12  Job evaluation systems and compensation structure

13 Job Evaluation Systems & Compensation Structure

Job Evaluation Systems

Job evaluation is a systematic process to determine the relative worth of jobs within an organization. It helps in establishing a fair and equitable compensation system. The four major job evaluation methods are:

  1. Ranking Method – Jobs are ranked from highest to lowest based on their overall value to the organization.
  2. Job Classification/Grading Method – Jobs are grouped into predefined categories or grades based on duties, responsibilities, and qualifications.
  3. Point Factor Method – Jobs are evaluated using specific compensable factors (e.g., skill, effort, responsibility) and assigned numerical points.
  4. Factor Comparison Method – Jobs are compared based on key factors, assigning monetary values to each factor for a fair pay structure.
    #### Compensation Structure
    A compensation structure includes various components such as wages, salaries, benefits, and incentives to attract and retain employees. Key elements include:
  • Base Pay – Fixed salary or hourly wage.
  • Variable Pay – Performance-based incentives like bonuses or commissions.
  • Benefits – Non-monetary rewards like health insurance, retirement plans, and paid time off.
  • Equity-Based Compensation – Stock options, profit-sharing, or ownership plans.