05
In this chapter the approach to developing a tailor-made job evaluation scheme is examined. The chapter includes descriptions of the overall development programme and its two main stages – design and implementation.
The development programme
The development programme for a point-factor scheme involves selecting and analysing benchmark jobs (job analysis is covered in Chapter 6), creating a factor plan and testing the factor plan on those jobs. This leads to the development of a grade structure. A matching scheme involves designing a grade or level structure, defining the grades and testing the process of allocating benchmark posts to them.
Following the initial design stages a survey of market rates usually takes place to inform the design of a pay structure. This typically consists of pay ranges added to the grade structure.
The implementation stage in a development programme involves evaluating and grading all the jobs not dealt with as benchmarks in the design stage, allocating those jobs to grades, assimilating employees into the new or revised pay structure, dealing with the protection of employees from any reduction in their earnings because they are paid more than the maximum of their new pay grade, and hearing appeals against grading.
Stages
The stages in a development programme are described below.
1. Pre-planning
Decisions are made on the need for a new scheme or to revise an existing one; objectives are defined; the type of scheme is selected; consideration is given to who should be involved in developing the scheme and whether outside help in the shape of consultants is required; and a project plan is produced covering both design and implementation.
The costs are calculated and budgeted for. These include the cost of buying in external support and software, if needed. Importantly, they also include the costs of assimilating employees to a new pay grade after the scheme has been implemented. Assimilation policies usually provide for those paid above their new pay grade to be ‘red-circled’ which, as provided for in a typical protection policy, means that their pay is protected at its present level, although the protection period may be limited. At the same time those paid below their new pay grade are ‘green-circled’, which means that their pay is increased to at least the minimum of their new pay grade immediately or, if the increase is considerable, say more than 10 per cent, over a period of two or three years. Thus there is almost inevitably an increase in payroll costs and this can typically amount to 2 or 3 per cent. It should also be recognized that in addition to the direct financial costs there is the cost of the time taken by people in the organization for designing and operating the scheme (opportunity cost).
The following principles should be taken into account when considering the design programme:
· The scheme should be based on a thorough analysis of the jobs to be covered and the types of demands made on those jobs to determine what factors or level definitions are appropriate in the context of the organization’s working environment and culture.
· The scheme should facilitate impartial judgements of relative job values.
· Factors or the grade/level elements in a matching scheme should cover the whole range of jobs to be evaluated without favouring any particular type of job or occupation and without discriminating on the grounds of gender, race, disability or for any other reason – the scheme should fairly measure features of female-dominated jobs as well as male-dominated jobs.
· Through the use of common evaluation criteria and methods of analysis and evaluation, the scheme should enable benchmarking to take place of the relativities between jobs in different functions or job families.
· The scheme should be simple to operate.
· The scheme should be transparent; everyone concerned should know how it works – the basis upon which the evaluations are produced.
· Special care should be taken in developing a grade structure to ensure that grade boundaries are placed appropriately and that the allocation of jobs to grades is not discriminatory.
· Plenty of time should be allowed.
2. Resource the project
An early decision needs to be made on what resources will be required to complete a job evaluation project. It is wise not to underestimate this. The internal resources required will be someone to direct and control the project (often an HR or reward specialist), job analysts, project administrators, communication specialists and project team members. The job analysts will need to be trained in the techniques they will use.
3. Set up project team
A project team is set up, consisting of managers, employee or union representatives and HR or reward specialists who will be involved in the design of the scheme. A team may be chaired or facilitated by a senior manager or an HR/reward specialist. An outside consultant who has been engaged to advise on the scheme’s development sometimes carries out this role.
4. Produce project plan
Project planning means identifying and defining the activities required, ensuring that the resources required are available, estimating times for completing each stage of the project and drawing up and maintaining a project timetable. The principles to follow in drawing up a project plan are:
· Allow plenty of time – it is likely to take longer than you think.
· Identify the key stages in the projects – the events that have to take place and the activities required to make those events happen.
· Clarify any interdependencies between stages.
· Define the criteria to be used to assess whether satisfactory progress has been made.
· Identify the key decisions to be made.
· Identify the responsibilities for managing the project, conducting each stage, monitoring and reporting on progress, reviewing progress and making decisions.
· Remember when planning the project that a frequent major cause for delay is getting decisions agreed by steering groups or higher authorities.
· Build communications into the project plan from the outset. Job evaluation implementation starts at project inception, as early communications set the scene for how credible the scheme will ultimately be. It is often helpful to have a separate communications plan that runs alongside the technical development plan.
