Employee Job Grading

What is the employee job grading?

A job grade is a method to decide the impact, seniority, and expectations for a specific role. In the best cases, a job grade will reflect knowledge, skills, and responsibility. Think of it this way: when someone is early in their career, we sometimes think of them as “junior” employees.(Rab. I 9, 2023)

 

    

                                                     (Figure 1- MGE Management Experts)

 

Five key benefits of Job Grading.

1. Financial certainty

From a Chief Finance Officer’s perspective, job grading can help to better manage payroll costs. The process is essential in setting the right budgets, providing the Finance team in particular with greater certainty over the required HR budget for the year.

An equitable pay and grading structure can be developed organization-wide, creating a more accurate picture of pay to assist with planning year on year. So, if you are wondering what is a job grading system, one of its primary uses is to ensure that employees feel as though they receive fair remuneration in line with their job role and responsibility.

2. Retain valued employees

Job grading can have a positive impact on talent retention in two ways. Firstly, engaging all relevant stakeholders, to determine the guiding principles for the structure’s design and operation. This secures buy-in from the outset and ensures employees feel fairly listened to and understand the logic and process that defines their level of pay and benefits. Secondly, transparency and fairness prevail; this structured approach offers a clear line of sight for employees in terms of career development and by communicating the fact that the system offers parity of pay, employees can have confidence that they are being fairly remunerated. This dual approach helps to drive down the cost of employee turnover, in turn keeping operational costs down. The cost to organisations of replenishing talent you have already trained can equate to hundreds of thousands of pounds, demonstrating the fact that reward is a business investment, as opposed to a cost.

Established parameters guide decision-making, ensuring employees and managers know and understand the basis upon which pay decisions are made. A system of grades minimizes subjectivity, enabling rational and consistent decisions to be made on a transparent basis. The greater the scrutiny around each role when setting each grade will ensure that the grades are as accurate as possible, improving employee satisfaction with the process.

3. Attract talent

Job grading can also enhance your employee value proposition. A solid framework can inform decisions around each individual and promote the organization’s position as a responsible and ethical employer. By showing candidates that the organization is committed to fair and equal opportunities, this upholds the employer’s promise to its prospective and current employees. Candidates increasingly say that a lack of diversity impacts their choice of employer, so being transparent about the objective HR practices that are in place within your organization can be a factor in candidates choosing to apply.

As two-thirds of respondents to our UK Reward Management Survey highlighted ongoing recruitment difficulties, paying fairly in the market is an appealing proposition. Employees are increasingly looking for transparent employers who promote talent recognition as much as diversity and inclusion. By internally and externally communicating a good internal framework of pay grades, this objective approach can strengthen the trust candidates place in you and be the critical factor that makes them choose you over a competitor organization in the war for talent.

4. Demonstrate vision

Rationalizing roles into a system of grades and job families can also bolster the use of cutting-edge technology. Organizations are equipped with the framework to be able to harness HR analytics more powerfully for the wider business’ benefit. A system of job grading may also enable organizations to identify where artificial intelligence more easily could complement each job role, driving productivity in the workplace. Utilizing job grading as part of a greater push to harness the opportunities of technology demonstrates the progressive nature of the organization, driving forward its IT capabilities and supporting the organization’s wider vision that is built for the future.

On an individual employee level, in a career family structure, each role has a development path mapped out. These are usually defined by profiles that describe the knowledge, skills and experience required for each grade. The framework provides an important reference tool for career development and succession planning decisions to be made, identifying early on where certain roles need to be recruited for and where key individuals are making the case for promotion. This also equips employees with the information they need to see to understand what is required of them to reach the next level. They can use the framework to understand the impact of their role, know how their role fits in with delivering the wider vision of the firm and feel more valued for their contribution.

5. Achieve compliance

At Payrate we focus on analytical job evaluation, which provides a granular framework for organizations and importantly provides a robust defense against equal pay claims. The Equal Pay Provisions of the Equality Act 2010 ensures that men and women in the same employment performing equal work receive equal pay and our approach ensures that equal pay can be assessed across:

• Like work – people doing the same or broadly similar jobs.
• Work rated as equivalent – where a job evaluation scheme operates and jobs are graded equally.
• Work of equal value – comparing jobs where no job evaluation scheme is in place.

Some employment tribunals have considered the question, ‘what is equal?’ and the answer really lies in the application of fair analytical job evaluation that underpins the grades and job families that exist. Therefore, an objective job-grading framework is the most reliable way of assessing which jobs are of equal value and should be classed in the same grade.

What are the disadvantages of ranking order?

The limitations of the ranking method is that it does not tell how much better or worse one is than another or that person is the best, with varying behavioral traits, and it is very difficult to compare one individual with others, it is difficult ranking individuals when a large number of employees are being rated.

 

Conclusion

Job grading is the process by which the organization develops a job structure. The job structure is the hierarchy of jobs within the organization, ordered according to their value and importance to the organization. Job grading involves comparing jobs to each other or to a standard, and then ranking them by the standard of organizational importance.

 

References

 

https://www.mgeonline.com/2016/grading-employee-performance/

BambooHR Blog | Human Resources Blog

Juneja, P., 2023. Job redesign: meaning, process and its advantages. [Online] 

Available at: https://www.managementstudyguide.com/job-redesign.htm