The point factor method or point system of job evaluation quantifies the value of the elements of a job by allocating points to each factor and the sum of those values provides a quantitative assessment of a job’s relative worth or pay. The system requires a few steps to end-up with pay of a job. The steps are stated below:

**Step 1: Determine cluster of jobs to be evaluated.** The job evaluation starts with determining cluster of jobs to be evaluated for setting pay. Job All jobs will not be selected for evaluation, only a sample jobs with homogeneous characteristics will be chosen for this purpose.

**Step 2: Collect job information.** Job information regarding activities to be done in each job, responsibilities to be undertaken, working conditions of the job etc information are needed for job evaluation.

**Step 3 : Determine critical factors with their definitions.** At his stage, the job factors and its subfactors will be determined and the definition of each factor will be made clearly. These are critical factors for which compensation will be given to the employees. The factors may be skill, responsibility, effort, and working conditions.

**Step 4: Determine factor degrees/levels.** The depth of each factor varies over jobs. So, the point system creates several levels /degrees associated with each factor. Each degree/level will have definite description so that it could be identified distinctively. Suppose, education may have 4 (four) different levels-MBA.

**Step 5: Determine relative value of factors.** Each critical factor now should be given relative value in percentage denoting the weight of each factor. It will reflect the relative significance of factors to the overall job performance.

**Step 6: Assign point value to factors and degrees/levels.** Now, each critical factor will be assigned total point value. The job evaluation committee subjectively assigns the maximum possible points to each factor, its sub factors and degrees. Such as skill assigns 500 points. Then, these 500 points will be assigned to each sub factors.

**Step 7: Develop the point manual.** Job evaluation analyst will now develop a point manual that contains a written explanation of each job element. It also defines what is expected for the four levels of each sub factor. This information is needed to assign jobs to the appropriate level.

**Step 8: Determine the rank of each job.** The points assigned to each critical factor and its associated levels would be set for a particular job now. Then the all points assigned to each factor are added to find out the total number of points for the job. After the total points of each job are known, the jobs are ranked on that basis of descending order- from highest to lowest.

**Step 9:** **Determine the money value of job.** Now, money value of each point in each critical factor would be assigned to determine the total money value of each critical factor. Then, money value of all factors would be sum up. The result would be the total worth of the job. That amount would be the pay/compensation /remuneration/salary of that particular job.