There are three principal approaches to job valuation: ranking, classification, and point factor analysis.
Ranking: Jobs are ranked according to job descriptions from highest to lowest, based on the definition of relative value or contribution to the organization's success. This method is simple, expedient, and by far the easiest to implement and explain to employees.
Classification: In this method, job descriptions are inserted into a series of categories that create a range within each classification. Class descriptions are the labels that serve as the standard for comparing job descriptions within the various categories. This method offers the opportunity to slot jobs by comparing job descriptions with benchmark jobs.
Point method: Jobs are assigned compensable factors that are defined on the basis of the strategic direction of the business and how the work contributes to that strategy. Compensation factors are then scaled to reflect the degree to which they are present in each job and weighted to reflect their overall importance to the organization. Points are then assigned to each factor weight. The total points for each job determines its position in the overall job structure.
The goal is to evaluate each job based on factors that have a direct relationship to the organization's objectives and overall corporate philosophy.
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