A salary structure for a turbulent world
Posted April 22, 2010on:
LizO of HRPractice in Harare asks
Dear Jo, how can I get role clarity and understanding , compensation internally equitable and consistent and worthwhile performance without the old tried and true job descriptions, Paterson etc ????
In a sentence Liz sum up the goal of job evaluation and salary structuring and the main change in work of the past and work today.
Our Goal remains
Role clarity and understanding , compensation internally equitable and consistent and worthwhile performance
Our Procedures change
Job descriptions take time to produce and are outdated so quickly that managers add ‘and anything else I think of” at the end. When we define something as anything, then there is little point in having it.
What of the past can we confidently take into the future?
First and foremost, we should be happy to be in a place seeking role clarity and understanding, internally equitable compensation, and consistent, worthwhile performance. Whatever the hassles of pursuing those goals, they indicate that people believe in their collective venture and each other. That’s great.
What constraints should we consider?
Express and implied terms of employment
Whether we have job descriptions or not, good descriptions or bad, we must remember that there are express and implied conditions of employment. Over and above the requirement that the employee is paid on time and does not act in conflict of interest with his or her employing organization, there are usually cultural and legal limitations on what an employer may ask the employee to do. We should list what we know, add to the lst as we go along, and keep the list as simple as possible. In an ideal world, we will have a short list that in one page lays out our obligations in a way that we are unlikely to breach either the law or deeply held cultural beliefs.
Jobs that are jobs
Within those broad boundaries, people want ‘proper’ jobs and work better when they have proper jobs: the need a goal that can be laid out in public next to the goals of everyone else, they need training, they need resources, they need authority, they need clear guidelines on when to refer to others. I think putting energy here is a better use of HR time than writing job descriptions. A training manual is better than a job description, in other words.
I would add one goal to your list. People want to see their futures too. Of course, our futures are affected by firm profitability more than anything else. The Labour Relations Act allows employee representatives to inspect the accounts. Few people understand them though and it makes sense to help everyone see where the company is. Some firms, for example, ingeniously printing current goal on canteen napkins and play a special tune every day when overheads are met and people start working for profit. What we communicate depends upon the business and the key factors and requires some creativity and good understanding of the business.
Once a firm is profitable, people want to see how they can climb the ladder. In some firms this is a nightmare because the next level up requires special training outside the firm (e.g. nurse to doctor). In so far there is a ladder, the equitable structure should reflect the ladder. After all, as someone said about UK, if someone is motivated for 9 pounds a day, why does someone else needs thousands of pounds a day to be motivated? Money doesn’t buy performance. It signals to young people the availability of certain life styles provided certain paths are followed. In short, we don’t pay a boss thousands of pounds for his time. He puts in the same time as everyone else. We pay him thousands to encourage youngsters to go to school and learn his skills. In a sentence, the pay structure makes the ladder visible.
Paterson job evaluation
With these considerations in the back of our mind, yes, I’d use Paterson. It is very reliable and the discussion of bands helps clarify roles.
Before I begin
Before I began, I’d take the precaution of listing all the jobs, their pay and their benefits on a spreadsheet and classifying jobs roughly myself. You want to look ahead to how many jobs are seriously out of position. When you draw a graph of pay against jobs, it should conform to a neat exponential curve with pay bands that overlap a little but not too much.
To manage the maths, the Paterson grades will be recorded as numbers (1-12) and the pay will be turned into a log. 10=1 100=2 1000=3. (There is a formula Excel). In that way, we flatten the exponential curve and we can check that the slope of the line (regression) is between 1.33 and 1.50. That means the grade-0n-grade increase in pay is between 33% and 50%.
Going to Paterson, the grades make good generic job descriptions.
A: Entry level job where you are shown what to do. You are still a bit of a liability.
BL: You have a skill that took some organized training, much like a light vehicle driving license. Within the boundary of this training, you know what you are doing and you are “in charge” as a driver is in charge of a vehicle.
BU: You have a skill that was acquired in a similar way to a driver’s license (heaps of practice) but it is far more responsible. Examples are long distance drivers and bus drivers. A BU might also supervise BL making judgments about very difficult situations. Once the BU has interpreted the situation, the BL is able to take over and carry on.
CL: This is a skilled level taking 3-5 years training where we have to think out what to do. The typical examples are nurse, junior doctor, trial balance bookkeeper, degreed accountant, sergeant, lieutenant. CL is also used as a bottom end of management and might included people who have worked up from A . They will be supervising several BU and the difference is seen in their time horizon. BU are finishing a shift of or a journey. CL are focused on weekly or monthly goals so there is a lot more juggling to do.
CU: This is rarely an entry level position. Usually a CU is an experienced CU and works alone or mentors CL. They have the same ability to understand how the time periods of months and weeks vary and to tell other people what to look for. In the army they would be Captains and Majors. In hospitals, they would be Senior Medical Officers. In schools they would be subject heads.
