What is job classification?

Job classification is a system that leaders use to oversee and analyze job titles within a company. Each position is given a grade or job classification for proper classification.

Leaders can establish a standardized scale based on the overall tasks, responsibilities, salary level, and duties associated with each role. Therefore, the job classification system does not consider the skill level and ability of an individual currently in a position; instead, it prioritizes the skills and abilities required for the job.

Although job classification structures vary by organization, the overall goal is to determine accurate job responsibilities. This approach also helps companies compare their positions with competitors within their industry.

Grass method

The Hay System is a popular job classification method. This system uses three components to classify jobs:

• Knowledge
• problem solving skills
• accountability

This framework sets a standard in the company and helps determine potential needs. It ensures that each employee is compensated fairly based on the duties of his or her position and the pay scale for similar jobs.

What is meant by job classification?

Job classification is the criterion that describes what each employee does for a company. Classification   can help leaders write performance reviews , post job opportunities, and eliminate overlap of responsibility between multiple positions.

Why is job classification important?

It improves your recruitment strategy

In addition to providing clear expectations and duties for each employee, job levels are also important for recruiting. Prospective employees often avoid applying for jobs in which the title and description seem too vague, because it's difficult for them to tell exactly what qualifications they need or what will be expected of them on a daily basis. Clearly defining seniority levels within your company (and showing this in your job postings) can help you recruit employees who are the right fit.

Also, job levels   can help organizations create  a logical compensation philosophy . A detailed job level structure can ensure that employees at the same level receive the same pay, helping to eliminate pay discrepancies between employees of different genders or races  . For example, first-year entry-level employees should be paid the same amount, unless they have different qualifications that merit a higher salary. This reduces the likelihood of employees looking for a job elsewhere.

This increases employee retention

 High job turnover can be  a huge financial loss for organizations  because recruitment and training costs  are effectively wasted if an employee only stays on the job for a few months. It is almost always in the company's best interest to train new employees well, giving them the confidence to do their job well and stay for the long haul.

In addition, if employees can envision a future with the company, they are more likely to get promoted. It  is almost always cheaper to hire existing employees  to higher positions than to recruit outsiders, and internal employees already have a better understanding of how the company works.

Advantages and Disadvantages of Job Classification

Job classification is beneficial because it groups similar jobs to streamline workflow and divide team tasks. It also creates a broadband pay structure, allowing employers to increase compensation without frequent promotions.

On the other hand, job classification can be quite subjective. Since each organization has its own structure, the data pools for comparative analysis are small. Furthermore, if those in charge of job classification do not fully understand the merits and nuances of each role, they cannot accurately assess its value. Asking a person to create a description of their skills and duties in that role can be helpful to get a better understanding of the position.

What are the job levels?

Job levels are categories with different titles and salary ranges within a company. Factors that determine these categories include duties, seniority, knowledge, skills, and decision-making authority.

Benefits of Using Job Levels

Using a job leveling system can help employers better understand positions within the company and  pay them appropriately  . Therefore, it can be argued that companies that clearly define the titles and job levels of employees often perform better than companies with an unclear structure, because employees with clear titles know what is expected of them.

Types of job levels

Although no two companies operate in exactly the same way, most organizations use the following framework for job levels:

entry level

Entry-level professionals, also known as associates,   have limited relevant experience when they join the team. Entry-level employees typically work under close supervision and focus on professional development. These employees usually have some level of higher education or previous work experience, but standards depend on the company's hiring policies.

Individual contributors

Individual contributors, sometimes called intermediate-level employees, are given more autonomy and work independently with some supervision. These employees typically have at least two years of professional experience and may  help train and guide entry-level employees  .

Senior Contributor

 Senior contributors can handle the full range of tasks within  their job descriptions with minimal instruction , and they rarely require oversight or interference from higher authorities. These professionals manage large projects,  advise lower-level employees  , and influence company-wide policies and procedures. Senior contributors typically have at least five years of professional experience, and some also have advanced degrees.

Manager

Managers  oversee entry-level or intermediate-level employees, providing training and support to help employees analyze and resolve issues. These professionals are responsible for high-level thinking, delegation, and decision-making that can affect the company and its employees.

Director

Directors are often considered supervisors to managers within the company, and they greatly influence organizational  policies  and programs. Directors usually report directly to vice presidents or executives, often considering important business decisions made by higher executives.

VP/Executive

Vice presidents or executive officers are typically the highest-level employees in a company. These professionals have the most experience and a strong understanding of how the company operates and relates to other businesses and the community. The main job of executives is to  make major decisions  that affect the overall trajectory of the company.

Other Job Classification Structures

While many companies operate in a format similar to the one described above, other organizations use a tiered structure. For example, a university might place entry- and intermediate-level employees in Tier 1, supervisors and managers in Tier 2, and executives and other higher-ranking positions in Tier 3.

 Tiers can also be used to  determine compensation . Perhaps Tier 1 employees can get raises over the years, but their pay can be capped at $30 per hour. To get another raise, they must be promoted to Tier 2 and work as a manager.

Your company can design its job classification structures in several ways, and each option has its own advantages and disadvantages. It may take some trial and error to determine which system is best for you.

How to apply job levels

When it's time to change or better define job levels in your company, there are a few important steps you should take:

1. Align:  Assemble a team of HR and other company leaders to create a new classification framework.
2. Audit:  Survey and interview entry- and mid-level employees to clarify job roles and responsibilities and gain insights.
3. Evaluate:  Evaluate your company's current informal hierarchy to see what's working and what needs to change.
4. Update:  Classify one job title or level at a time, choosing one end of the job level scale and working up or down.
5. Communicate:  Make sure all levels are logically connected so employees clearly understand who they should report to and what their career path may be.

Collect feedback on job classification and job level

Once you've drafted a new tier system using the steps outlined above, seek feedback from higher executives and possibly mid-level managers and intermediate-level employees. Take their opinions into account and make revisions until you and your organization are satisfied with the new structural outline.

With your job level structure in place, you can analyze the information you track to understand how much you are paying within certain levels and bands. You can also use real-time compensation data to benchmark whether your offering is competitive in the market. Again, because you are benchmarking your team’s information (level and band data), you now have actionable data to make informed pay decisions.

In addition, the data will enable you to make competitive offers to candidates and communicate your company’s remuneration philosophy with current employees in a more transparent way.

Structure Helps Make Your Job Classification Successful

It may seem overwhelming to overhaul or even make some changes to your existing job classification structure, but implementing a few deliberate and logical changes can make a big difference throughout the organization.

Employees will feel confident that they are being compensated fairly and will better understand what is expected of them. Also, they will have more motivation to move up in the company.