JOB EVALUATION &

MERIT RATING

DEFINITION
Job evaluation is a process to determine
in a systematic manner & analytically the
worth of each job in the organisation
based upon the set of carefully selected
factors such as skill effort & responsibility
demanded by the job & translating these
worth of jobs into monetary terms .

OBJECTIVES
To establish a sound wage & salary
system by determining the worth of each
job in the factory.
To eliminate the wage inequalities.
To establish a general wage level for a
given factory.
To clearly define the line of authority &
responsibility.
To formulate an appropriate & uniform
wage structure.

METHODS
1) Ranking Method.
2) Classification Method
3) Factor Comparison Method
4) Point Method

Ranking Method
The different jobs, depending upon
their requirements, responsibilities
involved & their importance to the
organisation, are ranked, graded or
placed from top to bottom.

 ADVANTAGES:The method is simple & fast.

It can be easily mastered & administered.
The method is suitable for small
organisations.
The method does not involve expenses.
DISADVANTAGES:o There is no commonly accepted base for
deciding the ranks.
o The method is not very accurate.
o It is not useful for large organisations.
o It is the least used method.

Classification or Grading
Method
Jobs are classified or graded in
groups & levels of equal skill,
difficulty, responsibility, importance
& other requirements.
It may be a production job, a sales
job or an office job; each job family
can be broken into a number of
grades. Each grade carries an
appropriate monetary scale.

 ADVANTAGES:The Method resembles Ranking Method, is

simple & can be easily mastered &
administered.
It is more accurate as compared to Ranking
Method.
DISADVANTAGES:o It is not useful for large organisations.
o Job classification process is cumbersome & time
consuming.
o The method does not involve detailed job
analysis.
o Sometimes it is difficult to correlate the grade of
the job with the present salary of the worker.

Factor Comparison Method

The method employs a five factor
scale for analysis, comparing &
evaluating different jobs.
The five factors are: Skill
Mental effort
Physical effort
Responsibility
Working conditions

 The various steps involved in the factor comparison

method are as follows : Identify a few key jobs in the organisation & record their
wages. Key jobs are those representative jobs which are
assumed to be correctly or fairly paid.
Analysis the key jobs for each of the five factors
mentioned above.
Allocate the salary amongst the five factors in proportion
to their requirements, necessity or importance in the job.
This formulates a money rating scales for each of the five
factors.
Construct a job comparison scale.
Analyse the job to be evaluated into the five factors.
As per the job requirements, determine the importance of
each factor in the job, fit the same in the job comparison
scale & total the monetary values attached to each.

 ADVANTAGES:Factor comparison method finds the wages.

It finds wages by direct comparison.
For fixing wages for a new job, this method uses a ready
made job comparison (monetary) scale & thus the wages
can be calculated speedily.
DISADVANTAGES:o It is complicated method; is not easily understood & hence
it is less popular as compared to point method.
o Selection of unfairly paid jobs as key jobs can introduce
considerable error in the wages calculated by this method.
o It is difficult to divide each factor into a large number of
sub-factors & unless done so accurate results may not be
achieved.
o The method depends upon subjective judgement different
persons may attach different monetary values with each
factor for the same importance.

Point Method
The point method bases itself on dividing
the jobs into a number of factors which in
turn are further subdivided into grades or
degrees.
Each degree is awarded certain points &
when such points for all the degrees are
totaled they indicate the importance of
the job in the organisation; consequently a
suitable wage rate proportional to the
total points is determined.

 The steps involved in point method are given below:a) Select a few key jobs which can be taken as
representatives of the jobs to be evaluated in the
organization. Key jobs are those which can be clearly
defined and are fairly paid.
b) Establish & define job factors whose number may vary
between five to ten. Both key jobs & the jobs to be
evaluated should have common job factors.
c) Select & define grades or degrees for each factor
mentioned under (b). Each grade is allotted certain
points.
d) Allocate points to each grade.
e) Break the key jobs into factors & factors into grades.
Total up all the grade points for each key job.
f) Establish the factors & grades for the job to be
evaluated.

