Job Leveling: Key Benefits And How To Do It
A few years ago, I was counseling a young woman who worked in risk assessment. She was skilled and extremely competent, but she reported feeling stuck in the role that she’d been in for two years.
She couldn’t picture her future and wanted more autonomy and the opportunity to expand her critical thinking abilities.
As a result, her motivation and engagement levels had dramatically declined and she was contemplating exploring opportunities elsewhere.
This situation is all too common in today's competitive job market where people are looking for more than just a job—they want a clear pathway for growth and development.
This is where job leveling comes into play.
Job leveling isn’t just about job titles and compensation, it's about creating a structured framework that provides team members with a clear understanding of their career progression and therefore increases the likelihood of they’ll stick around.
For this reason, and a couple more, we recently ran a job leveling project at my current company, a large multinational consultancy. Here I’ll take you through what we did and why.
What Is Job Leveling?
At its core, job leveling is the process of establishing a structured system for categorizing jobs within an organization based on their relative value and complexity. It involves evaluating various factors such as job responsibilities, required skills and qualifications, level of decision-making authority, and scope of impact on the organization's goals and objectives.
By assigning each job to a specific level or grade, job leveling enables organizations to create a systematic and transparent approach to managing job roles and compensation.
A typical job leveling framework consists of multiple levels or grades, each with its own set of criteria that determine the appropriate placement of jobs.
These criteria are typically defined based on factors such as job complexity, level of accountability, and the organization's overall compensation philosophy.
The framework is typically created by human resources in collaboration with key stakeholders, such as department managers and senior leaders, to ensure that it aligns with the organization's business goals and objectives.
The Benefits Of Job Leveling
There are several benefits to implementing a job leveling framework in an organization.
Fair and equitable compensation structure
First and foremost, job leveling helps establish a fair and equitable compensation structure by ensuring that jobs of similar value and complexity are assigned to the same level or grade, regardless of the department or function they belong to.
This helps minimize potential pay disparities and promotes transparency and consistency in compensation practices, which can boost employee morale and engagement.
Clearer career paths
Second, job leveling provides a clear career progression path for employees. By defining different levels or grades and the skills and competence associated with them, team members can clearly see how their job roles can evolve over time and what they need to do to advance their careers within the organization.
This can help with talent retention and development, as employees have a better understanding of what they need to work on to progress in their careers.
Better talent management and succession planning
Finally, job leveling can enhance organizational effectiveness by enabling better talent management and succession planning.
With a clear understanding of the value and complexity of different jobs, organizations can better identify high-potential employees and provide targeted development opportunities to prepare them for future leadership roles.
This helps organizations build a robust leadership pipeline and ensures continuity in key positions.
Job Leveling Example
An example job leveling framework for a software engineer/technologist role.
1. Technology and engineering
Entry-level/associate engineer
- Responsibilities: Implements small features or bug fixes under the guidance of more senior engineers. Focuses on learning the codebase and basic best practices.
- Skills required: Basic understanding of programming languages relevant to the job, problem-solving skills, and eagerness to learn.
- Typical experience: Fresh graduates or individuals with less than two years of professional experience.
Engineer/software developer
- Responsibilities: Works independently on larger features or projects. Begins to specialize in specific areas of the codebase or technology stack. Participates in code reviews and may start to mentor junior engineers.
- Skills required: Proficient in at least one programming language or technology stack and a good understanding of the software development lifecycle.
- Typical experience: 2-5 years of professional experience.
Senior engineer/senior software developer
- Responsibilities: Leads significant projects or features from conception to deployment. Mentors junior team members and is involved in strategic technical decisions. May also start to influence architectural decisions.
- Skills required: Expertise in multiple technologies or deep expertise in a specific area. Strong leadership and communication skills. Ability to mentor effectively.
- Typical experience: 5-10 years of professional experience.
Principal engineer/architect
- Responsibilities: Sets the technical direction for the team or project. Responsible for high-level architectural decisions, often involving multiple systems or technologies. Works across teams to ensure technical alignment.
- Skills required: Deep technical expertise across multiple domains. Strong strategic thinking and planning abilities. Excellent problem-solving skills at the system or organizational level.
- Typical experience: 10+ years of professional experience, with a track record of significant technical contributions.
Engineering manager
- Responsibilities: Manages a team of engineers, focusing on project delivery, team growth, and development. Involved in hiring decisions, performance reviews, and budgeting. Balances technical and managerial responsibilities.
