What is factor comparison in HR?

Factor comparison is a method used in human resource management for job evaluation and determining relative job worth within an organization. It involves comparing different jobs based on specific factors or criteria such as skill level, responsibilities, working conditions, and complexity.

Here’s how the factor comparison method works:

1. Identification of factors: HR professionals identify and define the key factors or dimensions that are relevant to evaluating job roles within the organization. These factors typically include skills, effort, responsibility, working conditions, and other job-related characteristics.
2. Ranking of factors: Each factor is ranked or weighted based on its importance or contribution to the overall job value. HR may assign numerical weights or scores to each factor to reflect its relative significance in job evaluation.
3. Evaluation of jobs: Jobs within the organization are evaluated against each factor based on predefined scales or criteria. HR professionals assess the degree to which each job meets the requirements of each factor and assign scores accordingly.
4. Comparison of jobs: Once jobs are evaluated on each factor, HR compares them to determine their relative worth or value within the organization. Jobs with similar scores on certain factors may be considered comparable in terms of job worth.
5. Factor comparison: Finally, HR calculates the total value or ranking of each job by summing the scores across all factors. Jobs with higher total scores are considered to have greater job worth or value within the organization.

Factor comparison is a systematic and analytical approach to job evaluation that allows organizations to objectively assess and compare the relative value of different job roles. By using this method, HR can establish fair and equitable compensation structures, support talent management decisions, and ensure alignment between job roles and organizational objectives.

What is an example of a factor comparison?

Let’s consider an example of factor comparison using the following factors: skills, responsibility, working conditions, and complexity.

1. Identification of factors: HR identifies four key factors: skills required for the job, level of responsibility, working conditions, and job complexity.
2. Ranking of factors: Each factor is assigned a weight or score based on its importance. For example:
   • Skills: 40%
   • Responsibility: 30%
   • Working Conditions: 20%
   • Complexity: 10%
     
3. Evaluation of jobs: HR evaluates two job roles within the organization: Software Engineer and Customer Service Representative, based on each factor.
   • Software Engineer:
   • Skills: Requires advanced programming skills (9/10)
   • Responsibility: Manages complex projects and deadlines (8/10)
   • Working Conditions: Office-based, standard working hours (7/10)
   • Complexity: Deals with intricate technical challenges (8/10)
   • Customer Service Representative:
   • Skills: Requires strong communication and problem-solving skills (7/10)
   • Responsibility: Handles customer inquiries and complaints (6/10)
   • Working Conditions: Mostly office-based, some flexibility (6/10)
   • Complexity: Deals with diverse customer issues (6/10)
     
4. Comparison of jobs: HR compares the Software Engineer and Customer Service Representative roles based on each factor and assigns scores accordingly.
   
   
5. Factor comparison: The total scores for each job are calculated by summing the scores across all factors:
   • Software Engineer: (9×0.40) + (8×0.30) + (7×0.20) + (8×0.10) = 8.2
   • Customer Service Representative: (7×0.40) + (6×0.30) + (6×0.20) + (6×0.10) = 6.7
     

Based on factor comparison, the Software Engineer role has a higher total score, indicating greater job worth or value within the organization compared to the Customer Service Representative role. This information can be used to guide compensation decisions, talent management strategies, and organizational planning efforts.