Ranking method - what is it?

2024 Author: Howard Calhoun | [email protected]. Last modified: 2024-01-17 18:37

Any business needs to constantly monitor the accuracy and efficiency of the accepted payment system and correct the situation if necessary. If the state of affairs requires the development of a new scheme, then it must meet the goals and objectives of the organization, its specific needs. At the same time, one should not forget about meeting the needs of the staff, ensuring a fair distribution of remuneration among the employees of the enterprise.

Features of choice

Until recently, it was generally accepted that it was enough for a company to use one payment scheme. A universal system was developed, taking into account the capabilities and needs of the enterprise. For example, a company could choose a scheme with additional payments. Currently, the management of most organizations has come to the conclusion that it is necessary to use systems depending on the conditions in which the company operates. In this case, it is necessary to take into account the specifics of products, services provided or work performed. The nature of production is also important. In particular, we are talking about the necessary skillspersonnel, technologies, automation, duration of the technological cycle and so on. The characteristics of working resources are also taken into account: the age of employees, staff stability, turnover, the number of absenteeism, etc. In addition, other factors also influence the choice of payment system: the state of the labor market, the specifics of relations in the team.

Pay fairness

One of the key functions of an enterprise or industry is to determine the relationship between the work performed and the remuneration received for it. Most employees compare their salary with that received by others, especially colleagues. For many workers, a differentiated system is quite acceptable. However, the desire for a fair distribution of funds requires that the differences between the amounts received be regulated openly. To implement this task, special expert methods of differentiation were developed. Consider them in detail.

Expert methods: general characteristics

There are different approaches to differentiation and justification of wage differences. All of them are usually divided into 4 major categories. The first includes methods for evaluating work. They form a more systematic approach to problem solving. Other options are developed individually for each specific case. They are called specialized. These approaches are based on local acts. When analyzing in such cases, first of all, the amount of funds allocated for the performance of a particular professional activity is examined. Then a differential payment scheme is built. It may or may not suit employees' needs. In practice, the second situation most often occurs. It is accompanied by constant disputes and claims from employees to management.

Estimation of objects by ranking method

It involves the formation of a model for differentiation of operations. Payment for this or that action is established after agreement. This approach is closely related to the content of the activity. When using it, the quality of completed operations is assessed. At the same time, neither a specific contractor nor external market factors are taken into account. Quality assessment should be based on an objective analysis of activities. The starting point of the study relates to those activities, the payment of which is considered fair by all parties of the relationship, which have a certain similarity with other categories so that they can be compared.

The easiest option

This is the direct ranking method. It is considered simple because the analysis is carried out by distributing activities depending on the value they have for the enterprise. The ranking method is a way of comparing the content of any operation with the process taken as the original one. As a result of the analysis, the action is assigned to the corresponding position. Often, the comparison of two objects is carried out according to the job description. However, no deep analysis of the content of operations is carried out. The ranking method is a method that is useful in smallcompanies. In such enterprises, as a rule, few different operations are performed. In large companies, this approach may be completely useless. In such firms, different types of activities with different content are usually carried out. These enterprises will suit the method of qualitative ordering. Assignment of operations to one category or another in such cases is carried out in accordance with the approved scheme. This is especially true when setting a large number of individual levels and pay rates is completely unacceptable.

Pros and cons of the approach

The ranking method is one of the schemes that can be introduced very quickly into the practice of an enterprise. Its undoubted advantage is the economy in use. At the same time, the analysis can be performed on the basis of incomplete data and without taking into account a number of standards. Often there is an insufficient level of qualification and lack of necessary knowledge among specialists using the ranking method. This, in turn, indicates the superficial nature of the analysis and may lead to a gradation not so much of activities as of their performers.

Alternative

It is a classification method. This method is widely used in determining the salaries of employees in institutions, differentiating the skills of manufacturing specialists. Unlike the one discussed above, this option involves the establishment of a gradation structure and corresponding remuneration before a thorough study of certain transactions is carried out. The number of levels is strictly defined,functions. Accordingly, the payments for each position are understandable. The classification method involves compiling descriptions of gradations in such a way that they reflect significant differences in duties, skills, and requirements for professional activity.

Creating a table

Activities that are carried out according to simple instructions under constant control are assigned to the lowest position. Each next step reflects a higher level of responsibilities, skills, requirements, and so on. At the same time, the degree of control is reduced. All activities are not divided into components. It is considered as one. Grouping of objects is carried out as follows.

Scale D	Usual routine activities.
Scale C	Operations that require special knowledge, experience, training in a particular area. To perform work, an employee must have certain personal characteristics. The activity requires a high degree of precision and reliability in contact with parts. Operations control other than general management is not provided.
Scale B	Activity requires serious special theoretical and practical knowledge and experience. Some operations require high personal qualities. A high degree of precision and reliability is required when interacting with parts. Completed operations are not additionally checked. Fromthe employee is expected to be individually responsible when studying the instructions, taking initiative in making decisions. Assumes leadership of a medium/small group of staff.
Scale A	Activity requires very serious training, special knowledge, skills and experience. The employee must be able to organize and perform some operations independently. It assumes responsibility for the performance and behavior of a small group of personnel, the ability to analyze their abilities and the effectiveness of their work.

