The four main methods of conducting a job evaluation comparison are the job ranking system, the job classification system, the point system and the factor comparison system. The point system for job evaluation utilizes a qualitative point system based on compensable factors, such as the skills, efforts and responsibilities for performing the job, which are then assigned a weight based on the organization’s judgment of the importance of each factor. The job ranking system for job evaluation is the most traditional system and it lines up jobs based on their relative worth, whereas the job classification system arranges and groups jobs in accordance with a selection of predetermined wage grades . The lower grades cover jobs that require less knowledge, skills, abilities and other factors (KSAOs) compared to the higher grades which require higher KSAOs and therefore the higher grade jobs are better paid. The factor comparison system for job evaluation is carried out by assessing the compensable factors of the various jobs and then comparing it to the compensable factors of key jobs within the company. The key jobs are the ones that are critical for establishing wages and are well known within the labor market. So, a factor comparison scale is constructed to enable the factor comparison system for job evaluation. The Hay Profile method is a job evaluation process designed for managers . This method evaluates the knowledge, problem-solving capabilities and accountability of candidates to determine their suitability for manager, executive, or professional positions. In order to attain internal and external pay equity, job evaluation techniques must be used in conjunction with wage-survey data. This data originates from the wage and salary survey of wages paid by employers within the relevant labor market. Job evaluation provides internal equity in pay since it determines the relative worth of a job, while the wage survey data will ensure external equity by ensuring that a company’s employees are being paid on a similar level to employees doing similar jobs in other organizations.
The wage curve can be graphically represented by a scattergram of the relationship between the relative worth of jobs and their wage rates. Pay grades are the types of jobs within a particular grouping that are paid at the same rate, whereas the rate ranges describes the range of pay rates for each pay grade. It is easier administratively to group jobs into pay grades and pay those employees at a particular rate or rate range. Hence, the existence of this system . Sometimes, employers pay certain employees above the set pay range and these rates are called red circle rates. This occurs if the employee is fairly senior or promotional opportunities are limited.