The need for job grading systems
Various reasons exist for implementing a job evaluation process in the workplace. This article will focus on one only, that is, its link to reward.
Payroll costs have become a major cost item, requiring rigid management controls, especially in companies employing a substantial number of people. Due to COVID-19 – thus, now more than before – leaders need to attract and retain the right kind of staff. This can be made possible by, inter alia, rewarding employees well, without eroding the bottom line too much.
In an article by PWC (from its publication Steering Point), it points out that one of the enhanced features of King IV is fair, responsible, and transparent organisation-wide remuneration.
It is virtually impossible to manage remuneration fairly and consistently in the absence of a job evaluation system. The following are only some of the challenges that could be encountered when organisations do not use a job evaluation system:
- Payroll management will become an administrative nightmare.
- When jobs (positions) are not aligned to job grades and salaries, pay scales will not be aligned, as each job will have its own salary range (minimums and maximums).
- Remuneration bench-marking will become problematic; it may result in remuneration levels that are either too low or too high.
It is therefore imperative that companies make use of the right system of job evaluation to ensure that reward is managed according to leading practice and aligned to appropriate reward philosophy and budget.
“The Paterson Job Evaluation system is one of simplicity and flexibility. One of the reasons that Paterson is extremely suitable to the South African business environment is that it can be aligned to employment equity reporting requirements with very little effort.”
Deciding on an appropriate job evaluation system
The Paterson Job Evaluation system is probably the most commonly used grading system in South Africa and Southern Africa. A variety of systems for grading jobs are available, some more sophisticated and costly than others. When deciding on a job evaluation system, the leadership team needs to consider the following:
- The reason for wanting to grade jobs: What are the corporate vision, human capital strategy, and purpose for embarking on a job evaluation drive? Introducing and implementing job evaluation certainly is a prerequisite for a number of human capital and reward processes, such as organisational design, remuneration bench-marking, employment equity reporting, and succession planning.
- Exposure of staff to job evaluation/job grading systems: Do your employees currently have an understanding of job evaluation and job evaluation systems? To what extent have they been exposed to, or become acquainted with one or more job grading systems?
- Simplicity versus sophistication of the grading system: An informed workforce will most probably want a (more) sophisticated job evaluation system. On the other hand, it could be argued that simplicity pays. Although the more sophisticated systems may appear more beneficial, they usually require additional resources (employees and/or consultants, funds, and time) to be managed appropriately.
- Costs: How much is the company prepared to spend – both in terms of the initial costs of investing in a job evaluation system and ongoing/recurring costs – to maintain the system?
- Ownership: How can buy-in by all stakeholders (management, employees from all levels of the organisation, unions, and/or other stakeholder forums) be obtained?
- The test of time: Bearing in mind the nature of and speed at which disruptive technologies are making inroads, it could be asked whether the job grading system has stood the test of time and whether it will continue doing so. To this end, the question to be raised is to what extent is it a bespoke system, that is, can the grading system be customised to satisfy company-specific requirements?
- Customisation to compliance and company-specific needs: What are the relevant legislative requirements and to what extent can the job evaluation system be aligned to comply with country, regional (SADC) or provincial specific requirements? In which industry/industries or sector/sectors does the company operate?
Experience has shown that the Paterson Job Evaluation system is one of simplicity and flexibility, as it provides for a variety of applications. One of the reasons that Paterson is extremely suitable to the South African business environment – both private and public sectors – is that it can be aligned to employment equity reporting requirements with very little effort. Moreover, as stakeholders, some unions have been exposed to Paterson, and they endorse it. In view of the above, it makes business sense that leadership and management apply their minds regarding the choice of a job evaluation system.