09

Levelling

‘Levelling’ is an approach to job evaluation that has come to the fore fairly recently although its roots are in more traditional forms of job evaluation and earlier attempts to define levels of responsibility. This chapter starts with a definition of levelling and a summary of these earlier approaches. It continues with a description of the ‘DMA’ system, which is based on the analysis of work levels.

Levelling defined

Levelling is a method of job evaluation that focuses on defining the levels of work in an organization and fitting jobs into those levels. It can simply be an alternative term for an analytical job-matching or job-classification scheme that allocates jobs into a hierarchy of grades by matching job definitions with the most relevant of the grade definitions. The difference is that in a proper levelling scheme the emphasis is on defining and describing how the organization is structured as a basis for considering the relative value of jobs, rather than on simply measuring relative worth. The work levels technique is concerned with the design of an organization, how work is structured in a hierarchy and the career paths available. It aims to fuse job evaluation with OD and talent management considerations. This can extend its purpose well beyond that of a traditional job evaluation programme.

As explained by Brown and Munday (2016):

Levelling is faster, more efficient and flexible than the ponderous points-factor systems of old, but still provides an objective, robust and effective foundation for fair and consistent pay setting and management. Points-factor evaluation may still be undertaken for difficult or controversial jobs, but most jobs are simply slotted into the appropriate level, and then the focus is on developing people’s skills and contribution, which drives their pay progression up clearly communicated career pathways. Managers understand and accept banding decisions, while employees are engaged by the clarity and links between their pay progression and development of their skills and talents.

The notion of levelling as described above was first developed by Brian Dive in Unilever and Tesco in the 1990s. The methodology involved was called the ‘DMA’ (decision-making accountability) system. This system has been used by several large companies and levelling has since been adopted with enthusiasm by a number of consultancies.

Brown and Dive (2009) commented that, ‘Organizations such as Unilever, Tesco and Vodafone are using such approaches to develop flatter, more flexible organization and job designs in which future leadership talent can flow and grow.’

Earlier approaches to levelling

As noted above, there is nothing new about evaluating jobs by defining levels of responsibility and fitting them into the most relevant level. And some time ago two people developed methodologies for doing so which, although they were little used in the UK, have influenced later developments. The people concerned were Elliott Jaques (1956) with his concept of the time span of discretion, and Thomas Paterson (1972) with his system of decision banding.

Jaques’ time span of discretion

Research conducted by Elliott Jaques into payment methods at Glacier Metal in the UK led him to the conclusion that a time span could be calculated for a job by analysing the decisions that had to be taken. From this information could be discovered the maximum length of time for which the decisions made by a person on their own initiative committed resources of the company. Later analysis led to the finding that the higher the executive level the longer the time span and thus the conclusion was reached that the maximum time span of discretion could be used to measure the level of work. This was confirmed by an analysis of the levels of work in Glacier Metal and the time spans for jobs at each level classified as one hour, one day, one week, one to two years, two to five years, and over five years.

The following procedure was recommended by Jaques for assessing work levels in terms of time spans:

1. Tease out the discretionary content of the work allocated to a particular job.

2. Discover the mechanism used to review the use of discretion by someone doing the job.

3. Discover the maximum period of time that would elapse during which job holders were authorized and expected to exercise on their own account in discharging the responsibilities allocated to them.

This concept enabled Jaques to describe a ‘requisite organization’ as one in which each level in the hierarchy had its own distinctive time span.

The attraction of this theory is that it seems to provide one unique but universal factor as the basis for evaluation. It also provides a basis for analysing and reviewing organization structures. The notion of a time span of discretion attracted a lot of attention at the time and is still in use in some schemes as one factor amongst others measuring different levels of responsibility. However, although time span may be a factor that helps to indicate the level of work, the problem is one of measurement. In practice it is a nebulous concept and difficult to apply rigorously. It has been found that the assessment of time spans for other than fairly basic jobs becomes increasingly difficult at higher levels, which leads to approximations without any inherent validity. Moreover, the concept does not give a clear picture of the actual quality required in work and how it varies at each level. The use of time span as a sole criterion is therefore very rare.

Paterson’s decision band method

Thomas Paterson, professor of engineering at the University of Strathclyde, stated that jobs have only one thing in common; they all require decisions to be made, and so they can be compared on the basis of the kinds and numbers of decisions. He distinguished six bands of decisions that, on the basis of his experience in engineering, he defined as follows.

