Job Classification

What Is Job Classification and How Do Employers Use It to Pay Staff?

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What Is Job Classification?

Job classification is a system for objectively and accurately defining and evaluating the duties, responsibilities, tasks, and authority level of a job. The job classification, done correctly, is a thorough description of the job responsibilities of a position without regard to the knowledge, skills, experience, and education of the individuals currently performing the job.

Job classification is most frequently, formally performed in large companies, civil service and government employment, nonprofit agencies, and colleges and universities. The approach used in these organizations is formal and structured with pay or salary grades attached to the results of the job classification. Promotional opportunities and eligibility for the next level of pay are structured within the job classification system.

What Results From Job Classification?

In summary, the results of a job classification create parity in job titles, consistent job levels within the organization hierarchy, and salary ranges that are determined by identified factors. These factors include market pay rates for people doing similar work in similar industries in the same region of the country, pay ranges of comparable jobs within the organization, and the level of knowledge, skill, experience, and education needed to perform each job.

Informal forms of job classification are used even in smaller and mid-sized companies and agencies to generate a sense of fairness across equivalent employee jobs. This form of job classification can be as simple as grouping similar positions in a broadband pay structure.

For example, employees who directly serve customers on the telephone are grouped with employees who serve customers in person in the store in a broadband pay structure. With limited advancement opportunities, the broadband enables employees to see career and compensation advancement despite doing the same job. The pay structure recognizes people who are performing equivalent work with customers with the same range of compensation opportunities. This allows the employer to fairly compensate employees in a pay range.

Broadband Pay Structure

In a broadband pay structure, the numbers of salary grades are consolidated into fewer, but broader, pay ranges. In broadbanding, the spread of the pay ranges is wider, and there is less overlap with other pay ranges.

Broadbanding evolved because organizations want to flatten their hierarchies and move decision-making authority closer to the point at which necessity and knowledge exist in organizations. In flattened organizations, fewer promotional opportunities exist, however.

So, the broadbanding structure allows more latitude for the employer to make pay increases and provide career growth and development without the use of promotion to provide employees with opportunities.

Broadband pay structures encourage the development of broad and advanced employee skills because non-managerial jobs are appropriately valued, and skill development is rewarded. Additionally, a broadband pay structure is not as sensitive to changing market pricing conditions. As such, broadband pay structures cost less to administer and manage over time. They also provide serious non-promotional income opportunities for employees.

The Korn Ferry (Hay) System of Job Classification

One popular, commercial job classification system is the Korn Ferry, formerly Hay Classification system. The Hay job classification system assigns points to evaluate job components to determine the relative value of a particular job to other jobs.

The Korn Ferry (Hay) method measures three components in all jobs: the knowledge required, the problem solving required, and the level of accountability. The Hay method compares the relative value of comparable jobs to maintain parity across an organization.

For the purposes of larger organizations with many departments and locations, union-represented jobs, and organizations with hierarchical rigid pay or salary grades and needed internal equity, a system such as Hay is appropriate.

Working with Korn Ferry (Hay) job classification, an evaluator uses a job evaluation instrument or questionnaire that is filled out by the department requesting the job or evaluation. Trained to assign points appropriately, the evaluator assigns points to determine where to place a job in the job classification system. The placement of the job determines the pay or the salary grade within the organization's compensation system.

More Information About Job Classification

Following a strictly enforced job classification system will safeguard employers against some charges of discrimination since the value of each job was determined apart from the individuals doing the job. It makes unfair treatment because of race, color, religion, sex (including pregnancy, gender identity, and sexual orientation), national origin, age (40 or older), disability, or genetic information.

Article Sources

  1. Korn Ferry Hay Group. "Job Evaluation: Foundations and applications."