- Skills required: Strong leadership and people management skills. Good understanding of technology and software development processes. Ability to manage projects and stakeholders effectively.
- Typical experience: Varies widely but typically requires significant experience as a senior engineer or developer before transitioning into management.
Director of engineering
- Responsibilities: Oversees multiple teams or an entire engineering department. Sets engineering strategy, goals, and priorities. Responsible for the department's performance, culture, and development. Works closely with other departments and senior management.
- Skills required: Strong leadership and strategic planning skills. Excellent communication and interpersonal skills. Deep understanding of engineering practices and industry trends.
- Typical experience: Extensive experience in engineering and management, usually 15+ years, with a proven track record of leadership and success.
Vice president of engineering
- Responsibilities: Sets the overall engineering vision and strategy for the company. Ensures alignment with the company's business goals. Oversees all engineering activities, from product development to infrastructure and operations. Part of the executive team, contributing to company-wide strategy and decisions.
- Skills required: Exceptional leadership and strategic thinking abilities. Broad technical knowledge and a deep understanding of the business. Strong communication and negotiation skills.
- Typical experience: Typically requires decades of experience in technology and leadership roles, with significant experience at the director level or higher.
How To Create a Job Leveling Framework
Creating a job leveling framework requires a structured approach and careful consideration of various factors.
I’ve helped several clients draft in-depth documents that serve as a master guide to job leveling.
Here’s a step-by-step for creating a similar job leveling framework for your organization.
1. Define the purpose and scope
The first step is to clearly define the purpose and scope of the job leveling framework. What specific objectives do you want to achieve?
Align the framework with your organization's overall remuneration philosophy and business goals. This will provide a clear direction and ensure that the framework serves its intended purpose.
This is important to get right because, once in place, you will use your leveling framework at all stages of the employee journey; such as in hiring, performance reviews, and compensation reviews.
2. Conduct a job analysis
The next step is to conduct a thorough job analysis to gather information about the roles you’ll be including in the job leveling framework.
This means reviewing job descriptions, conducting interviews with employees and managers, and observing job tasks and responsibilities.
The goal is to understand the key factors that differentiate jobs in terms of their value and complexity. This analysis will form the foundation for your job leveling framework.
For example, for a software company, the job analysis could involve reviewing job descriptions for roles such as software engineer, project manager, quality assurance analyst, and product manager, and conducting interviews with employees and managers to gather information on the key responsibilities, skills, qualifications, and impact on organizational goals for each role.
3. Identify key criteria
Based on the job analysis, identify the key criteria that will be used to evaluate and differentiate jobs within the framework.
These criteria could include factors such as job responsibilities, required skills and qualifications, level of decision-making authority, and impact on organizational goals and objectives.
Select criteria that are relevant, measurable, and align with your organization's compensation philosophy. A compensation strategy is a plan developed by an organization to determine how it will remunerate workers. This strategy takes into account the organization's goals, budget, and competitive position in the job market.
For example, if your company values performance-based pay, you may want to include criteria related to job performance in your framework. By aligning your job leveling criteria with your organization's compensation philosophy, you can ensure that the framework supports your overall compensation strategy and helps you achieve your business goals.
4. Establish job levels or grades
Once the key criteria have been identified, establish job levels or grades that reflect the different levels of complexity and value across jobs.
This could be a simple numerical or alphabetical system (e.g., Level 1, Level 2, Level 3, etc.) or a more descriptive system (e.g., Entry Level, Mid-Level, Senior Level, etc.).
The number of levels or grades will depend on your organization's size, structure, and complexity of job roles.
For example, using a numerical system, the job levels could be Level 1, Level 2, Level 3, and so on, with Level 1 being entry-level positions and Level 3 being senior or leadership roles.
Alternatively, a descriptive system could be used, such as Entry-Level, Mid-Level, and Senior Level, to denote the different levels of roles in the organization.
5. Assign jobs to levels or grades
Using the criteria established in the previous step, evaluate and assign each job to the appropriate level or grade within the framework.
This may involve comparing and benchmarking jobs against each other to determine their relative value and complexity. Assigning jobs to levels or grades is usually done based on the job's overall value to the organization.
It’s not necessarily based on specific job titles, roles, or departments. For example, a senior-level recruiter might be assigned to the same level as a senior-level software engineer if they have a similar level of job complexity and value to the organization.
On the other hand, a senior Python engineer, senior Ruby engineer, and senior QA engineer might all be assigned to different levels or grades if they have different levels of job complexity and value to the organization.