 ADVANTAGES:Since the method involves points(i.e; numerical

figures), it is considered to be more accurate &
reliable.
It is more precise than any other method of job
evaluation.
Once grade table has been constructed, the chances of
subjective discretion decrease.
The method can be understood without much difficulty.
It is the most widely used method.
DISADVANTAGES:o Analysis of factors & grades involve a large amount of
work experience.
o Points allocated to each factor base on more or less
arbitrary grounds.

DEFINITION
Merit rating is a systematic & orderly
approach to assess the relative worth
of an employee working in a n
organization in terms of his job
performance, integrity, leadership,
intelligence, behaviour, etc.

OBJECTIVES
i. Merit rating provides a record of the worth of
employees, they, therefore, can be put on the most
appropriate jobs depending upon their capabilities.
ii. Merit rating unfolds the limitations of an employee
& thus helps in employee improvement.
iii. Merit rating records form a basis for:
. Wage increase
. Promotion
. Special assignments
. Training
. Transfer
. Discharge

METHODS
Rating Scale Method
Check List Method
Employee Comparison Method

JOB ROTATION
Job rotation involves shifting a person from one job to another,
so that he is able to understand and learn what each job
involves. The company tracks his performance on every job and
decides whether he can perform the job in an ideal manner.
Based on this he is finally given a particular posting.
Job rotation is done to decide the final posting for the employee
e.g. Mr. A is assigned to the marketing department whole he
learns all the jobs to be performed for marketing at his level in
the organization .after this he is shifted to the sales department
and to the finance department and so on. He is finally placed in
the department in which he shows the best performance
Job rotation gives an idea about the jobs to be performed at
every level. Once a person is able to understand this he is in a
better understanding

Advantages of Job Rotation

1. Avoids monopoly : Job rotation helps to avoid monopoly of job and enable the
employee to learn new things and therefore enjoy his job
2. Provides an opportunity to broaden ones knowledge : Due to job rotation the person is able to learn different job
in the organization this broadens his knowledge
3. Avoiding fraudulent practice : In an organization like bank jobs rotation is undertaken to
prevent employees from doing any kind of fraud i.e. if a
person is handling a particular job for a very long time he
will be able to find loopholes in the system and use them
for his benefit and indulge ( participate ) in fraudulent
practices job rotation avoids this.

Disadvantages of Job Rotation

1. Frequent interruption : Job rotation results in frequent interruption of work .A person
who is doing a particular job and get it comfortable suddenly
finds himself shifted to another job or department .this
interrupts the work in both the departments
2. Reduces uniformity in quality : Quality of work done by a trained worker is different from that
of a new worker .when a new worker I shifted or rotated in the
department, he takes time to learn the new job, makes mistakes
in the process and affects the quality of the job.
3. Misunderstanding with the union member : Sometimes job rotation may lead to misunderstanding with
members of the union. The union might think that employees
are being harassed and more work is being taken from them. In
reality this is not the case.

JOB ENLARGEMENT
Job enlargement is another method of job design when any
organization wishes to adopt proper job design it can opt for job
enlargement. Job enlargement involves combining various activities at
the same level in the organization and adding them to the existing job.
It increases the scope of the job. It is also called the horizontal
expansion of job activities.
Job enlargement can be explained with the help of the following
example If Mr. A is working as an executive with a company and is
currently performing 3 activities on his job after job enlargement or
through job enlargement we add 4 more activities to the existing job
so now Mr. A performs 7 activities on the job.
It must be noted that the new activities which have been added
should belong to the same hierarchy level in the organization. By job
enlargement we provide a greater variety of activities to the individual
so that we are in a position to increase the interest of the job and
make maximum use of employees skill. Job enlargement is also
essential when policies like VRS are implemented in the company.

Advantages of job enlargement

1. Variety of skills : Job enlargement helps the organization to improve and
increase the skills of the employee due to organization
as well as the individual benefit.
2. Improves earning capacity : Due to job enlargement the person learns many new
activities. When such people apply foe jobs to other
companies they can bargain for more salary.
3. Wide range of activities : Job enlargement provides wide range of activities for
employees. Since a single employee handles multiple
activities the company can try and reduce the number of
employees. This reduces the salary bill for the company.

Disadvantages of job enlargement

1. Increases work burden : Job enlargement increases the work of the employee
and not every company provides incentives and extra
salary for extra work. Therefore the efforts of the
individual may remain unrecognized.
2. Increasing frustration of the employee : In many cases employees end up being frustrated
because increased activities do not result in increased
salaries.
3. Problem with union members : Many union members may misunderstand job
enlargement as exploitation of worker and may take
objection to it.

