Job evaluation methods involve assessing jobs based on the difference in their values or impact. The four job evaluation approaches include ranking, classification/grading, point factor, and competitive market analysis methods (Gluck, 2021). All of the mentioned job evaluation methods employ a skilled-based and impact strategy. They rank jobs based on the skills and technical know-how required to undertake them and how they impact the organization. For instance, in the ranking method, jobs are evaluated based on seniority or impact within the organization. Similarly, the grading method uses a pre-determined seniority scale to grade jobs based on the impact they have. In the point factor method, problem-solving capabilities and skills are used. Finally, the competitive market analysis method assesses jobs based on their impact worth in the marketplace.
On the other hand, these job evaluation methods differ based on how they value or rank individual jobs and their scope. In the ranking method, jobs are classified and evaluated in pairs, with the most impactful one being chosen. In the classification method, several jobs within a job family such as sales or marketing are graded. In the point factor method, several jobs are ranked based on how each of them scores on selected factors like skills, knowledge, and impact. Unlike the other three methods where the qualitative impact of the jobs is assessed, the point factor method uses a quantitative score in ranking jobs (Gluck, 2021). The competitive market method assesses how the individual job compares to similar ones in the market.
Fixed Versus Variable Payment
Fixed payment involves giving a flat wage/salary to an employee for their input in the organization. Its pros include encouraging healthy competition, collaboration, and teamwork among employees, better customer service, and retaining employees even during periods of slow business returns. On the downside, fixed payment can result in an unbalanced payment structure, where underperforming employees may receive similar pay as overperforming players. Performance-based and variable payment has the advantages of motivating employee performance and productivity, while also helping the company spend appropriately on underperforming individuals. Its cons include the low potential to retain employees during slow business returns, poor customer service due to overbearing on them to earn commissions, and unfair competition, and lack of collaboration. Both payment approaches may enhance attract potential employees and enhance recruitment. Individuals may find performance-based payments motivational, lucrative, and matching their efforts over fixed payments. However, fixed payment may encourage employee retention more than payment-based systems.
Other than the potential to motivate employees to work harder, performance-based pay is not effective. First, it may encourage unhealthy competition and conflicts among employees, especially if the company feedback system is not fair in assessing merit. Also, it may cause a high employee turnover due to low retention capability. Whenever employees figure out that the compensation does not merit their input, they may opt to seek organizations that offer better compensation for similar efforts. In turn, the business may lose productivity through reduced performance and also spend more on hiring replacements. An effective performance-based payment system can be created by giving back a portion of finances directly earned by employees as incentives to them. Examples are commissions, stock ownership, profit-sharing, and gain-distribution plans. Unlike a subjective and general payment for performances that are not based on performances, this approach makes the compensation more objective, direct, and fair, and open.
Gluck, S. (2021). Types of job evaluation. Small business.