Point Method

This method is broadly used currently. Jobs here are expressed in terms of key factors. Points are assigned to each of factor after prioritising each of factors in order of significance. The points are summed up to decide the wage rate for the job. Jobs having similar point totals are placed in same kind of pay grades. The process involved may be described thus:

1. Select key jobs. Recognize the common factors to all of the identified jobs like effort, skill responsibility, etc.
2. Divide each crucial factor into a number of sub factors. Each of sub factors is defined and expressed apparently in the order of importance, preferably along a scale. Most frequent factors employed in point systems are following (i) Skill (key factor); Education and Breadth/depth of experience required,  training needed, Social skills essential, Problem-solving skills, Degree of discretion/use of judgement, Creative thinking (ii) Responsibility/Accountability:, Specialised responsibility, Breadth of responsibility ,Degree of freedom to act, complication of the work, Extent of accountability for equipment/plant, Number and nature of subordinate staff, Extent of accountability for product/materials; (iii) Effort: Physical demands of a job, Mental demands of a job,  Degree of potential stress

 Thus the educational requirements (sub factor) under the skill (key factor) might be expressed in the order of value.

Box

 Assign point values to degrees after fixing associative value for each of key factor.

Box: Point Values to Factors along a Scale

1. Determine the maximum number of points assigned to each of the job (after adding up the point values of all of the sub-factors of like job). It would help in finding out the relative worth of a job. For example, the highest points assigned to an officer's job in a bank come to 540. The manager's job, after totalling key factors + sub factors points, possibly will be getting a point value of 650 from the job evaluation committee. Now this job is priced at a higher level.
2. Once the value of a job in terms of whole points is expressed, the points are transformed into money values keeping in view the hourly or daily wage rates. Typically a wage survey is undertaken to gather wage rates of definite key jobs in the organisation. Let's described this:

Box: Conversion of Job Grade Points into Money Value