· Develop project control systems. Take account of organizational style and culture in developing the plan. Try and make a realistic assessment of how many drafts of the scheme will be needed before it is signed off. Is the organization highly analytical? How feasible is it to drive decisions through the steering group or senior management team, and to what extent are they likely to want to see a number of iterations/drafts at each stage? Build in contingency time, as appropriate.
· Allow time for testing the scheme.
5. Design scheme
A draft scheme is produced. Descriptions of how the two most popular types of formal job evaluation schemes – point-factor and matching – are designed are given in Chapters 7 and 8 respectively.
6. Decide on job evaluation procedures and policies
The procedures for operating the job evaluation scheme and the policies and procedures for appeals, assimilation and protection (see the last section of this chapter) are drawn up and agreed. It is advisable to do this at a fairly early stage in the programme, especially if they have to be negotiated with trade unions.
7. Analyse and evaluate benchmark jobs
Benchmark jobs are selected and analysed in accordance with any factor plan that has been incorporated in the design of either a point-factor or job-to-job matching scheme. A point-factor scheme will require the panel to:
· study the job description or role profile;
· establish for each factor in the scheme the level at which it is present by comparing the information available on that aspect of the job with the level definitions in the factor plan;
· decide which provides the best fit (often a judgemental process);
· agree scores for each factor according to its level;
· add the factor scores to produce a total score;
· record a rationale for their decision.
Analytical matching requires the matching panel to study a role profile analysed in terms of pre-defined evaluation elements and match this to a similarly analysed level profile or benchmark role profile using pre-determined matching rules or ‘protocols’.
It is advisable to test the draft scheme on benchmark jobs. There is typically at least one iteration before an acceptable scheme is produced.
8. Create grade and pay structure
At this stage of designing a point-factor or matching scheme, the outcome of the benchmark evaluations and an examination of the job/organization structure form the basis for a decision on the grade structure. Grades are defined in terms of job evaluation points or grade descriptors (profiles) as described in Chapter 11. In a levelling scheme (see Chapter 9) the level structure will be determined on the basis of organizational analysis and defined in terms of predetermined criteria. A survey of market rates is conducted and the grade structure extended into a grade and pay structure.
9. Evaluate remaining jobs
The remaining non-benchmark jobs are evaluated and slotted into the grade or level structure. As described earlier, with a point-factor scheme this can be a lengthy and tedious process. This is why matching is increasingly used at this stage as it is much less time-consuming. An underpinning point-factor scheme may only be deployed when it has been impossible to obtain a good match.
10. Assimilate employees into the new or revised structure
Individual employees are assimilated into the grade and pay structure and an analysis is made of the number of individuals who will have either to be red- or green-circled.
The cost of increasing the pay of employees to bring them into their new pay grade is calculated and if it is more than the amount budgeted it may be necessary to redesign the grade and pay structure so that after assimilation, the pay of a greater number of employees is within their new grade.
11. Inform individual employees
Individual employees are informed about their new pay grade and, where necessary, the arrangements for protecting their pay.
12. Hear appeals
Appeals by employees against their grading are heard in accordance with the appeal procedure.
Communicating to employees
An important activity at all stages of a development programme is the communication to employees of the aims of job evaluation, how it works and how they will be affected by it. A job evaluation programme creates interest and concern amongst all employees. There will be expectations and fears that may or may not be reasonable. In some cases staff may believe that they will get more money. In others there may be concerns that the process is being used to review cost-cutting/restructuring opportunities. In practice, there are usually some winners (staff whose pay is below the minimum for their new grade who will therefore get an increase) and some losers (staff whose pay is above the maximum for their new grade and, although protected against any immediate reduction, may eventually ‘mark time’ or even lose pay when they revert to the rate for their grade at the end of the protection period). The pay of the majority of people will be unchanged. In contrast, trade unions have sometimes claimed that the aim of management is to use job evaluation to reduce pay all round.
There are key stages in a job evaluation development project when communication is essential: as the project starts, before employees are involved in job analysis, during the design stage, when the scheme design is complete and before and during the implementation programme. Regular progress bulletins should be issued.
It is essential to reinforce the basic messages regularly; for example, the purpose of the project and how people will be affected (eg no one should expect to gain but no one will lose at the time when the scheme is implemented).
Practical guidance
The advice of the practitioners who responded to the 2017 e-reward job evaluation survey on designing and introducing a job evaluation (JE) scheme is set out below in the form of dos and don’ts.
