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Choose benchmark jobs
Select compensable factors. Example: job complexity, effort, and working conditions
Assign weights to compensable factors
Example
To assign weights, we assume we have a total 100 percentage points to allocate for each job. Then (as an example), assign
percentage weights of 60% for the factor job complexity, 30% for effort, and 10% for working conditions.
Job complexity 60%
Effort 30%
Working conditions 10%
Convert percentages to points for each factor
It is traditional to assume we are working with a total number of 1,000 points
Job complexity 60% x 1000 = 600
Effort 30% x 1000 = 300
Working conditions 10% x 1000 = 100
Define each factor's degrees
A scale of degrees must be defined, in order to assign points to the extent a job demands different activities and skills
with increasing difficult, as shown below

Determine for each factor its factor degrees' points

Review job descriptions and job specifications
Evaluate the jobs
For instance, a job of master mechanic , the team might conclude (after studying the job description and job specificacion)
that the master mechanic's job deserves the third degree level of job complexity points, the first degree level of effort, and
the first degree level of working conditions

Finally, we add up these degree points for each job to determine each job's total number of points
For the master mechanics: 360 + 60 + 20 = 440 points

Jobs with more points should command higher pay

Draw the current (internal) job curve
The wage curve typically shows the pay rates paid for jobs,
relative to the points assigned to each job

We can draw this wage line by just estimating a line that

best fits the plotted points or we can use a regression

Conduct a market analysis: salary surveys

Draw the market (external) wage curve
Compare and adjust current and market wage rates for jobs

In this example, our wage rates are below

the market wage rates

Develop pay grades

The pay grade consists of jobs falling within a range of points.
It is standard to establish grades of equal point
spread. (In other words, each grade might include all those jobs falling
between 50 and 100 points, 100 and 150 points, 150 and 200 points, etc.)

Establish rate ranges

Address remaining jobs
Correct out of line rates
ADVANTAGES
DISADVANTAGES