What is Meant by Job Grading?
Before discussing job grading, you need to know that there is a term job grade which refers to a system that groups job positions based on similar skills, experience, and responsibilities.
This system helps companies determine the appropriate job duties, level of authority, and compensation for each job group.
Meanwhile, job grading is the process of determining job grades by systematically evaluating jobs.
This process determines the level of responsibility, skills, and experience required for each position in the company.
It is important to remember that what is evaluated in job grading is the job position, not the person who holds the position.
That way, companies can determine the value of a job objectively and ensure a fair and equal payroll system for all employees.
What are the factors that can influence job grading?
Some factors that influence job grading include:
A. Nature of work
Jobs with similar characteristics, such as department heads and project managers, are grouped in the same job grade.
B. Organizational structure
Managers are not on the same job grade as their subordinates.
There are usually several levels of differences between superiors and subordinates.
C. Training level
Positions that require specialized skills or advanced training usually fall into a higher job grade with greater compensation.
D. Company size
Small companies with less than 100 employees are more suited to using a narrow-range job grading system.
Meanwhile, large companies benefit more from a more flexible and varied system.
With job grading, companies can build a clear structure, ensure fairness in compensation, and provide rewards that are appropriate to the employee's position.
Do companies need to do job grading?
Yes, with job grading, companies can determine salary structures fairly and objectively.
In addition, here are some benefits of this strategy:
A. Guarantee Equality
The job grade system helps companies carry out their commitment to equality and diversity.
B. Help Retain Quality Employees
Work flexibility and job satisfaction are very important.
However, the CIPD’s Good Work Index survey shows that the reason 34% of employees want to resign is because they need better pay and benefits.
Salary may not be the only reason people work, but by providing appropriate pay, companies can retain the best employees.
C. Attract New Talent
An unfair salary structure or one that is far from market standards will make it difficult for companies to attract the best candidates.
On the other hand, with a fair and transparent job grading system, companies can improve their image in the eyes of potential employees.
D. Provides Financial Stability
With a clearer salary structure, companies will find it easier to budget and manage salary costs each year.
For example, you can estimate how much salary costs will increase if a number of employees move up a level.
E. Help Comply with Legal Regulations
Job grading also helps companies comply with laws related to wage discrimination.
In Articles 5 and 6 of the Job Creation Law, the state emphasizes that workers, both men and women, have the right to receive equal opportunities and treatment without discrimination in obtaining employment or while working.
By implementing job grading, companies support this principle of equality and reduce the risk of discrimination in salary or job promotion.
What are the types of job grading?
Generally, there are three types of job grades that companies can use, namely:
A. Job Grade Narrow-Banded
Narrow-banded job grades use a fairly detailed hierarchical structure, where each position in the team has a different level of authority, ranging from junior to senior.
The differences between positions in this type are usually thin, so employees can get promoted even though their responsibilities do not change much.
This system is suitable for small companies (less than 100 employees), because it makes it easier to place employees based on their skills and qualifications.
Excess :
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Promotions can be done more frequently
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Promotion process is clearer
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The differences between each role and authority are more visible
Lack :
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Employees may focus more on job structure than performance.
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Tensions can arise between teams due to differences in status.
B. Job Grade Broad-Branded
Broad-banded job grades have fewer job levels than narrow-banded ones.
This type focuses on work improvement, not just promotion.
That is why the difference between one level and the next is quite large, both in terms of responsibility and salary.
Here, employees are not under too much pressure to move up, but are still encouraged to continue to develop and improve their abilities. This system also allows companies to set a more flexible salary range according to market standards.
Excess :
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Performance evaluation is more optimal and becomes the main basis for promotion.
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Focus on improving performance, not just promotions
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Salaries within a level can be adjusted to market conditions
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Increase productivity because performance is more appreciated
Lack :
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The organizational structure becomes more complex
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Requires more time and planning to implement
How to Create a Job Grading System?
Building a job grading system is an important step in managing HR in a company.
This system helps companies provide fair compensation to employees and provides a clear career ladder structure.
If implemented properly, this strategy can increase morale, productivity, and reduce employee turnover rates.
However, to create this system, a thorough evaluation of job roles, market research, and periodic adjustments are required.
Here are the steps to create a job grade system:
Understand what job grading is?
Before setting up the system, you need to first understand what job grading is and why it is important for the company.
Simply put, job grading is the process of assessing each job position in an organization to determine how much it is worth compared to other positions, especially in terms of salary and benefits.
Job grading is also important to ensure that each employee is valued according to their skills, experience, and contribution to the company.
Thus, this process is not only about determining the nominal salary, but also about appreciating the value of a position in the organization
A. Evaluate each job role or position
The first step to creating this system is to evaluate all the positions in your company.
This includes looking at the main tasks, skills required, minimum qualifications, and the level of responsibility and seniority of each position.
