Job leveling is an exercise that is essential for leaders to go through if a company wants to offer fair and competitive pay. Establishing a pay structure for employees consistently and equitably, helps organizations provide competitive offers to attract talent and is the first step toward pay transparency.
Thoughtful and accurate job leveling involves aligning the expectation of the employee's role with compensable factors like accountability and scope, required skills or abilities, organizational impact, and span of control. Performance reviews should be conducted separately from job leveling, so leaders don’t factor in employees’ performance.
When job leveling is complete, market-based compensation ranges that align with a company's compensation philosophy are established for each job, and competitive analysis can begin. When evaluating employees' pay competitiveness against the market, calculate their compa-ratio to be able to conduct an ‘apples to apples’ comparison. Divide each employee’s base salary by the market midpoint of the range for their job to arrive at their compa-ratio.
Job leveling should be an integral part of a company’s compensation strategy and should be updated regularly (e.g., every year). Involving leaders in job leveling helps them workforce plan, ensure they’re hiring at the right job level aligned to business needs, offer competitive pay, and equip transparent compensation conversations with employees.
After job leveling, tying employees’ performance to their role's market-based compensation range is the most efficient way to make fair decisions while preventing bias and building employee trust. Understanding how each employee’s pay compares to the market also makes it easier for HR and Finance teams to budget for market compensation adjustments.
Kamsa makes managing compensation simple for companies. Job leveling using Kamsa automates establishing competitive market-based compensation ranges and paying employees fairly. Kamsa is a compensation management platform that helps companies create career paths for their employees and provides market compensation data to compare their pay to the market. Their compensation review tool saves time by removing the heavy lifting of planning and distributing the reviews by automating routine compensation processes.