JOB ENRICHMENT
Job enrichment is a term given by Fedric Herzberg. According to him a few
motivators are added to a job to make it more rewarding, challenging and
interesting. According to Herzberg the motivating factors enrich the job
and improve performance.
In other words we can say that job enrichment is a method of adding
some motivating factors to an existing job to make it more interesting.
The motivating factors can be
a) Giving more freedom.
b) Encouraging participation.
c) Giving employees the freedom to select the method of working.
d) Allowing employees to select the place at which they would like to
work.
e) Allowing workers to select the tools that they require on the job.
f) Allowing workers to decide the layout of plant or office.
Job enrichment gives lot of freedom to the employee but at the same time
increases the responsibility. Some workers are power and responsibility
hungry. Job enrichment satisfies the needs of the employees.

Advantages of job enrichment

1. Interesting and challenging job : When a certain amount of power is given to employees it makes the job more
challenging for them, we can say that job enrichment is a method of employee
empowerment.
2. Improves decision making : Through job enrichment we can improve the decision making ability of the
employee by asking him to decide on factory layout, method and style of working.
3. Identifies future managerial caliber : When we provide decision making opportunities to employees, we can identify
which employee is better that other in decision making and mark employees for
future promotion.
4. Identifies higher order needs of employees : This method identifies higher order needs of the employee. Abraham maslows
theory of motivation speaks of these higher order needs e.g. ego and esteemed
needs, self actualization etc. These needs can be achieved through job
enrichment.
5. Reduces work load of superiors : Job enrichment reduces the work load of senior staff. When decisions are taken by
juniors the seniors work load is reduced.

Disadvantages of job enrichment

1. Job enrichment is based on the assumptions that workers
have complete knowledge to take decisions and they have the
right attitude. In reality this might not be the case due to
which there can be problems in working.
2. Job enrichment has negative implications ie. Along with usual
work decision making work is also given to the employees and
not many may be comfortable with this.
3. Superiors may feel that power is being taken away from them
and given to the juniors. This might lead to ego problems.
4. This method will only work in certain situations. Some jobs
already give a lot of freedom and responsibility; this method
will not work for such jobs.
5. Some people are internally dissatisfied with the organization.
For such people no amount of job enrichment can solve the
problem.

WAGES & INCENTIVES

TERMINOLOGY

Wages
Nominal Wages
Real Wages
Living Wages
Fair Wages
Minimum Wages

CHARACTERISTICS
A good wage system should be
acceptable
to
both
employees
&
management.
It should guarantee a minimum wage to
the employee.
It should able to keep the worker
motivated.
It should provide a scope for employees
to get reward for their additional or extra
effort.

FACTORS
1) Labour market
2) Legal & statutory restrictions.
3) Organisations ability & willingness to
pay.
4) Bargaining capacity of the employer &
employee.
5) Prevailing wage structure in the specific
sector or industry.
6) Workers skill, knowledge & experience.
7) Wage levels in the specific sector or

TYPES OF INCENTIVES
1. Financial incentives:- these are the
rewards paid to the employee &
efforts in cash.
2. Non financial incentives:-these are
non-monetary incentives(other than
cash). These may include gifts,
discount coupons, special holidays,
etc.

WAGE INCENTIVE PLAN

Taylors
Differential
Piece
System
Gantt Task & Bonus Scheme
Halsey Premium Plan
Rowan Premium Plan
Bedaux Point Premium Plan
Emersons Efficiency Plan

Rate

ROWAN PLAN
This plan was devised by James Rowan of
Glasgow in the year 1901. the plan provides
each workman a guaranteed minimum wage
plus bonus for certain portion of the time saved,
the proportion of the time payable for incentive
being the ratio of actual time taken to the
standard time.
Earnings under this scheme are,
Bonus = (Tt/Ts)*(Ts-Tt)* R
Earnings = R*Tt + (Ts-Tt)/Ts * R * Tt
= Tt + R[1+(Ts Tt)/Ts]

 ADVANTAGES:1. Encouragement to slow workers &

trainees.
2. Employer will get the partial benefit of
increased output.
3. A good protection against loose
standards
. DISADVANTAGES:1. It is more complex compared to other
incentives schemes.
2. The sharing concept is not favoured by
workers & so unpopular amongst
workers.