Advantages and disadvantages

The above method is also considered to be relatively simple, easy to apply and inexpensive. However, despite the fact that the results obtained during the analysis may well satisfy the interested parties, the amount of remuneration for a particular activity may be dependent on existing rates. Among the shortcomings, one should also note the high complexity of compiling descriptions of the steps. This can be a real problem for large enterprises. Difficulties often arise when directly attributing one or another operation to a specific position. This is often extremely problematic, since several activities may have similar characteristics. However, the analysis is not always detailed enough for a correct classification.

Mapping factors

The first task in applying this method is to clearly describe the features that will bebe used in the analysis. As a rule, they are the requirements for education, training, including physical, conditions of activity, responsibility, the availability of certain skills. Depending on the specifics of the enterprise, the list may be narrowed or expanded. Certain types of operations are selected for analysis, which will act as key ones. Job descriptions are drawn up for them. Accordingly, rates are assigned for each type of activity. The peculiarity of this method is the use of existing tariffs for key operations to determine several fixed points on the scale for indicators that are identified in the analysis process. The selected activities should have significant differences. They need to be described in detail. The number of key activities should be sufficient to capture the required number of fiducial points to match all operations, from the simplest to the most complex. Further, the works are distributed according to their importance in accordance with the selected factors. Similarly, payments are established for certain signs for key types of operations. Quantitative indicators are set in proportion to the factors used. For example, the activity of a toolmaker is conditionally characterized by 20 units. Accordingly, they can be broken down into the following quantitative indicators:

1. For skill and skill - 9.
2. For the requirement to the level of knowledge - 5.
3. For physical requirements - 2.
4. For working conditions - 1.
5. For responsibility - 3.

Next, the results are compareddistribution of activities by payment and factors. Inconsistencies that arise can be eliminated by adjusting rates or the content of transactions. If this is not possible, then the selected type of work cannot be considered key. At the last stage, all types of activities can be placed on a scale in accordance with their relationship with the main maintenance operations. Each factor will be examined separately until new levels of pay rates are formed for all jobs in the enterprise. The essence of this method is that the tariffs for key types of transactions are considered as final and correct. Other activities are assigned to each item and adjusted to the main scale.

Good and bad points

The main advantage of the method discussed above is the fact that factors are taken into account that determine the relative value of different types of operations. This method allows you to build a basic scale, which is expressed in monetary units. Non-key works can also be evaluated on it. This approach is considered more flexible and accurate than the previous two. However, the introduction and subsequent application of this method requires more time. In addition, it is problematic to explain it to employees. When using this method, certain inequities in payments may appear over time. It is caused by the inadequacy of the current rates or approaches, according to which thethe significance of a particular activity for the enterprise. It is also worth noting that, despite the obvious scientific nature of the method, the proportional ranking of payment by various factors is still arbitrary. In this regard, this method is currently not as popular as others.

Score distribution

The rating method is based on the assumption that there are features that are common to all types of transactions. This method can contain a different number of factors - from 3 to 40. In one of the most common schemes today, the following rating objects are used:

1. Effort.
2. Skills.
3. Terms of operation.
4. Responsibility.

They, in turn, can be divided into 10-15 subfactors. The requirements that are imposed on them subsequently can be differentiated into several levels. The number of points assigned to each factor can be different. This is due to the use of a weighted scoring distribution. The direct ranking method assumes the same assignment of values to each factor.

Progress analysis

To determine the rank of an object:

1. Select factors that will be considered common to all types of transactions.
2. Determine the number of levels for each feature when matching activity types.
3. Calculate the weight for each factor.
4. Determine the value of each attribute or level in points.

After that, the development of job descriptions for each type of activity begins. As a rule, theycompiled in accordance with the results of a systematic review of operations. Various works are evaluated according to the generated instructions, as well as on the totality of factors of each of them or all types of activities on the first basis, then on the second, and so on. As a rule, the second option is used, since it facilitates the analysis of the relative value of transactions.

Pros and cons of the scoring distribution

The main advantage of this method is that it only calculates points, not payment amounts. In this regard, its application does not significantly affect the current rates, in contrast to the three previous approaches. The scoring method is considered more objective, as it is based on information about each type of transactions obtained during their analysis. This allows for more informed explanations of questions about the validity of the data. At the same time, this version contains a large number of subjective and arbitrary components. In particular, they appear when:

1. Selecting the types and number of levels and factors to be used in the evaluation.
2. Distribution of specific gravity or scores by features.

In practice, it is quite difficult to make decisions on these points. In these situations, a subjective assessment almost always appears, since there are no objective signs. Accordingly, as a result, the significance of some operations may be exaggerated. To use this method, you must have technical skills. This approachnot as flexible as the previous ones. When using it, it is difficult to take into account changes in general economic conditions and other factors. The scoring method is what specialists mean when they point out that the analysis of activity, in fact, acts as a statistical operation, and it must be adapted to a dynamic situation. Meanwhile, performance appraisal can be used to collect information about changes in the scope of a transaction and translate them into values.

Conclusion

It must be said that all methods, regardless of complexity and scientific validity, are based primarily on arbitrary decisions, as well as subjective criteria. All of them largely depend on the current ratio of different types of professional activity. In many situations, the only way to prevent problems and conflicts associated with unfair payments is precisely the evaluation of work. However, the results of such an analysis cannot be regarded as undeniable and absolutely correct. It may be advisable in practice to periodically evaluate, regularly review factors and levels, create new scales, determine the significance of a particular activity, if this will help reduce tension.