Design practice
Do:
· Clearly think about the purpose and rationale for introducing JE and how it will be used across various HR processes.
· Ensure you have a clear objective for the scheme.
· Keep it simple and transparent.
· Apply one scheme for all jobs in the organization. Make sure the scheme is a good fit for the types of roles in your organization. Keep good records to track outcomes for reference and consistency. Invest time in ensuring consistency and quality of job description information before starting the evaluation process. Have a central resource that is accountable for the scheme and ensure that peer review is built into the process.
· Create materials that describe the different levels in a way that’s meaningful for your business (eg don’t necessarily just use the standard off-the-shelf descriptors).
· Build in language and elements the business understands.
· Consider what you want to be important when weighting factors. Ask people’s opinion of what the important and less important factors are. Ensure the factors cover all aspects of all jobs in the organization. Trial the draft scheme to see if it works.
· Consult widely with your senior leaders.
· Consult, educate, promote, be transparent.
· Decide on the overall number of grades in your internal grading structure – these could span multiple (Hay Group or similar) levels, especially at the higher grades to maintain flexibility.
· Extensively test your design by doing some benchmark evaluations and thoroughly moderate the outcomes. Get your job description/job profile template right and make sure managers are clear about what they are for and how best they can be completed. Thoroughly train and prepare your job analysts – a consistent approach and application is key to ensuring good-quality outputs – and quality check them until you’re comfortable they’re doing it right.
· Have a clear understanding of differentials between one grade and another.
· Put together a project team with clear roles and responsibilities and project timeline; put aside time to plan for communication strategy and engagement with key stakeholders; do thorough research of different JE approaches to see what would fit the best within your organization; be clear what benefits JE will bring to your organization in terms of retention, recruitment, financial impact etc; schedule position review interviews with team managers; at an early stage of the process (or even before embarking on the project) make sure that you have a database of all job descriptions and that they are up to date. Involve unions/staff representatives by keeping them informed on the project progress.
· Use a recognized scheme (eg Hay) but look at tailoring as one size does not fit all.
· Remember that with all evaluation systems more or less 90 per cent of the roles are levelled without any discussion. The last and tricky 10 per cent are hard no matter which approach you take. Do not design a system simply to defend levelling results for the last 10 per cent. Keep it simple and leave room for manoeuvring. Reduce complexity. Make it understandable. Use the time that you save on complex evaluation methods to discuss the scheme and its implications with management.
Don’t:
· Assume there is a perfect solution.
· Add layers of complexity in an effort to be able to explain/justify matching; the outcome will be a system that is inoperable.
· Design a process for now – think ahead to where the organization may be in one to five years.
· Expect most managers to be competent or capable of writing good-quality job descriptions and accountability statements.
· Get too detailed in your descriptions/factors as this will only take away flexibility and lead to endless discussions … but don’t leave it too general either.
· Make it cumbersome to maintain or unnecessarily bureaucratic.
· Over-engineer the process, which could lead to a cottage industry of role evaluations.
· Rush the process – there may be a lot of tweaking or going back to the drawing board.
· Rely on existing job descriptions that are unlikely to be fit for purpose.
· Underestimate the time the project and design stage will take.
· Use a too large a panel of evaluators – six is a good number; more than this tends to become difficult to manage and gain consensus.
Introducing job evaluation
Do:
· Allow enough time for communication, create task force groups, ensure full understanding of the principles by the organization.
· Be open and transparent and communicate thoroughly with staff and unions.
· Be able to describe the scheme in simple terms all can understand.
· Communicate, communicate, communicate (all ways) – understanding by, and sensitivity to all is essential.
· Provide as much information to staff as possible to inform them of the process and reason for JE and to enable them to provide realistic and agreed information about their job for evaluation purposes.
· Decide on level of transparency of grading structures and how these read across to internal pay ranges. Separate the communication of new grades from any related to base pay changes as the latter is a more emotive subject.
· Ensure training of all HR personnel involved in the process and provide them with materials to engage their stakeholders. Be clear that the result needs to be ‘felt fair’ – there is never a perfect scientific answer.
· Ensure you have a buy-in from the senior management team; allow extra time for internal approvals, developing and implementing scheme governance before going live.
· Introduce in the context of other HR processes rather than just ‘you were a grade x; now you are a band y’.
· Test in a live ‘pilot’ environment.
Don’t:
· Think that it will be a perfect solution.