TAYLORS DIFFERENTIAL
PIECE RATE SYSTEM
This plan was developed by F.W.Taylor.
Under this system a standard output for
the day is fixed based upon the accurate
time & method study.
The employees who achieve this
standard or produce more than the
standard are given higher rates than
those who fail to reach the standard. It
considers both time & output, the
differential rates are paid based upon the

Characteristics
1. The days wage or earning is not
guaranteed.
2. Two piece rates are applicable- lower
piece rate for output below standard
output & higher piece rate for output
exceeding the standard output.
3. Lowe piece rate is considered for below
standard performance workers & higher
piece rate for standard & above standard
performance.

 ADVANTAGES:Worker is paid as per his efficiency & he is paid only

for production time & not for idle time.
Clerical work is kept at minimum.
Reduce the supervision to the minimum.
Encourage the workers to produce more to earn
more.
It ensures better utilisation of the resources.
DISADVANTAGES:o Workers in order to earn more will not care much for
quality of the work.
o Quantity orientation makes the worker to work fast,
in due course he may neglect safety measures.
o The decrease in demand may have an adverse effect
on the employees.

EMERSONS EFFICIENCY
PLAN

Under this plan,

I. Days wages irrespective of the output
performance is guaranteed.
II. A standard output based on past performance is
taken as 100% efficiency.
III. Actual output of the worker is compared with
standard output to calculate the efficiency.
IV. An incentive bonus is paid to the workman of his
output exceeds, 2/3rd (66.67%) of the standard
performance (100%).
Efficiency % =(actual o/p for the period/std.
o/p for
the period) * 100

Earnings in this method are

computed as under:1. Efficiency below 66.67% - No bonus, only
time
wages.
2. Between 66.67% to 100% -Time wages +
bonus at
different %
increasing.
3. Over 100% - Time wages + 20% bonus
+ 1%
bonus for each 1%
increase in
efficiency beyond
100%.

HALSEYS 50-50 PLAN

It is a gain sharing plan standard times
are established based upon the past
experience.
The plan guarantees to worker a certain
base rate & in addition a certain
percentage of time he has saved on the
job.
Earnings in this scheme are computed as
follows:Bonus Earned = *(Ts Tt) * R.

 ADVANTAGES:It guarantees the fixed wage to slow workers

& at the same time additional payment to
efficient workers.
Product cost saving.
Simple in operation & worker can compute his
days earning without any difficulty.
DISADVANTAGES:o The plan does not give the bonus on the time
saved but it gives bonus only on % of time
saved.
o Any mistake in computing standard time
affects the workers earnings.
o Incentives is not much attractive to workers.

BEDAUX PLAN
This system is applicable when the
manufacturing involves variety of
short cycle jobs of varying work
contents.

Characteristics
1. Based upon the work measurement study, the
standard time is established for each job in terms
of points. One point equals one minute, i.e. a
standard hour consists of 60 points.
2. Guaranteed wage rate is paid up to standard
performance.
3. Guaranteed wage rate plus incentive bonus is
paid for above standard performance.
4. The incentive bonus is paid at the fixed proportion
for the time saved. As per this plan, 75% of the
points saved multiplied by one sixtieth (1/60 th ) of
the workers hourly rate is paid on incentive.

Advantages
1. Plan is simple in design & easy to
operate.
2. It is really gives incentives to higher
production.
3. This brings in a competitive spirit
amongst the workers to produce
more.

GROUP TASK & BONUS

SYSTEM
This scheme was proposed by henry gantt.
In this system a minimum wage is
guaranteed for those workers who cannot
reach bonus level.
The standard output is fixed based upon the
careful study.
If the worker achieves the standard output
or produces more than the standard output,
he is provided with an extra allowance
between 25% to 50% of the hourly rates.

Characteristics
1. Minimum days wage is guaranteed
irrespective of the performance of the
worker.
2. The actual output of the worker is
compared with the standard output to
calculate efficiency.
3. Time wages without bonus are paid
below standard performance.
4. Time wages plus an increase in wage
rate is considered at standard