Fundamental principles and practices of evaluating and sizing jobs help you make objective decisions and give your organisation a competitive edge. Here is why these principles will continue to lead companies to succeed in an agile world.
Do these terms sound familiar: Tribes, scrums, squads, antipattern, Kanban, poker planning, burndown chart, fail-fast, sprint? If not, your organisation may not be implementing an agile approach to the world of work ─ a more flexible, nimble and less bureaucratic approach to running a large-scale business. Approaches such as this have evolved from a need to allow organisations to become agile and customer centric through a framework that supports the business and its people respond to their digital transformations and the ever-changing environment. But in the spirit of running an efficient and effective organisation, many sound and fundamental principles and practices that have helped companies succeed in the past are sometimes being overlooked.
It wasn’t long ago that the world was “throw out performance management” crazy. Many however, quickly realised that there was no need to throw it out, but simply go back to doing it properly. Now there seems to be a backlash aimed at job sizing based on its perceived lack of relevance in an agile world and allied new ways of working.
Those supporting this view tend to forget or ignore that corporate agility requires a fundamental review and redefinition of operating models or structuring for customer centricity. It means optimising your company’s performance which in turn calls for looking at the company’s shape and size, how competitive the reward programs are and whether people are being rewarded based on their performance. Far from being irrelevant, job evaluation, sizing and grading can help you make objective decisions in these areas and give you a competitive edge.
The problem is that it’s easy to get carried away by trends and new jargons and some are passionately arguing that it’s about people not jobs, there is no hierarchy anymore ─ people are a team, jobs are too fluid to be measured, we don’t have position descriptions any more. But as everyone in HR knows, companies need a structured approach to streamlining job structure whether they are managing a complex matrixed or a flat organisation. Reward and benefits, job grades and families and career pathways have to be determined in order to structure and harmonise the organisation.
Job evaluation, grading and sizing are not management fads ─ they have lived alongside many and outlived some long forgotten fads (Quality Circles, BPR, Total Quality Management, TPS, JIT, Lean, EVA, Matrix structuring, De-Layering, Six Sigma, Change management, etc) since scientific management became the new paradigm. They have been used and valued by companies since the 1930’s because they provide a method to establish a hierarchy of jobs (job X is bigger than job Y) and explains the complexity and relationship of jobs (X is how much bigger than Y?). They also serve other purposes such as setting employee expectations, ensuring external equity, providing a framework for other HR processes and will continue to support companies during Agile and Digital Transformation. That’s because, all jobs, even the exotically titled Tribe Leaders & Scrum Masters in a new world of work are made of 3 components, Inputs, Processes and Outputs. Although the nature of work activities has changed substantially since the development of the Hay methodology, the fundamentals of inputs, processes and outputs continue to apply.
Many new jobs have emerged and others have disappeared in response to major trends since 1950 such as mechanisation and robotics, computerisation, globalisation and the internet and the new world may well change the nature of work activity within some organisations. But the need for individuals to bring knowledge, skills and experience to competently process the demands and challenges of the new roles, and deliver the various outcomes required by the organisation will remain. It would be a strange new world indeed if this was not the case. As it would be if organisations were not able to articulate that need for individuals to bring knowledge, skills and experience to competently process the demands and challenges of the new roles, and deliver the various outcomes required.
Assuming however, that organisations do know what Inputs, Process and Outputs are required, then the Hay JE methodology can generate a point score for each of these three factors, i.e., Know How, Problem Solving and Accountability. And adding the scores for each of these factors gives us the total job size, which is of course then used to understand both internal relativities and external market pay.
Some of those advocating the ceasing of using job sizing suggest that broad banding is an appropriate replacement. But this isn’t an issue because in reality, most organisations that use job sizing have been broad banded for a couple of decades now, well before they became agile. Long gone are the grading structures of 30 to 40 grades with very narrow remuneration ranges based simply on job sizing. Contemporary users of job evaluation use broader bands, with wide remuneration ranges, and specifically cater for pay differentiation based on experience, individual skills and competence, skill scarcity, performance – those more sophisticated organisations adding factors important to their specific environments and needs.
Behind the broad bands, if one were to peel away the outer, you will invariably find a formal job sizing method such as Hay points that link to market pay. Career bands are usually built on market data specific to job families and skill clusters, allowing for market premia and discounts to be catered for. The manager making the pay decisions in a broad banded approach is making these decisions using her discretion and knowledge of the employee within a market related and objective view of the market.
Furthermore, using job sizing is of immeasurable value when it comes to understand the various elements of the overall EVP in the market at different job sizes and in different segments. One of the main reasons for evaluating and ranking a job is to ensure that people are earning a similar salary to employees working in a similar role with another company – some benefits are more prevalent at higher levels in the market, and in certain sectors and job families. Creating broad bands without this knowledge would be tantamount to posting benefit names on a dart board and hoping for the best and you run the danger of exceeding average market pay or lagging behind– both equally a threat to the company competitiveness.
Another thing to consider is that job sizing methodologies and tools have evolved to fit the digital and agile organisation. Technologies used in job evaluation today provide an efficient way to access organisational and market data and can help companies make fast and effective strategic decisions not only around salaries and compensation levels but on HR strategy, organisational design, operating model and strategic workforce planning.
Digital transformation is underway in most organisations and collaboration and agility between networks of teams is paramount for success today but so is the structuring and evaluation of jobs. Do not fall for the illusion of being able to manage pay objectively to market without using job sizing. In over two decades of consulting in performance and rewards, I’ve learned that effective ways of working in a new world don’t have to be entirely new. Success in the 21st century will continue to have room for trialled and tested methods, especially those that have delivered consistent results over so many decades.
Keep up to date with the latest trends in rewards. Watch our latest reward webcasts.