DL: The entry level to middle management requires people to lay out systems. Should they buy in the wrong tools or not have cash available, then the CU cannot do their jobs. Sadly lots of people in these roles have drifted up but are unable to plan ahead for a whole year adequately. In a factory, they not only plan and watch progress towards an annual goal, they usually are on 24 hour call when the system crashes. They are responsible for the overall system though CL keep it running on a shift-by-shift basis. Some mines appoint entry level engineers here. Recently qualified medical consultants enter here. Often newly qualified CA’s enter here. This is a Lt Colonel in the Army responsible for keeping an entire battalion battle-ready. They would be a Chief Superintendent in charge of a District in the police. General Managers of factories begin here.
DU: Is the skilled level of DU. They’ve put in several systems, or done so much surgery that they can mentor other DL’s. They would be Brigadiers in the Army responsible for 4-5 Battalions. If they don’t “see ahead”, then the DL’s won’t have the budgets and systems in place to function. In the police, they are the provincial commanders. They get involved with big events but they are largely pattern watchers. They understand patterns across time spans of 1-2 years and get things in place on time for others to roll things out. A DU in business is likely to manage a set of factories each of which is self contained but linked to the others. A Captain of a long distance aircraft is here. Though their planning horizon is only journey, the complexity of the system they are managing requires them to anticipate lots of if-thens.
EL: Is the beginning of senior management. Their time horizon should be five years – anticipate the obstacles we will face in the next five years. Can’t see it in UK some how. Events always seem to take managers by surprise. Contrast the sitting-on-hands with TESCO who rerouted produce to Spain and trucked it in. That couldn’t have been rolled out quickly with advance anticipation of adverse events and general preparation. Junior managers are effective with senior managers have done the ground work. Typically senior managers do a juggling act of planning out a whole function and managing another plan of change simultaneously. Or they are managing the links between functions. It’s not just rolling out a plan. There has to be a element of saying we are following Plan A but if this happens, we will have to be ready to go Plan B, and if this then Plan C. They are balancing the present with the unknown. Spend to much time on the what-if and the company will fail now.
EU: Experienced version of EL. Should have 3-4 EL reporting to them requiring coordination and overview.
F: Designing a whole organization
Alpha: Monitoring world events (Chairman of Board)
Beta: Changing conditions in the world
Thinking ahead to a structure
When applied to structuring work, you don’t want to split the grades into quarter grades (B1 and B2, B3 and B4) unless you are like the army or a mine where everyone is doubled up to allow for continuity during an emergency. Have A’s report to BL who report to BU etc.
Sometimes when the minimum wage is very low, the entry level is pegged there and there is a big dog’s leg into A band when the person joins up permanently.
You can see why you should do a rough check yourself before you start talking. Thereafter you have a simple system where people get paid and they know what they need to do to move up. The training must be available of course otherwise it is not possible and they will devote their energies to side ventures.
You can also leave spare money in a pot to be divided up at the year end (or November) and tailor benefits. One well know firm used to have the very good benefits kick in after 5 years because there was high turnover before then.
How to sort out a mess
Before I talked to anyone, I would do my own preparatory work and sort out a skeleton for the key jobs.
Then (depending on how the problem was presented)I would discuss role (not pay) and guide the discussion to talk about career structures.
If pay had already become an issue, I would simply say that I was there to sort out a pay structure, but before I could, I must understand the levels and how some one got to be really good. That I would go round and talk to every one to see what I could learn but it would also be useful to sit down in groups and talk through how one gets to learn the business. Then I will on my consultant’s hat and lay out some proposals for them to look at.
The odds are that they will find the solution themselves and we only have the administrative task of tidying up the payroll over a period of a few years.
To give an example of how this might pan out, once I proposed a simple structure: Learning the job, Knows what they are doing, Could run the business for a day, Could run the business for a week, Could run the business for a month. When we know Paterson, then we see immediately that I have proposed levels that are A, BL, BU, CL, CU. There is still the level of DL above these. Using a slope of 1.40 that would be fairly typical in the private sector, if the guy in A band is earning 10 dollars, the fellow in BL will get 14, in BU will get 20, in CL, in CU 38 and in DL, 54.
Depending how long it takes to move through those levels and other pragmatic considerations (including how much fiddly bookkeeping I am prepared to do), I might put in some notches. Or I might not. I always go for the admin-lite solution that delivers more control and more cash to the employees (presuming I begin with sound business sense and everything I propose is linked to making more money faster within the company). It simplymight be better to hand out decent cash bonuses from time-to-time and some businesses are so volatile the best the owners can do is pass on windfall gains.
Once I have a clear structure like I proposed, phrased in clear business terms, then I am clear about the training people need to go up the ladder, the opportunities they need to learn and even the systems I need to put in. People can’t run the business and make sensible business decisions if the accounts are in shambles, for example.
I’m also able to communicate clearly what matters and people will take charge of their own training. They will be looking around for tasks they don’t know how to do and making sure they’ve learned from people who do know.
HR is a a creative business (TG) and people respond to simple, comfortable systems leaving us with a lot less work to do.
The question of whether you need to write jobs descriptions.
My answer would that in places that change a lot, why write them?
- a clear simple contract
- transparent orderly pay that doesn’t put the company at risk
- managers’ skills in delegating whole tasks and coordinating teams rather than micro-managing
- good emergency welfare budgets to help people keep their lives stable
- sensible career structures (with planned exit strategies – like articled clerks- that benefit the employees).
We need simplicity in HR and a spotlight on trust. We don’t need more paperwork and complication.
What do you think?