Job Classification: A Detailed Study of its Pros and Cons

What do you know about job classification?

A common doubt in the field of recruitment pertains to job classification definition and understanding. To clarify this perpetual query, job classification or employment classification is defined as the system of objectively and precisely evaluating and defining the roles, responsibilities, duties, tasks, as well as the authority of a particular job.

When done correctly, job classification gives a detailed explanation of the roles and duties of a particular job position. It does not need details regarding the employee/applicant’s level of skills, knowledge, education and experience of the person who is currently doing the job.

A proper job/employment classification is performed formally and frequently in several large organizations. The best job classification examples can be found in the employment structure of government employment, civil services, armed forces, universities and colleges, as well as non-profit agencies.

These organizations use a structured and formal approach to their job classification, helping them decide the salary or pay grades for different job positions. The eligibility and opportunity for promotion in the job and the next pay level are designed and structured with the help of a classic job classification system.

Job classification in the context of a company

The job classification meaning is different for different companies. In general, it is formulated to determine the level of a particular job and its functions for the company. The company can use job classification to post job listings, conduct performance reviews and to determine whether there is a role overlap between any two jobs within the organization.

Job classification is used to create a standard job structure across the organization and the industry. Plus, it is a tool that helps to determine the level of roles and responsibilities entitled to each job position within the company.

Importance of job classification

The significance of job classification in HRM can be observed in the results it creates for the organization. It creates parity among job titles, uniform level of job hierarchy within the company, and determines the salary range as per the identified job factors.

These job factors include pay rates in the market for the workforce doing a similar task, in similar positions, in the same industry, and the same location or the region within the country. The allied factors, which also determine the salary range, include the skill, knowledge, education and experience level required to perform the given jobs within the company.

Various forms of informal job classifications are applied in medium and small scale companies to create uniformity and impartiality across equivalent job positions. They could be simply classified as creating groups of similar job positions within the broadband salary structure.

For instance, employees who serve customers over the phone are grouped along with employees serving the customer directly, in person, at the company’s retail outlet. With limited opportunities for career advancement, the broadband pay structure enables the employees to perceive compensation and career advancement, despite performing the same duties.

The salary structure recognises the employees who perform a similar kind of work, with a similar range of salary compensation opportunities. It allows employers to give affair compensation to their employees within the same pay range.

The Hay or Korn Ferry system job classification

Among the most sought-after job classification systems, commonly used in commercial companies, is the “Korn Ferry job classification system”. This system was formally called the “Hay system” for job classification.

The Hay or Korn Ferry system assigns different points to assess or evaluate different components to establish the corresponding value or significance of one particular job position when compared to the other job positions within the company.

This method of job classification evaluates or measures the three main aspects of every job position:

• The required knowledge
• The required problem-solving skills
• The required level of ownership and accountability

This system compares the corresponding values of all the comparable job positions to maintain balance and parity across the organization. The system is appropriate for the job classification purposes of bigger organizations with several departments across different locations, union-backed jobs, and for companies with hierarchical and rigid salary structures that need internal equality.

In this system for job classification, the evaluator uses an evaluation tool or questionnaire, which is filled by the company or the department that has requested for the job evaluation. This evaluator undergoes rigorous training to assign the points appropriately.

They assign the points to help determine the proper position of the job role using the Korn Ferry job classification system, which further determines the salary and the paygrade within the firm’s compensation system.

Benefits and drawbacks of the job classification system

Pros

• The best advantage of the job classification system is that equivalent or similar job roles can be classified into a single group.
• It can aid the organization to create a proper pay structure for its workforce across different departments, as well as streamline the workflow of the organization.
• Once the jobs get classified in the right order, the tasks get distributed evenly among the company’s workforce.
• With this classification, promotions can be consolidated with an increase in compensation and a higher job title for employees who perform the same task across the organization. For instance, the senior customer service executive does the same job as the customer service executive but is given the perception of seniority because of their experience; they are also complemented with slightly higher pay at times.
• The broadband salary structure allows the company to give their employees perception of hierarchy or seniority and have a broadband salary structure without really promoting the employees.

All this can only be achieved if the company knows about the kind of tasks which needs to be done and the kind of job titles required, which is possible with a proper job classification system.

Cons

• The drawbacks of the job classification system are that the provided pool of data is small or limited because it only applies to the organization creating the data pool. This means that whenever a company creates a new job position, the only data it can be compared to is with the other job positions within the organization itself.
• For each new job position, every existing job position needs to be re-evaluated.
• As human resources are exhaustively involved in the evaluation process, the judgments arising out of the job classification are highly subjective of the individual doing the evaluation, and they may misunderstand or underestimate the importance and merits of a particular job position.

These disadvantages, however, can be solved by enrolling existing employees to write a detailed description of the skills used to perform the duties related to the job position to get a deeper understanding of the requirements for the job position.

Proper job classification plays an important role in defining the hierarchy and salary structures of the organization. It helps to group the workforce effectively as per their job role, skills and experience. This brings in proper uniformity to the structure of the organization.