· Allow a ‘cottage industry’ culture to develop in respect of rewriting and re-evaluating roles.
· Allow too many exceptions – manage through pay protection red-circling rather than allowing grade drift before you start.
· Assume that managers will see the rationale as clearly as you do.
· Assume the users will remember it all – they won’t touch it every day. As a result, ensure tools and materials are available for quick reference.
· Do it behind closed doors with a few key people!
· Keep it all ‘behind the scenes’ as it makes people feel like you are doing something sneaky.
· Expect anyone to fill in a form without guidance. If you do, they will fill it in as they think best with the wrong type of evidence in the wrong factor.
· Make it something just operated by reward people. Put HR business partners in the middle of it.
· Where a system is non-analytical don’t oversell the ability to justify placement of roles, particularly in industries that employ large nu mbers of analytical professionals.
Procedures and policies
Appeals procedure
The appeals procedure should set out:
· the grounds upon which an appeal can be made, eg that an individual believes that he or she has been undergraded;
· the body that should hear the appeal, often a specially constituted appeals panel whose members should not have been involved in the original evaluation;
· the procedure for hearing the appeal, for example obtaining supporting evidence from the appellant, requesting a rationale from the original evaluation panel for their decision, or requesting a re-evaluation by the original panel (or by a specially formed panel);
· what happens if the appeals panel rejects the appeal – it is usual to make a hearing of that panel the final stage in the appeals procedure but typically provision is made for individuals who are still dissatisfied to take the issue up through the standard grievance procedure.
Protection policy
A protection policy indicates how the pay of employees will be safeguarded following the introduction of a new pay structure when some employees are likely to be over-graded and therefore overpaid. The policy will guarantee that in those circumstances employees will not suffer a loss of pay and they will thus be paid at a higher level than the size of the job and internal relativities justifies. They are then said to be ‘red-circled’, but they may be required to ‘mark time’, ie remain at the same rate until their pay is at the correct level for their grade.
Organizations have sometimes provided ‘indefinite protection’ to red-circled employees, ie maintaining the difference between current pay and range maximum for as long as the employee remains in the job. To differentiate them from employees paid in accordance with the pay scale they are sometimes placed on what is called a ‘personal to job holder’ scale. But this is undesirable, first because it will create permanent anomalies and, second because, when there are a lot of men in this situation, it will perpetuate unacceptable gender gaps.
Because of these considerations, the most common approach is to provide for red-circled employees to receive pay protection for a limited period, typically between two and four years. During this time the organization can choose to freeze the individual’s salary or to give cost of living increases. The benefit to the organization of freezing salary is that the individual’s pay is more likely to fall back within the grade range during the period of protection than if they receive a cost of living award. However, this can be regarded as unduly harsh, so many organizations still provide for the payment of ‘across the board’ cost of living awards during the protection period.
Assimilation policy
An assimilation policy deals with how employees should be placed into a new pay structure resulting from job evaluation. There are four categories of staff to be covered by the policy as explained below.
1. Current pay and pay potential both within the new pay range
The majority of employees will normally be in this category and the policy should be that they will not be given an increase in pay.
2. Current pay within the new pay range but pay potential higher than new maximum
In this case, if progression to the previous maximum was based on service only, ie a scale of annual increases to the maximum that is guaranteed to those who perform effectively, then this guarantee should be honoured or bought out. If as a result of honouring a pre-existing commitment a person’s pay passes the maximum for the new grade, this should be treated as a ‘red-circle’ situation. If progression to the old maximum was not guaranteed, but was based on performance or contribution, then the new range maximum should normally be applied. Care will be needed to ensure that this does not adversely affect any specific category of staff, particularly female staff.
3. Current pay below the minimum for the new grade
This situation should be rectified as quickly as possible by raising the pay to the minimum of the new pay range. This should normally be the first call on any money allocated for assimilation. If the total cost of rectifying underpayments is more than the organization can afford, it may be necessary, however unpalatable, to ‘green-circle’ the person and phase the necessary increases, say one portion in the current year and the rest the next year – it is undesirable to phase increases over a longer period unless the circumstances are exceptional.
4. Current pay above the maximum for the new grade
This category usually includes either a high proportion of people who have been in their current job for a long time and who may have benefited from a lax approach to pay management in the past, or individuals who have received additional market-related payments or allowances that will no longer apply under the new pay scheme. They have to be ‘red-circled’ and dealt with in accordance with a protection policy.
Reference
e-reward (2017) Job Evaluation Survey, Stockport, e-reward