Factor Comparison - Meaning & Definition

Published in Human Resources Terms by MBA Skool Team

What is Factor Comparison?

Factor Comparison is a method used to carry out Job evaluation. Job evaluation refers to the measurement of the value of a job relative to other jobs.

Factor comparison is a complex quantitative method.

In this method, each job is given a rank on the basis of a number of factors. These factors are enumerated below:

1) Skill

2) Mental effort,

3) Physical effort,

4) Responsibility, and

5) Working conditions

A composite score is obtained by assigning different weights to each factor and the value of the particular job is hence obtained. The jobs are then compared on the basis of their composite score.

The steps to be followed in this particular method are as under:

Step1: Key Jobs across the organisation are selected. About 20-25 jobs across various departments of the organisation can serve the purpose well

Step2:  For each job selected, corresponding evaluation parameters are selected

Step3: Each job is given a rank under each formulated factor in an independent fashion (without any consideration from other parameters)

Step4:  An equivalent monetary value is assigned to each job parameter

Step5: The money value of the job is then apportioned amongst the formulated factors.

The advantage of this job evaluation method is its broad application. It can be used in wide range of job roles, it can also be applied to the new roles in different organizations to compare them with similar positions. Converting the value of jobs in monetary terms can enable the organizations to make sure their recruitment and selection method provides a reasonable return on investment. Monetary values are assigned in very fair way according to the agreed ranks fixed by the job evaluating authority. This method is flexible as there is no upper limit on the rating of the factors.

The major disadvantage attached with factor comparison method is that someone will have to make a decision on evaluating the relative worth of each factor. For example, some employee might believe that knowledge is worth more than skills and might allot this factor more salary. It is difficult to operate, explain and understand. It is also costly as well as time consuming.


Hence, this concludes the definition of Factor Comparison along with its overview.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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