Job Classification

What Is Job Classification?

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

Leaders may establish a standardized scale based on the overall tasks, responsibilities, pay level, and duties associated with each role. So, a job classification system doesn’t consider the skill level and ability of someone currently in a position; instead, it prioritizes the skills and abilities needed 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 to competitors’ within their industry.

Hay 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 across a company and helps determine possible needs. It ensures that each employee is compensated fairly based on their position’s duties and the pay scale for similar jobs.

What Does Job Classification Mean?

Job classification is the criteria that outlines what each employee does for a company. Classifications can help leaders write performance reviews, post job openings, and eliminate responsibility overlap between multiple positions.

Why Is Job Classification Important?

It Improves Your Recruiting Strategy

Aside from providing clear expectations and duties for each employee, job levels are also important for recruiting. Prospective employees often avoid applying for jobs with titles and descriptions that seem too ambiguous, as it's difficult for them to tell exactly what qualifications they need or what would be expected of them on a daily basis. Having clearly defined seniority levels within your company (and showing that in your job postings) can help you recruit employees who are the right fit.

Plus, 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 wage, helping to eliminate pay discrepancies among employees of different genders or races. For example, first-year entry-level employees should be paid similar amounts unless they have distinct qualifications that merit higher pay. This reduces the likelihood of employees seeking employment elsewhere.

It Increases Employee Retention

High job turnover can be a major financial loss for organizations as recruiting and training costs are effectively wasted if an employee only sticks around for a few months. It's almost always in a company's best interest to thoroughly train new employees, building their confidence to do their job well and stick around for the long haul.

Plus, if employees can envision a future with the company, they’re more likely to seek promotions. It’s nearly always cheaper to hire current employees for higher-up positions than to recruit externally, and internal employees already have a better understanding of how the company operates.

Job Classification Advantages and Disadvantages

Job classification is beneficial because it groups similar jobs to streamline workflow and compartmentalize 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, data pools for comparative analysis are small. Furthermore, if those in charge of job classification don’t fully understand the merits and nuances of each role, they can’t correctly assess its value. It can be helpful to have someone in the role create a description of their skills and duties to provide a better understanding of what the position entails.

What Are Job Levels?

Job levels are categories with various 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 the positions within the company and pay fairly. So, it stands to reason that companies that clearly define employee titles and job levels often perform better than those with an ambiguous structure, as 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

Also known as associates, entry-level professionals tend to have limited relevant experience when joining a team. Entry-level employees typically work under close supervision and focus on professional development. These workers usually have some level of higher education or prior work experience, but standards depend on the company's hiring policies.

Individual Contributor

Sometimes called intermediate-level employees, individual contributors are granted more autonomy and work independently with some supervision. These employees typically possess at least two years of professional experience and can help train and guide entry-level employees.

Senior Contributor

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

Manager

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

Director

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

VP/Executive

Vice presidents or executives are typically the highest-level employees in a company. These professionals have the most experience and a firm understanding of how the company operates and relates to other businesses and the community. The main job of executives is to make big decisions that impact the company’s overall trajectory.

Other Job Classification Structures

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

Tiers may also be used to determine compensation. Perhaps Tier 1 employees can get raises over the years, but they may have a salary ceiling of $30 per hour. To get another raise, they may have to be promoted to Tier 2 and serve as a manager.

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

How to Implement Job Levels

When the time comes to change, or better define, job levels within your company, there are a few key steps you should take:

1. Align: Assemble a team of HR and other company leaders to design a new classification framework.
2. Audit: Survey and interview entry- and mid-level employees to clarify and gain insight into job roles and responsibilities.
3. Assess: Evaluate what’s working and what needs to change by assessing your company’s current informal hierarchy.
4. Update: Classify one job title or level at a time, choosing one end of the job level scale and working your way up or down.
5. Communicate: Ensure levels connect logically so that employees clearly understand who they should report to and what their career path may look like.

Gather Feedback on Job Classification and Job Levels

Once you’ve drafted a new level system using the above steps, seek feedback from higher-ups and potentially mid-level managers and intermediate-level employees. Take their opinions into consideration 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’ve tracked to understand how much you’re paying within certain levels and bands. You can also use real-time compensation data to benchmark whether your offering is competitive in the market. Then, because you're benchmarking your own team’s information (the levels and bands data), you now have actionable data to make informed pay decisions.

Furthermore, the data will enable you to make competitive offers to candidates and communicate your company’s compensation philosophy more transparently with current employees.

Structure Helps Your Job Classifications Succeed

It can feel overwhelming to overhaul your existing job classification structure or even just make a few tweaks, but implementing some intentional and logical changes can make a world of difference throughout the organization.

Employees will feel more confident that they’re fairly compensated and better understand what’s expected of them. Plus, they’ll have more motivation to level up within the company.