Job evaluation: Point method
The point method of job evaluation provides HR a framework for establishing a pay ranges in an organization. Learn everything you need to know about this effective compensation planning tool.
Published: February 10, 2025 | by Brightmine | Reviewed by Sarah Peterson Herr, JD, Legal Editor at Brightmine
Attracting top talent is high on the list of priorities for organizations of all types and sizes regardless of the economy or the job market. Employers want to build a highly skilled workforce that will contribute positively to achieving their strategic goals and objectives and boosting the bottom line.
Ensuring that employees are paid appropriately and competitively is an important part of attracting top talent. Fairness and transparency are attributes that employees value in an organization.
Job evaluation is a process used by organizations to evaluate the required knowledge, skills, and abilities (KSAs) required in a given position and, based on the work done and its contributions to the organization, to establish a pay range for the position. HR business partners play an important role here in terms of both job analysis and evaluating compensation and developing a compensation strategy that is fair and free from bias.
What is the point method of job evaluation?
Making decisions about how much employees should be paid based on the role they hold can be challenging. In some instances, companies may take a “pay what the market can bear” approach, tying their levels of pay to competitors in their market. In other cases, individual managers may be given the authority to determine pay structure based on what it takes to get a candidate to accept an offer.
But these methods, over time, can create major problems as there will likely be no consistency in pay rates and inequities may emerge that, however unintentionally, may result in disparate levels of pay for employees in protected classes—for instance, women and people of color.
Having a method of making more objective determinations of pay is important for organizations of all sizes. Not only does it benefit employees and ensure fairness and equity, it also helps organizations maximize their compensation budgets—neither under- or overpaying for various positions.
The point method, or point factor method, is an objective form of evaluation that assigns points to various attributes of the job to come up with a score for the position which is used to establish a competitive pay range. Job descriptions serve as an important source document for the job evaluation process. Job descriptions, of course, must be accurate and up to date. They can then be used to understand the important elements of a job, including compensable factors.
Using the point method involves breaking down the elements of a specific job into factors indicating what the job is requiring. Defined factors are then assigned points and added together to come up with an overall score. The score is used to compare jobs and to help determine appropriate compensation.
Other methods of job evaluation
In addition to the point method, there are other methods of job evaluation that are used by organizations to help classify their jobs and determine levels of pay. They include the ranking or paired comparison method, job classification, the factor comparison method, market pricing, and the Hay job evaluation process.
The point method, though, is the most used.
What are the four major factors of the point method?
The point method is used to value a job based on the work that is done, the skill that is required, and other factors outlined below.
While factors may vary between organizations depending on the type of work they do and the stakeholders they serve, the four major factors of the point method are skill, effort, responsibility, and working conditions.
1. Skill
Skill is a measure of the level of knowledge, experience, and abilities someone in the job would need to have to perform the job effectively. For instance, a software developer might need advanced programming skills in specific programming languages, an advanced knowledge of software architecture, and experience with agile development.
2. Effort
Effort is an indication of both the mental and physical demands of the job. For instance, a construction worker’s job might require heavy lifting, as well as the ability to operate certain power tools. An air traffic controller would have to exhibit intense concentration over long periods of time.
3. Responsibility
Responsibility takes into account the decision-making authority that the person in the job has and the aspects of the company’s product and service outputs that the individual influences. For instance, a Chief Financial Officer (CFO) would have responsibility for making critical financial decisions impacting the company’s bottom line. A project manager would have responsibility for overseeing and completing projects on time and within budget.
4. Working conditions
Working conditions relates to the actual physical environment where the employee works, including any potential hazards. For instance, a laboratory technician might have exposure to hazardous chemicals or biological agents. A firefighter would work in situations with extreme heat, the risk of smoke inhalation, and the potential risk of structural collapses.
These factors offer insights into the critical elements of a job, indicating the skills and competencies job holders would need to have and how they would be applied.
The process can be time consuming, initially. But once established the point method serves as a reliable job evaluation method that can be readily adjusted and scaled.
What are the advantages of the point method of job evaluation?
The major advantage of the point method is that it provides an objective way to place a value on a job. By focusing on specific job requirements and impacts, the organization can avoid subjectivity in how salaries and wages are determined.
In addition, a strong job evaluation process provides a way to be transparent with employees about how their jobs, and other jobs, are valued. They can readily see how their jobs might rank compared to other jobs in the organization which can help to identify potential career paths.
Using the point method of job evaluation offers consistency within an organization in terms of how salary ranges and wages are established.
When done correctly to ensure objectivity and consistently, the point method can also provide legal defensibility in terms of how compensation decisions are made.
What sections are required to design a point factor analysis?
Conducting job evaluations using the point method requires following a specific structured process that includes five elements.
