Under this system, jobs are evaluated by means of standard yardstick of value. It entails deciding which jobs have more of certain condensable factors than others.
Here analyst or the Evaluation Committee selects some ‘key’ or ‘benchmark’ jobs for which there are clearly understood job descriptions and counterparts in other organisations, and for which the pay rates are such as are agreed upon and are acceptable to both management and, labour.
Under this method, each job is ranked several times – once each condensable factor selected. For example, jobs may be ranked first in terms of factor ‘skill.’ Then, they are ranked according to their mental requirements. Next, they ranked according to their ‘responsibility,’ and so forth. Then these ratings are combined for each job in an over-all numerical rating for the job.
The major steps in this system consist of the following:
Step 1: Clear-cut job descriptions are written and job specifications then developed. Preferably in terms of condensable factors. The people writing job specifications are generally Provided with a set of definitions which have been used in each of the condensable factors selected.
Usually, five factors are used:
(1) Mental requirements,
(2) Physical requirements;
(3) Skill requirements;
(4) Responsibility and
(5) Working conditions.
These factors are universally considered to be components of all the jobs.
Step 2: Selecting of Key-Jobs: Such jobs are those jobs which represent the range of jobs under study; and for which pay is determined to be ‘standard’ or ‘reference points’ and for which there is no controversy between the management and the employees. These ‘key’ jobs serve as standards against which all other jobs are measured.
They are selected in such a way that they cover the range from the ‘low’ to the ‘high’ paid jobs. Besides, such jobs must be those on the pay of which analysts and executives do not disagree. Again, they should be definable in accurate and clear terms. Usually 10 to 30 jobs are picked up as ‘key’ jobs.
Step 3: Ranking of ‘Key’ Jobs: Several different members of the job Evaluation Committee rank the key jobs on each of the five factors (mental requirements, physical requirements, skill, responsibility, and working conditions). Ranking is made individually and then a meeting held to develop a consensus (among raters) on each job.
Mental requirements involve inherent mental trait (such as memory, intelligence, reasoning, ability to get acquired education, and acquired specialization of education or knowledge).