Time to re-evaluate job grading?

The recession continues to throw a large shadow over the UK economy.  Nowhere is this more the case than in the world of pay and reward strategy.  

Over the past three years we have seen that organisations are becoming adept at making their payroll budget stretch to meet competing needs.  Indeed, the success organisations have had in constraining pay growth is largely credited for maintaining employment beyond the level that previous recessions would suggest was possible.

Testing times for reward

This is a challenge for reward professionals.  Not only do they have a reduced pot of money to play with, they are also being asked to come up with innovative approaches to support new priorities such as talent management and employee engagement.  At the same time, there is a palpable nervousness about a potential upturn in the jobs market sparking a race for talent that drives up pay.  Competing for good people has focussed the limited funds towards the key people that businesses want to protect for the future.

Grading under pressure

One potential casualty of this pressure can be the integrity of reward strategies and pay structures.  Grading may yet be a part of the recession’s collateral damage.   In many cases job evaluation processes have been designed in a very different business context from the one that operates today.  There is a danger that they fail to keep up with the rapid changes that have taken place in the intervening period. 

Even during times of plenty, some recalibration of grading is required from time to time as grade drift occurs.  When funding is highly constrained the temptation to manipulate the evaluation process to get the desired result is hard to resist despite everyone’s best intentions.

Time to take stock

Pay growth is generally predicted to remain subdued for some time to come.  Perhaps this is just the time to look at how existing structures, grades and job evaluation processes are able to meet the current and future needs of the organisation.