20th February 2014 From India, Hyderabad
There are many readings available on the matter, but try going into the basic HR textbooks to have a full understanding of job grading systems.
But, I would like to tell you that creating job grades without the required processes and steps will make your job grades (and salary structure) useless. The reason is: job grades should be based on a correct and credible assessment/ evaluation of jobs and the roles/ functions that a job actually performs in an organization. Hence, it must be based on an accepted methodology that can withstand questions on why a certain job is gets a higher job grade (and base pay) than another job. Simply put, job grading must be able to correctly distinguish each job from another, and identify which are the small ones, the bigger one, and the biggest one.
Trying to establish which jobs are small and which jobs are big within a company must be done with care. Business organizations are embarking on job evaluation programs precisely for the above reasons. Because simply creating a salary structure (whether in numbers or letters and in ascending or descending styles) and assigning jobs in each grade without a credible and defensible basis will be full of subjectivity, bias, and favoritism ------ which are the usual causes of employee demoralization, high turn-over rates, and talent retention problems in many companies worldwide.
Hence, doing a simple JE is not also enough. From my personal experience as an international consultant (and having designed job grades and salary structures in small and very big business organizations), I have seen the need for the following things to be done for a company to be able to establish good, credible, and acceptable job grades:
1. You have to evaluate jobs to have a credible basis for distinguishing which jobs are small and which jobs are big.
2. To be able to evaluate a job, each job must have a properly written job description (JD). A properly written JD is one where the contents, context, and requirements of a job is shown.
3. If you did not write the JDs, you must make sure to validate whether the written JD is a complete reflection of the actual job done by the incumbent of the job. Hence, you must perform a position clarification interview--- which is part of the job analysis aspect in JE. A position clarification interview is necessary because there are incumbents who write so many things in a JD, but whose real and actual day to day responsibility is few or even nil. Keep in mind that jobs are not done the same in every organization. Hence, you cannot simply download a JD from the internet and copy a general template there.
4. When the JD has been validated, then you make the evaluation of the job (JE), using a credible methodology, and preferably an internationally accepted and defensible tool.
5. The scores in the JE must be able to give you the job class of that specific job.
6. Then get hold of the latest market survey in your country and use the JE scores (and the job class) to benchmark that particular job. You must be able to show graphically the market rates and your proposed salary structure rate ranges.
7. Then create a matrix that will temporarily assign all the jobs in the company within your created structure.
8. When there is consistency and logic in the assignment of jobs within your structure, then create a proposed salary structure that will be submitted for top management approval.
9. When the structure is approved, design a good compensation policy that will help you implement your newly created job grades and salary structure.
NOTE: If your company has an existing salary structure, you must be ready to know the exact total cost of the proposed new salary structure (vs. your existing) and you must be ready to defend it, even up to the CEO/ board level.
These things may seem very easy to follow, but it needs lots of know-how and experience to create a truly credible job grading and salary structure.
Ed Llarena, Jr.
Emilla International Consulting Services
22nd February 2014 From Philippines, Parañaque