Standard Operating Procedure “Job ranking/grading to establish salary levels/hourly wages”
Standard Operating Procedure “Job ranking/grading to establish salary levels/hourly wages”
One of the HR management functions is developing and implementing a reasonable compensation and benefits system in the company. The validity of this system assumes:
- Establishing competitive payment levels from a market conditions standpoint and timely updating of these levels depending on external factors
- Determining the value of a specific position, taking into account the characteristics of the business, the company structure, and the directions of its development
- Justification of salary levels/hourly rates based on a subjective approach to evaluating company jobs that is clear and understandable to employees
- The optimal compensation budget in the overall cost structure to maximize profits
There are many approaches to justifying pay levels worldwide, from individual in-house developments (sometimes inaccurate) to generally accepted and inter-industry-standardized technologies for ranking (grading) jobs. The most popular are the Hay method and the Primary Standard method. The proposed standard operating procedure is based on the Primary Standard approach. Its peculiarity is not only in the presentation of the methodology itself. Still, it describes the entire workflow of implementing a job ranking system in your company from the moment of generating the idea to completing the staffing table with salary ranges/hourly rates. The procedure also covers the technique of regularly updating them, considering market conditions
- The guide for assessing each job, where the collective assessment of each position at compensation committee meetings levels the degree of subjectivity in the evaluation. The rank and number of points (not monetary indicators) assigned to each position and the method for allocating these points should be known to each employee and should not raise suspicions of bias in the results of the assessment
- Procedure and algorithm for converting points into monetary indicators (salary levels/hourly wages)
- The guide for updating the rank grid of salaries/hourly rates, taking into account inflation, changes in the company structure, and functionality of departments or stand-alone jobs
- A detailed description of the interaction of officials in the job ranking process and compensation committee regulations template
What business problems does this standard operating procedure solve:
- Optimize the compensation budget according to market requirements
- Calculate the required number of employees and plan the structure and number of departments
- Get away from unsystematic behavior by introducing transparent and understandable rules for establishing payment levels and protect top management/CEO from constant pressure and speculation of subordinate employees on salary issues
- Increase the motivation of company employees due to their complete understanding of what they are paid for and what they need to do specifically to increase their pay levels
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The International Management Decisions Library allows users who have purchased the corresponding standard operating procedure to receive consulting services from the vendor/procedure developer on its content and implementation technology. The user must book a video conference with a specific developer to receive such consultation. The system allows you to agree on a convenient time for both parties automatically, considering the difference in time zones if the user and the procedure developer are in different time zones. Depending on the complexity of the standard operating procedure, a certain number of free developer consultations is established (the cost is included in the price of the procedure). If a library user requires additional consultations beyond the established limit, they can book this consultation for an extra fee.
This procedure belongs to our library’s foundational standard operations procedures (SOPs) class. The prerequisites for SOP implementation are:
- Job descriptions
- Employee specifications (a written statement of educational qualifications, specific qualities, experience level, physical, emotional, technical, and communication skills required to perform a job, responsibilities involved, and other unusual sensory demands. It may also include general health, mental health, intelligence, aptitude, memory, judgment, leadership skills, emotional ability, adaptability, flexibility, values and ethics, manners and creativity, etc.)
