To Grade or Not To Grade

​I was recently discussing compensation strategies with one of my clients when I came across a couple of interesting articles regarding a new trend in market evaluation for jobs.  Some companies are opting to not use salary grades nor use benchmark positions for salary survey mapping purposes.  Rather, all jobs are mapped to salary survey data and then assessed for market equity based on the company’s philosophy regarding the goal survey percentile for their employee base.

I found this new trend quite interesting and, honestly, began looking at myself as old school and thought that I should jump on this progressive train before I was left behind in the dark ages!  However, upon further assessment, I realized that my methodology was not that far off and was, in a sense, a hybrid of this new approach.
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I have never been a fan of benchmark jobs.  It is the practice of selecting jobs that have a large number of employees in them, highly visible or critical jobs, or common survey jobs and then mapping them to salary survey data.  Jobs that fall outside the benchmark jobs are then “slotted” in grades based on their level of responsibility and peer relationships to the benchmark jobs.  In very large organizations, it can become time intensive to review every single job and map them to the salary survey positions. However, without mapping every single job some “hot skill sets” may be missed causing jobs to be mapped to grades with ranges that are not appropriate.  Therefore, I like the aspect of this new trend that lends itself to survey mapping for every job.

Here is where the new trend loses me – eliminating grades/salary ranges.  Most organizations utilize their salary survey job mapping data to create customized salary grades with ranges appropriate for the jobs in their organization.  These ranges are based on survey data, but it allows like jobs in the organization with similar market value to be grouped together.  By creating grades with ranges, it allows Compensation to provide relative market value without sharing specific survey data.  Some organizations even provide the salary grade ranges to employees.  It opens up transparency without being completely transparent.

For organizations that decide not to share salary ranges, an organization’s grades provide an understanding of peers in the organization and the level of the job in the organization.  This practice can assist with career development discussions, career pathing, and succession planning.

I am not a fan of sharing survey data with managers nor employees.  I had a recent experience with a client where the survey data for a new position was shared with a manager.  Two weeks later and we are still debating the survey title, level, and percentile.  Grades and ranges allow Compensation to be the experts in their field and map jobs to the appropriate survey position while still having the ability to discuss the general market for positions in the organization.  Additionally, it allows the organization to create their ranges based on their own organizational philosophy regarding compensation and how they want to pay compared to their peers.
 
My approach has always been to take the time to map every job in the organization to survey data – and keep up with it every time a new job is created.  Then use that data to create customized salary grades and ranges for the organization in order to be more transparent with managers and employees regarding compensation.  In my view, that methodology is a compensation best practice no matter the size of your organization.