Factor Comparison

Factor comparison is a structured method used in job evaluation to assess and rank positions based on specific factors.

These factors typically include skills, responsibilities, physical and mental efforts, and working conditions.

Rather than evaluating the job as a whole, factor comparison breaks down roles into individual components, making it easier to determine fair compensation.

How Does Factor Comparison Work?

• Identify key factors: Roles are evaluated based on a consistent set of factors, such as skills, responsibilities, and working conditions.
• Benchmark roles: Common roles across various organisations are used as benchmarks for comparison.
• Assign value: Monetary value is allocated to each factor, and these are combined to calculate the overall job worth.
• Compare factors: Factors like skill can be subdivided further into experience, education, or specific abilities. Similarly, responsibilities may be broken into supervisory or financial accountability.

This approach ensures that the evaluation is comprehensive and applicable to diverse roles.

Steps for Conducting Factor Comparison

• Select jobs for evaluation: Typically, 20–25 jobs from various departments are chosen.
• Identify parameters: Parameters such as skills, education, and experience are selected for each job.
• Rank parameters: Each parameter is ranked by importance through surveys or expert consultations.
• Assign monetary value: The value is determined by industry standards for similar roles.
• Combine values: All the parameter values are combined to calculate the base salary.

Advantages of Factor Comparison

• Wide applicability: It can be applied to a range of jobs, including new positions.
• Clear structure: Helps set a monetary value for roles, making salary discussions transparent.
• Consistency: The same factors are used across roles, making the method easier to understand.
• Flexibility: There is no upper limit to how factors can be rated, offering flexibility in evaluation.

Disadvantages of Factor Comparison

• Subjectivity: The ranking process can be biased if not done carefully.
• Complexity: The evaluation process may be time-consuming and require thorough knowledge of the factors involved.

Frequently Asked Questions (FAQ)

Q. How do companies ensure objectivity and avoid bias in factor comparison evaluations?

A. Companies ensure objectivity in factor comparison by involving multiple stakeholders in the evaluation process. They include experts, supervisors, and even employees to gather balanced insights. Independent third-party consultants may also be brought in to verify fairness. Clear guidelines and criteria for each factor help standardise the process, reducing personal bias. Regular audits and feedback loops can further ensure the evaluation remains transparent and consistent.

Q. What tools or software can be used to implement the factor comparison method efficiently?

A. Organisations often use HR management software that includes job evaluation modules to implement factor comparison. Tools like Mercer, Korn Ferry, and other compensation management platforms provide built-in templates for factor comparison. These platforms streamline the process by automating calculations and ensuring consistency across multiple roles. Custom-built systems may also be employed, especially when companies have unique job evaluation needs. Using software reduces human error and makes updates to evaluations more manageable.

Q. How does the factor comparison method differ from other job evaluation methods like the point-factor system?

A. While both methods break jobs into components, the factor comparison method assigns monetary values directly to factors. In contrast, the point-factor system breaks each factor into smaller sub-factors and assigns points instead of monetary values. These points are then converted into compensation later. Factor comparison is often quicker because it skips the point conversion step, while the point-factor system offers more granularity and precision. Both methods help maintain fairness, but their complexity and application differ based on the organisation’s needs.