaluation methods in order to evaluate jobs within an organization. This method determines the relative rank of the jobs to be evaluated in relation to monetary scale It is often used in evaluating, the managing administrative and white-collared jobs. This method ranks jobs in order based on each job’s perceived value in relation to the others, says Neelman. In this method, each factor of a job is compared with the same factor of the other jobs or the key job either defined or existing one. Essays using the point-by-point method can seem more like lists than essays and lack unity. These may include skill, effort, decision making, working conditions, and responsibility for people, finance, or equipment. Rank the selected jobs under each factor (by each and every member of the job evaluation committee) independently. Psychology Definition of FACTOR-COMPARISON METHOD: is one of the many methods used to evaluate jobs which is then used to set an appropriate wage or salary level for potential employees. This method is comparatively complicated to apply and it is difficult to explain to workers. Factor-Comparison Method: Under this method, the job is evaluated, and the ranks are given on the basis of a series of factors Viz. The point-factor rating method is another approach that Beth can use. There may be wide fluctuations in the compensable factors with the change in technology, values of employees etc. It is costly to install, and somewhat difficult to operate for anyone who is not acquainted with the general nature of job-evaluation techniques. Wages are basically set on prevailing wages in surrounding communities coupled with some attempt for internal equity among workers. This is done to know their relative importance and position in the scale of jobs. A) Skill. It is suggested that 15 to 20 jobs should be picked. It gives us a numerical basis for wage differentials. Identifying these elements require an internal business needs analysis and a definition of how success will be measured through key factors inherently contained in jobs within the organization. The Korn Ferry Hay method is … It has the ability of handling a large number of jobs and enjoys stability as long as the factor remains relevant. In this method jobs are expressed in terms of key factors. When all factors are compared, the final rating is arrive… It is a sophisticated and quantitative ranking method. She thinks this reduces turnover and fosters employee loyalty. It involves quantitative and analytical approach to the measurement of job value. You are a newly hired HR professional now working for Jeans, Inc. The use of five factors is a growth of the technique developed by its organisations. You are a newly hired HR professional now working for Jeans, Inc. The point method is a superior and widely used method of evaluating jobs. In a larger organization, it is more complex to use, but sometimes it can still work if jobs are grouped by job families—professional level, etc. Steps involved in Factor Comparison Method :: • Select key jobs (say 15 to 20), representing wages/salary levels across the organization. Point System: This is the most widely used technique of job evaluation. All of these should be clearly describable and capable of analysis in terms of factors. The ultimate goal of factor comparison is to assign the relative parts of each job role a financial value i.e. By analysing a job by factors it is usually possible to obtain a high measure of agreements on job value. WE ARE PASSIONATE AND WE ARE HERE TO HELP. The degree of each factor is also determined for assigning points. The major steps in this system consist of the following: Human Resource Management - What is HRM? Factor Comparison definition A scientific method designed to rank job roles based on a breakdown of factors rather than the role as a whole. Each factor is then divided into levels or degrees which are then assigned points. The point-factor method includes seven job factors which are grouped into four categories: Complexity Decision-making impact Supervisory These factors are divided into several levels, or degrees, each having assigned points. 4. The basic pay for each 'key' job is allocated to each factor. Factor comparison definition. D. the center-of-gravity method. It is flexible as it has no upper limit on rating that a job may receive on a factor. Point Rating Method This is the most widely used method for job evaluation. Prices are based on three dimensions that are cost, demand, and competition. Factor Comparison Method. Adoption of the whole procedure is a very difficult and time-consuming process. A method of job evaluation in which jobs are compared with each other in terms of compensable job factors. Which method (if any) do you recommend for the Jeans company? This method is analytical as jobs are broken into sub-factors and components. Steps of Factor Comparison System. This method is widely used currently. Is the policy of paying 10% more than the prevailing rates a sound one, and how could it be determined. It is, in fact, a modified factor comparison method. It accounts for differences in wage rates for various jobs on the strength of job factors. The point-by-point method is often utilized for longer assignment, essays, and papers. It examines the job by carrying out a comparative study. This should reflect a range from the lowest to the highest. Each of the factors associated will be divided into levels or degrees that are then assigned to points. Once the scales are developed, they can be used for a long time. Factor Comparison/Point Method of Job Evaluation • Most consulting firms adopt this method, which was pioneered by Edward Hay in 1943. 1. Generally a key job is one whose contents has become stabilized over a period of time and whose wage rate is considered to satisfactory and acceptable by the management and union. Compare and contrast the following methods of job evaluation: ranking, classification, factor comparison and point method. - Definitions - Functions - Objectives - Importance - Evolution of HRM from Personnel management. Point-Factor Method is a strategy for valuing jobs based on elements deemed important to the organization's survival. Jeans does not have a formal wage structure, rate ranges and does not use compensable factors. EXAMPLES OF COMPENSABLE FACTORS: * SKILLS * RESPONSIBILITIES * EFFORT * WORKING CONDITIONS STEPS IN COMPARING AND RANKING JOBS UNDER EACH 1. Factor comparison method permits a more systematic comparison of jobs than the non-analytical methods. Why? The key jobs should be a good sample representing the entire range. Employees, trade union representatives, management and other interest parties may perceive differently in selecting a compensable factors, in giving weightage etc. The points for each factor are summed to form a total point score for the job. The reliability and validity of the system are greater than the same statistical measures obtained from group standardised job analysis plans. 1. Each job is rated using the job evaluation instrument. Factor comparison is systematic and scientific method designed to carry out job evaluation which instead of ranking job as a whole, ranks according to a series of factors. It along with factor comparison method, involves a more detailed, quantitative and analytical approach to the measurement of job worth. The aim of factor comparison is to assign financial value to the relative parts of each job role. And using the same five factors for all organisation and for all jobs in an organisation may not always be appropriate. the amount of compensation offered for that part of the role. The development and installation of the system calls of heavy expenditure. Thomas E. Hitten was the first to originate factor comparison -method of job-evaluation. These factors are assumed to be constant for each set of jobs. 3. A number of important factor to be considered in each job are identified. The point method is an extension of the factor comparison method. Key jobs serve as a standard against which all other jobs are compared. Though it is the most difficult method of all, it is appreciable & consistent. All other jobs are compared with the list of key jobs. The Point method is the most widely used job evaluation method, primarily because the approach forces raters to view and quantify all key job factors and sub factors. Ideally, all factors should be present in all the jobs being evaluated to some degree, so that each job can be scored under each factor heading. Job-evaluation methods are of two categories: Analytical and Non-analytical methods. Examples of compensable factors are: The use of present wages for the key jobs may initially create errors into the plan. Factors are prioritized and then assigned points by the job evaluators. In this, four job factors such as skill, effort, responsibility and job condition are taken as basis of point values and these factors are further sub divided for more accuracy. Traditional factor point method is good during 20 cen 40, 50s because external labor market is rather stable. determining the relative importance of factors and describing their degrees. The contents and the value of these jobs may change over a period of time and they will lead to future errors. 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