Factor comparison

Factor comparison is a systematic method designed to conduct job evaluations based on different factors like skills, physical efforts, mental efforts, responsibilities, and working conditions. Thoman E Hitten was the first who founded this method, which is very useful for determining the worth of jobs. In this method, instead of ranking the role as a whole, it is broken down into different factors.

The next stage is identifying benchmark jobs and roles that are consistent across different companies. A salary is assigned to each position, and the wage is further broken down for each factor.

Factor comparison can also be used to compare the compensation packages and benefits offered by different organizations. An extension of the factor method is the point method, where each factor is further divided into points. For example, skill can be divided into experience, education, ability, etc; responsibilities can be broken into points like fiscal and supervisory. Working conditions can be divided into hazards and extremes in the environment. 

How to make a factor comparison?

  • Around 20-25 jobs are selected across the company. The jobs must be spread across different departments.
  • Different parameters like skills, education, and experience are selected in each job for evaluation.
  • A rank is given to each parameter independently, in the order of their importance. This can be done by consulting the field experts and conducting a survey among the employees.
  • A monetary value is assigned to each parameter. This is done by researching the salaries of similar positions in the industry. 
  • Then the individual values of the parameters are combined to create a monetary value for each job. This serves as the base salary of a job position.


Advantages of factor comparison

  • Applicable to a wide range of jobs- The factor comparison method of evaluation can be applied to a wide range of jobs and positions as the five factors are the same in every job.
  • Applicable to newly created jobs- This can be easily applied to newly created positions to decide the value of that job.
  • A monetary value is set for each job- This method comes in very handy in deciding the base salary of any position in the company.
  • The method is flexible as there is no upper limit for rating a factor.
  • Helpful in selecting the best candidates- As it becomes clear what is expected for a position, the method is essential in attracting the best possible talent.
  • Can be easily understood by the workers- As the five factors used for the evaluation are constant, the method is easy to understand.
  • Managers can use factor comparison to determine employee compensation for creating new positions; employees can also use it to negotiate their salary.


Disadvantages of factor comparison

  • Rating of the factors is subjective
  • As someone from the authority has to decide the value of the jobs, there might be chances of bias.
  • The rating of factors can be complex and time-consuming.
  • The evaluators need to have more knowledge about the factors in order to rate them.




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