1. Benchmark jobs
A representative sample of specific jobs is used to provide thorough coverage of the range of skills and responsibilities that exist within an organization. Benchmark jobs can then serve as reference points as other jobs are evaluated. The total point score of one job can be compared to another and considered in terms of relative value and relevance.
2. Compensable factors
Compensable factors represent the specific factors that jobs will be evaluated on. The most common are skill, effort, responsibilities, and working conditions. There may, though, be other factors that come into play depending on the industry or organization and the type of work done. For instance, financial impact on the organization, involvement in problem-solving, impact on innovation, communication skills, etc.
3. Factor weight or level
As factors are identified they are weighted to provide a relative indication of how important each one is to the effective performance of a job. For instance, for a computer programmer role, “skill” might be weighted more heavily than “working conditions.”
4. Assigned points for each factor
For each factor identified, a point scale needs to be developed, indicating the various levels or degrees to which that factor needs to be exhibited. This is very similar to the use of rubrics in education settings to provide students with information about the importance of various elements of an assignment.
For instance, “responsibility” factors might range from “minimal supervision required” to “responsible for making strategic decisions independently.”
5. Analysis
The final step is analysis. Based on the compensable factors and their weight and assigned points, each job is evaluated and assigned a total score based on the total point score. This is generally done by a group of people that might include HR representatives, the position’s manager, internal customers, and even representative employees holding the position. After evaluation and discussion, a consensus is reached in terms of score.
It’s important that the group working on job evaluation takes an objective approach to the process, focusing on job descriptions and the requirements of a job, and not specific skills and attributes of individuals who hold the job. This is not about evaluating people, or employees, and their capabilities, but evaluating the job, its attributes, and the value the job holds for the organization.
Achieving consensus can be challenging, and sometimes contentious, but it’s an important process to go through to ensure both understanding and adherence to principles of objectivity and contributions to the organization and its mission, vision, values, and desired outcomes.
Once specific jobs are analyzed, a reality check can be done by comparing the relative scores of rated jobs to other jobs to determine whether the differences in levels seem appropriate.
Example of point method evaluation
Here’s a simple example of how the point method might be applied to analyze a software developer job.
| Factor | Weight | Level | Points |
|---|---|---|---|
| Skill | 40% | Advanced (4/5) | 160 |
| Effort | 20% | Moderate (3/5) | 60 |
| Responsibility | 30% | High (4/5) | 120 |
| Working conditions | 10% | Standard (2/5) | 20 |
| Total | 100% | 360 |
Each factor is weighted for all defined factors with percentages that add up to 100%. In this case it’s clear that both skill and responsibility are the most important factors, and given equal weight, with working conditions having the least weight based on the type of job being performed.
Then a level of proficiency is applied—in this case on a scale of 1-5, with 5 being high. The most important factors are skill and responsibility, with each receiving a score of 4.
Next, the weighted percentage is multiplied by the level of skill required to come up with points.
Ultimately, this position received a score of 360 points. That score will then be compared to other jobs to get a reality check in terms of how the value of various jobs stack up against each other.
The point method process of job evaluation is an important way to build fairness and transparency into an organization’s compensation strategy. In addition, the point method can readily be adjusted and added to as new positions are added or as the responsibilities and other attributes of the position change.
Having a process in place to regularly review and update job evaluations is important to ensure that this critical element of compensation strategy remains relevant and current. Not sure where to start? We can help. Click below to start your free trial today.
Start your free trial today
Register today to gain free 7-day access to the Brightmine HR & Compliance Center and stay up to date, compliant and save valuable time.
About the authors
Brightmine
With more than 10,000 customers, Brightmine is a leading global provider of people data, analytics and insight – empowering HR leaders to deliver brighter business outcomes.
For more than two decades, Brightmine, formerly XpertHR, has continued to help HR leaders confidently navigate the evolving world of work through our unique combination of critical workforce data, AI-enabled technology, and trusted HR expertise.
Brightmine is a division of LexisNexis Data Services within RELX®, a global provider of information-based analytics and decision tools. RELX serves customers in 180+ countries with 35,000+ employees. Ticker: London: REL; Amsterdam: REN; New York: RELX.
Follow Brightmine on LinkedIn
Sarah Peterson Herr, JD
Legal Editor, Brightmine
Sarah Peterson Herr is a former in-house attorney with over 10 years of employment law experience. As a member of the Brightmine editorial team, she focuses on compensation and benefits compliance, including health care benefits, health care continuation and retirement benefits.
Sarah earned a Bachelor of Science in psychology from Baker University, a Master of Arts in counseling psychology from the University of Kansas and a Juris Doctor from Washburn University. Prior to joining Brightmine, Sarah led a team conducting workplace investigations. She previously worked in-house as a research attorney in a firm specializing in employment law. Sarah’s employment law interests include leaves of absence and accommodations, AI and privacy issues.
Connect with Sarah on LinkedIn.