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