Does your grading structure need a health check?

Does your grading structure need a health check?

Many organisations use some form of job levelling or grading to help manage their employee reward, employee development and overall employee experience. Based on my recent conversations with business and HR leaders, it seems that more and more businesses are introducing or reviewing their grading structures. While, for some, this may be to support their HR systems and people analytics, or linked to their equal pay reporting, in many instances their drivers are more about ensuring transparency and promoting a culture of overall fairness in the organisation.

Whether the primary rationale is around engagement or risk management, for a job levelling or grading system to do a good job it needs to be, and to remain, relevant to the business. While a good system should be able to scale with your business, even the best can come adrift or become less relevant over time. It is, therefore, good practice to review your grading system periodically, at least every 10 years or on any significant change to your organisation, to check it is still fit for purpose. To assist you in that initial review, I’ve put together the following “Grading Health Check”.

Is your levelling methodology still fit for purpose?

  • What is your grading methodology? (the most consistent and defensible systems are those based on an analytical job evaluation system, whether bespoke or off-the shelf)
  • How long has your current methodology been in place and are the factors still relevant to your business?
  • How often do your grading team members receive refresher training? (it’s possible to forget the nuances of any system if you don’t use it often and/or the original group members have moved on)
  • Who is involved in the grading process? (when both HR and operational managers are included the grading results tend to be more robust, more defensible, and more consistent)
  • How often do the grading group meet? (this one can go both ways because, although the group needs to meet sufficiently often to consider new jobs that arise through changes in the organisation, if they meet too often this could indicate a poorly understood or inconsistently applied methodology)

How well is your grading system working in practice?

  • Is there still good correlation of pay within levels and are there discernible differences in the typical pay between levels?
  • Are your pay levels competitive for recruitment and retention? (if some jobs are consistently pushed back with pay challenges it can indicate issues with the grading)
  • When looking at incentives and benefits, are you comfortable differentiating your programs by level or do you have frequent requests for exceptions?
  • Outside of pay, do your managers and employees understand the levels and how they can progress? (if there is frequent negative feedback this definitely indicates your system needs review)
  • Do you have frequent arguments with employees, candidates or managers about job titles? (while this can equally be an issue with job title protocols, aligning titles to a well-managed grading structure can alleviate many of these issues)
  • Finally, how current are your employee communications and supporting documentation? (if a manager or employee is not able to find the documentation or use it to understand how their role fits in overall, it will be severely limiting the transparency and engagement that your grading structure should be delivering)

Do you have robust and documented governance in place?

  • Do you have clear and documented processes for both grading and grading appeals? (these should include not only how the process works but who is responsible for each element)
  • Is your documentation straightforward and clear to use? (if there are changes in the team managing the system, new team members will need to be able to quickly understand how to manage the system consistently going forward)

Are your HR programmes aligned to your grading structure?

  • Is your grading structure embedded into your HR processes? (using it to underpin your talent management and succession programmes – both in terms of which levels of role are included and to identify progression paths for key talent – can assist transparency, understanding and long-term buy-in)
  • Do your performance management and development programmes link to the requirements set out for jobs at each level, whether that is technical competence, appropriate behaviours or managerial expertise?
  • Is your grading structure aligned to incentives eligibility, pay benchmarking and people analytics? (if it is, it will give you a powerful tool for managing reward; if it is not it could actually be driving inequalities)

Is it time to schedule your grading health check?

A periodic review of your grading system against the above key points can quickly highlight whether – and indeed where – it has come adrift, or where it is not providing the value that it might. While the highlighted failings could indicate that you need a new grading system, it is equally possible that your current system could, with the assistance of a grading specialist, be kept relevant with some appropriate tweaks. This is always easier to manage if regular reviews have been held, and issues or opportunities for improvement have been identified quickly and clearly!

In short, staying diligent with regular grading health checks will help ensure you get the most out of your investment in a grading structure. If you have any concerns or believe you have identified areas where you could drive more value after your review – or if you would like help in conducting a review of your grading structure – please get in touch with Hummingbird Consulting. We are grading experts, with extensive practical experience, and we would be delighted to discuss your questions in more detail.