To recognize the fact that a job in one decision band may involve the coordination of jobs in the same band, each band with the exception of 0 can be divided into grades.

The merit of this approach is that a single well-defined factor is used which can be applied to all types of jobs. Decision making is an easy concept to grasp and is readily accepted as an important element in distinguishing between job levels. It is, however, essentially a job-classification scheme and suffers from the typical drawbacks of such methods, namely inflexibility and insensitivity. And the fact that it is non-analytical means that under UK equal pay law, the evaluations reached by this method cannot be used to defend an equal pay claim.

The decision-making accountability (DMA) approach

The DMA approach assumes that any organization has a genetic code of decision-making accountability and jobholders are held to account to ensure that it achieves its purpose. The complexity of accountability increases as people move up the organization. A decision is defined by Brian Dive (2004), who developed the method, as ‘a considered act in response to a demand or need, to progress a process, change a state of affairs or solve a problem’. Accountability occurs when one is answerable to a higher authority for work, resources and results. Results could include service.

The approach was based on the empirical evidence provided by the extensive research led by Brian Dive undertaken globally over 10 years at Unilever and Tesco. He emphasized that, ‘The key premise is that jobholders must take decisions that cannot be taken at a lower level and which need not be taken at a higher level.’

The appropriate accountability level for each job is established by assessing the following elements:

1. Nature of work – how it differs in essence from those below and above.

2. Resource complexity.

3. Problem solving.

4. Change – the accountability for driving change.

5. Natural work team – the accountability for lateral collaboration with peers.

6. External interaction – the accountability for external interaction with consumers, customers and suppliers.

7. Timeframe – the average time it takes to complete the balance of tasks for which a person is responsible.

DMA as a form of levelling was first applied by Unilever. It was used as the basis for replacing 17 job classes with five work levels that better structured reward and talent development processes. The DMA model has now spread across many different industries as well as the public and voluntary sectors.

Tesco used the DMA approach to move away from a point-factor job evaluation system and 22-grade structure towards a six-band structure of work levels. Work levels progress from level one, covering clerical and administrative jobs, up to board and senior directors in levels five and six. Jobs are allocated to a level according to the seven elements of accountability in the DMA model. The pay bands are relatively wide, with actual pay managed against market-related reference points set for about 100 benchmark roles based on the practices of 20 blue-chip companies. Work levels have also been applied to develop more effective organization design and reduce costs. In the Tesco structure, all staff must report to an individual in the work level above their own. These work levels underpin Tesco’s group leadership development programme, linked to key competencies.

As reported by Brown and Dive (2009), other firms adopting the levelling approach include Vodafone and Novartis. Vodafone operates a system that uses eight global broad bands encompassing all jobs. Accountability descriptors exist for each band and roles are slotted into this framework. At the most senior levels and for the roles most difficult to slot, more detailed descriptors are used under headings such as business impact, leadership and innovation. The banding framework is mapped onto external databases for pay benchmarking and to support core reward processes such as incentives and benefits allocation.

Novartis uses a flat framework of bands to classify on a common basis the jobs of more than 90,000 employees in over 50 countries. A brief general description covers the types of job at each level, but then more detailed descriptions can be used to place jobs at the appropriate level in one of their functional specialist job families, which together constitute a global job family catalogue that essentially replaces traditional job evaluation. The firm’s compensation policy makes no reference to internal fairness or job evaluation, instead explaining: ‘Our compensation system offers competitive compensation that is aligned with industry practice and supports the realization of our vision and a performance-oriented culture that allows Novartis to reward people who perform well (and) be competitive with world-class companies and industry peers.’ Pay ranges at each level vary by job family and location, supported by extensive market pay analysis.

References

Brown, D and Dive, B (2009) Level pegging, People Management, 15 January, pp 26–29

Brown, D and Munday, S (2016) Stability rhymes with agility, pay structure needs to go with flexibility, Opinion Paper 26, Institute for Employment Studies

Dive, B (2004) The Healthy Organization, London, Kogan Page

Jaques, E (1956) Measurement of Responsibility, Cambridge, MA, Harvard University Press

Paterson, T T (1972) Job Evaluation: A new method, London, Business Books