A comparison of factor weighting methods in job evaluation: implications for compensation systems.

The concept of pay equity is important not only from the standpoint of employee morale, commitment, and performance (Lawler, 1981), but for compliance with equal employment opportunity laws such as the Equal Pay Act of 1963 and the Civil Rights Act of 1964. Recently, job evaluation has received

considerable attention as part of the continuing concern for sex-based pay equity (Arvey, 1986; Schwab, 1984). In the 1981 Supreme Court ruling, Gunther v. County of Washington, the court held that female dominated jobs were not required to be identical in content (i.e., duties) to jobs held primarily by males in order for federal courts to hear testimony of possible wage discrimination (452 U.S. 161 (1981)). Subsequently, job evaluation methodology and results have become prominent issues in sex-related discrimination cases (Cooper & Barrett, 1984; Milkovich & Newman, 1987), as well as a focal point of pay equity legislation being passed by local and state governments (Reichenberg, 1986).

In addition to legal considerations, important reasons for the use of job evaluation in compensation management are (1) having a rational and communicable basis for explaining different wage rates, (2) maintaining job satisfaction and minimizing grievances, (3) having a flexible basis for revising pay rates and establishing rates for new jobs, and (4) containing the administrative costs of employee compensation (Henderson, 1989; Milkovich & Newman, 1987).

Recently a number of measurement problems cited in a National Academy of Sciences study by Treiman and Hartmann (1981) have been addressed in the personnel literature. For example, research has focused upon such psychometric properties of job evaluation plans as reliability (Doverspike, Carlisi, Barrett, & Alexander, 1983), sex-biasing (Grams & Schwab, 1985; Mount & Ellis, 1987), and validity (Gomez-Mejia, Page, & Tarnow, 1982; Madigan & Hoover, 1986). However, an important methodological issue that has received scant attention in the literature is that of job evaluation factor weighting (Arvey, 1986; Treiman, 1984).

Weighting in Job Evaluation

Most formal job evaluation plans entail the measurement of job worth by ranking or rating jobs on a set of "compensable" factors (Henderson, 1989; Milkovich & Newman, 1987). Attributes of job worth measured by these factors typically fall into the categories of skill, responsibility, effort, and working conditions. (In fact, these 4 criteria are specified in the Equal Pay Act of 1963.) When combining the separate factor scores to form a composite, or when using the individual factors as variables in a prediction model, a decision must be made concerning the weighting of each factor. The determination of job evaluation factor weights is usually done in one of three ways: (1) a priori weights may be chosen and applied to the factors reflecting a subjective notion about worth; (2) weights may be derived empirically, from a statistical regression analysis of the relationship between job evaluation scores and criterion wage rates; or (3) job evaluation factors may be deemed equivalent in value and thus receive "equal" weights (Milkovich & Newman, 1987; Treiman, 1984).