To ensure fair and consistent results, conduct an objective and thorough evaluation.
You can use job evaluation methods such as the point-factor system or factor comparison method to help create a structured and accountable assessment.
B. Do market research
Once you have a thorough understanding of the positions in your company, the next step is to conduct market research.
Find out the salary ranges for comparable positions in the same industry and region.
This data is important so that you can set competitive salary ranges for each job level.
Salaries that are in line with the market will make it easier for you to attract and retain quality employees.
C. Create salary levels
Once you’ve evaluated each position and conducted market research, it’s time to create salary tiers for employees.
Each level or grade should have a clear salary range that is consistent with the value and responsibilities of the position.
You also want to make sure that this system is communicated openly to employees.
When employees understand how their salary is calculated and what they need to do to move up to the next level, they feel more valued and motivated.
D. Establish a job grading system
Once the salary levels are set, the next step is to implement them in the company.
This means that you need to inform all employees about the new system, and if necessary, the company needs to adjust salaries to fit the new structure.
At this stage, open and clear communication is needed so that employees understand the changes and feel they are being treated fairly.
E. Monitor and adjust regularly
The job grading system is an ongoing process.
Therefore, you need to monitor and review the system regularly to keep it relevant to job position developments and market conditions.
If there are changes in responsibilities in a position or shifts in salary trends in the industry, don't hesitate to adjust the system to keep it fair and appropriate.
F. Train the HR team
Finally, make sure your HR team is properly trained to accurately assess and compare job positions.
This training is essential so that the job grade system can be applied consistently and without bias.
With a well-trained HR team, companies can maintain fairness in the payroll system and ensure that every employee is assessed objectively.
What are the negative impacts of inaccurate job grading?
Job grading that is not done properly can have various negative impacts, both for employees and the company.
Mistakes in job assessment, whether too low or too high, can affect job satisfaction, productivity, and budget efficiency.
If a position is assessed too low, this can cause dissatisfaction among employees.
They may feel unappreciated, increasing employee turnover and causing potential conflict between coworkers.
Salary disparities between similar positions can also raise questions about fairness and transparency in the payroll system.
Conversely, if a position is assessed too high, the company is at risk of wasting budget.
The salary given may not be commensurate with the actual value or responsibility of the job.
Some common signs of inaccurate job grading include:
A. Complaints regarding salary
Employees voiced dissatisfaction because they felt they were not being paid according to their workload or when compared to colleagues in similar positions.
B. Request regarding
The large number of requests for job reviews indicates a lack of trust in the existing system, both because of real inequalities and a lack of transparency.
C. Multiple job titles for similar roles
This complicates the evaluation process because differences in positions do not always reflect significant differences in responsibilities or qualifications.
D. Difficulties in the recruitment process
A salary structure that is below market standards can hinder recruitment.
Meanwhile, a structure that is too high can attract a large number of applicants without proper screening.
E. Subjective determination of salary by managers
Without a proper job grading system, salary decisions can fall back on the manager’s personal judgment.
This can lead to unfairness and budget inefficiency.
To minimize the above challenges, it is important for companies to regularly review and evaluate the job grading system implemented.
This process should be complemented by peer review and to obtain more objective results and reduce the potential for individual bias.
What is an example of job grading in a company?
The following is an example of the application of job grading in a company:
A. Operational Grade
Used for employees who perform routine tasks to keep the company running.
Some positions require formal training, but some do not.
Example :
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Customer service
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Courier/delivery person
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Factory employee
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Janitor
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Security guard
B. Technical Grade
Used for employees who have special skills and usually require formal training or education.
Example :
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Business analyst
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Web designer
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Data scientist
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External consultant
C. Business Grade
Used for employees who are tasked with carrying out administrative work and acting as liaisons between departments and with clients.
Example :
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Secretary
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Personal Assistant
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Office Assistant
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Paralegal
D. Professional Grade
This level is used for employees with professional skills and higher education. They are usually responsible for the company's big targets.
Example :
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Lawyer
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Certified Accountant
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Doctor
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Marketing Staff
E. Management Grade
Used for positions that have the responsibility of setting strategies, making policies, and guiding teams.
Example :
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Managers (entry, middle, senior level)
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Head of department
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Project manager
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Executive
Conclusion
Based on the article above, it can be understood that the job grading system is an important tool that can help companies create a fair, transparent, and competitive salary structure.
By evaluating each position objectively and setting appropriate salary levels, companies can ensure that each employee is paid based on the value of their work, not on subjective or discriminatory factors.
This also supports the achievement of the principle of equality in the work environment.
In addition to providing fairness in terms of compensation, the job grading system is also useful in maintaining the stability of the company as a whole.
This system can help attract and retain the best talent, create certainty in managing the salary budget, and facilitate employee career paths.
However, for this system to run effectively, companies need to implement it transparently, involve a trained HR team, and conduct regular evaluations.
