The point method is widely used. It requires identifying several compensable factors (like skills and responsibility) each with several degrees and also the degree to which each of these factors is present in the job. A different number of points are usually assigned for each degree of each factor. So once you determine the degree to which each factor is present in the job, you need only add up the corresponding number of points for each factor and arrive at an overall point value for the job. Here are steps:
Determine Clusters of jobs to be evaluated: because jobs vary widely by department, you usually will not use one point rating plan for all jobs in the organization. Therefore the first step is usually to cluster jobs, for example into shop jobs clerical jobs, sales jobs, and so forth. Then the committee will generally develop a point plan for one group or cluster at a time.
Collect job Information: This means performing a job analysis and writing job descriptions and job specifications.
Select compensable factors: Here select compensable factors, like problem solving, physical requirements or skills. Each cluster of jobs may require its own compensable factors.
Define Compensable factors: next, carefully define each compensable factor. This is done to ensure that the evaluation committee members will each apply the factors with consistency.
Define factor degrees: Next define each of several degrees for each factor so that raters may judge the amount or degree of a factor existing in a job. Thus, for the factor complexity you might choose to have six degrees ranging from seldom confronts new problems through uses independent judgment (Definitions for each degree are shown in Figure). The number of degrees usually does not exceed five or six and the actual number depends mostly on judgment. Thus, if all employees either work in a quiet, air conditioned office or in a noisy hot factory then two degrees would probably suffice for the factor working condition. You need not have the same number of degrees for each factor and you should limit degree to the number necessary to distinguish among jobs.
Determine relative values of factors: The next step is to decide how much weigh (or how many total points) to assign to each factor. This is important because for each cluster of jobs some factors are bound to be more important than others. Thus, for executives the mental requirements factor would carry far more weight than would physical requirements. The opposite might be true of factory jobs.
The process of determining the relative values or weights that should be assigned to each of the factors is generally done by the evaluation committee. The committee members carefully study factor and degree definitions and then determine the relative value of the factors for the cluster of jobs under consideration. Here is one method for doing this:
First assign a value of 100% to the highest ranking factor. Then assign a value of the next highest factor as a percentage of its importance to the first factor, and so forth For example,
Decision making 100%
Problem solving 85%
Next sum up the total percentage (in this case 100% + 85% + 60% = 245%). Then convert this 245% to a 100% system as follows:
Decision making: 100 ÷ 245 = 40.82 = 40.8%
Problem solving: 85 ÷ 245 = 34.69 = 34.7%
Knowledge: 60 ÷ 245 = 24.49 = 24.5%
Assign point values to factors and degrees: In , total weights were developed for each factor in percentage terms. Now assign points to each factor as in Table. For example suppose it is decided to use a total number of 500 points the point plan. Because the factor decision making had a weight of 40.8% it would be assigned a total pf 40.8 x 500 = 204 points.
Thus, it was decide to assign 204 points to the decision making factor. This automatically means that the highest degree for the decision making factor would also carry 204 points. Then assign points to the other degrees for this factor, usually in equal amounts from the lowest to the highest degree. For example divide 204v by the number of degrees, (say 5) this equals 40.8. The lowest degree here would carry about 41 points. The second degree would carry 41 plus, 41 or 82 points. The third degree would carry 123 points. The fourth degree would carry 164 points. Finally, fifth and highest degree would carry 204 points. Do this for each factor.
Write the job evaluation manual: Developing a point like this usually culminates in a point manual or job evaluation manual. This simply consolidates the factor and degree definitions and point into one convenient manual.
Rate the Jobs: Once the manual is complete the actual evaluations can begin. Raters (usually the committee) use the manual to evaluate jobs. Each job based on its job description and job specification is evaluated factor by factor to determine the number of point that should be assigned to it.
Raters generally start with rating key jobs and obtain consensus on these. They rate the rest of the jobs in the cluster.