When I work with clients to establish the criteria for job complexity and value, I often recommend looking at the level of education and experience required, level of decision-making authority, and impact on company revenue. Then I evaluate each job based on these criteria and assign it to a level or grade within the framework.
It’s important to make sure that the process is transparent, consistent, unbiased, and involves input from relevant stakeholders such as department managers and senior leaders.
6. Document and communicate the framework
Once the job leveling framework is established, document it in a clear and concise manner. This means creating written guidelines or manuals that outline the criteria, levels/grades, and the process for evaluating and assigning jobs.
Communicate the framework to all relevant stakeholders, including employees, managers, HR personnel, and even potential hires. This could be done through training sessions, workshops, or written communications (more on this below).
7. Review and update regularly
Job roles and organizational needs may change over time, so it's important to review and update the job leveling framework regularly (recommended on a yearly basis).
Conduct periodic job analyses, evaluate the effectiveness of the framework in achieving its objectives, and make adjustments as needed.
To assess the effectiveness of the job leveling framework, organizations can conduct periodic job analyses, gather feedback from relevant employees, and measure outcomes such as employee engagement, retention, and performance.
Regular review and adjustments can ensure that the framework remains in step with the organization's goals and reflects changes in job roles and market conditions.
Involve relevant stakeholders in this process to ensure that the framework remains relevant and aligned with your organization's goals.
Where And How To Share The Job Leveling Framework
Once the job leveling framework is established, it's important to share it with relevant stakeholders to ensure its effective implementation.
Here are some suggestions on where and how to share the framework:
Internal communication channels
Utilize internal communication channels such as intranet portals, email newsletters, and company-wide announcements to share the job leveling framework with employees. Make sure to provide clear and concise information on the purpose, criteria, and process of the framework, and address any questions or concerns employees may have.
Training and development sessions
Organize training and development sessions for HR personnel, managers, and employees to educate them about the job leveling framework. Provide detailed information on how the framework works, how jobs are evaluated and assigned to levels or grades, and how it impacts compensation decisions. Allow for interactive discussions and Q&A sessions to ensure a clear understanding of the framework.
Performance and compensation review meetings
Incorporate the job leveling framework into performance and compensation review meetings with employees. Use the framework as a reference point for evaluating job performance and determining compensation adjustments. This will help employees understand how their jobs are evaluated and compensated within the organization.
Employee self-service portals
Employees should understand exactly where they stand in terms of their job level. If your organization has an employee self-service portal, incorporate the job leveling framework into the portal so that employees can access information about their job level or grade, and how it impacts their compensation. This will empower employees to take ownership of their career progression and compensation decisions.
Recruitment and onboarding process
Potential and new employees should be aware of their employer’s role structure right from the get-go to help them avoid any confusion.
During the recruitment process, provide candidates with information about the job leveling framework and how jobs are evaluated and compensated within the organization (KPMG publish a rough outline on their website, for example).
During the onboarding process, provide new hires with an overview of the framework and how it impacts their career progression and compensation. This will ensure that new employees are aware of the framework from the start and can align their expectations accordingly.
Performance management tools
Integrate the job leveling framework into your organization's performance management tools, such as performance appraisal forms, performance metrics, and goal-setting processes.
This will help managers and employees understand how their job level or grade is linked to their performance expectations and compensation decisions, and ensure that the framework is consistently applied across the organization.
Employee handbook or policies
Include information about the job leveling framework in your organization's employee handbook or policies. This will serve as a reference for employees to understand the criteria, process, and implications of the framework in their career progression and compensation.
No matter the economic climate, hiring and retaining talent is almost always a serious challenge.
Having a well-defined job leveling framework can make a big difference when it comes to a company’s perceived fairness, transparency, and opportunities for advancement.
By following a systematic approach to creating a job leveling framework, organizations can effectively evaluate and differentiate jobs based on their value and complexity, and ensure that compensation decisions are aligned with the organization's goals and objectives.
Regularly reviewing and updating the framework will ensure its continued effectiveness in meeting the organization's evolving needs.
In my experience, too many organizations fail to implement a proper job leveling framework, or they borrow one from another company that has a completely different culture and organizational structure.
To avoid all kinds of issues ranging from demotivated employees to conflicts regarding compensation and promotions, organizations would be wise to conduct an audit of their current job level structure and then implement a customized framework.
I know certain compensation management tools can help with job leveling and creating job architectures if you're considering using software.
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