Best practice and a step-by-step guide for defining job levels — the foundation for job titles, job descriptions and salary bands
The initial phase of any company is often characterized by a general spirit of euphoria and a strong will to create. During this fast-paced startup phase the need to create and fill new positions within the company arises quickly in order to keep up with the growth of business. To preserve momentum there is a high pressure to fill these positions, which emerge at increasingly shorter intervals, as quickly as possible.
It is also a fact, that this initial startup phase usually is characterized by a lack of structures and processes. This is in most cases also true for the process of defining job levels, job descriptions and job titles for these new positions. In those early days the priority lies in hiring talent as swiftly as possible and not in defining a job leveling scheme.
Why are job levels important?
The lack of a framework regarding job levels becomes an ever-increasing issue as a company grows. Job levels are strongly connected to a multitude of topics such as: Job titles, job descriptions as well as salary bands and career progression models.
With no job level framework available to the company often a proliferation of job titles will accumulate. These titles do not follow a clear leveling structure, at times might be worded odd and do not support hierarchy transparency. Furthermore, the lack of job grading poses a challenge during review and performance talk cycles: People leaders and HR have no global guideline resource they can reference to when discussing expectations or career path opportunities. Additionally, decisions on promotions, salaries and salary increases do not follow a clear policy or guidance. All of this leads to a lack of visibility in career opportunity, unfairness or frustration. Finally, there is a risk that during recruiting the requirements for new positions are not clearly defined and the wrong people are hired for the job.
The lack of of governance in job levels will ultimately create confusion and frustration among staff, which increases the risk of top talent (especially those in earlier stages of their careers) leaving the company. This issue can be avoided by establishing a clear job level structure, which poses the foundation for clear job titles, job descriptions, salary bands and visibility in career opportunities. Introducing a leveling structure will address this retention issue and furthermore support in:
- Defining clear job descriptions, helping to hire the right people for the right jobs with the right salary
- Aid leadership in in developing, promoting and recognizing top talent
- Determining a transparent way of deciding job titles, salary levels and promotions for new and existing employees (that also scales with growth)
- Ultimately, keeping staff happy and churn rates low
What exactly is job leveling?
The need to establish and introduce job levels has been recognized. But what exactly is job leveling? Job leveling maps out in detail all required layers within an organization from top to bottom.
Each job level is then described in detail with a job level description based on common job grading dimensions, such as accountability, experience and know-how, problem solving and communication. These job level descriptions are not subject to details of individual, specific jobs. Rather they are held generic to fit for all jobs within one level yet detailed enough to outline the characteristics and dimensions of each level. The generic job level descriptions are the foundation on top of which specific job descriptions for individual jobs will be based.
Furthermore, each job level is assigned a generic job title (e.g., “Head of”, which is the same across all departments (e.g., “Head of marketing”, “Head of merchandizing” etc.). Each job level is also assigned a salary band. Salary bands describe a range for typical salaries within that job-level (these naturally differ from department to department). How does it work in detail?
5 Steps to introduce job levels in your company
Your goal is to create clarity, transparency and scalability in job levels by creating a tailor-made leveling structure for your company. Following steps will help you achieve that goal:
- Review existing level and salary structure and identify gaps and issues with it (including existing job titles)
- Design your global job level setup (accounting for number of levels required, manager vs. expert track, salary bands)
- Create generic, yet detailed job level descriptions
- Map individual employees to new job levels
- Communicate and implement the new job levels and titles and gradually adapt salaries (Change management)
In this article you will find a step-by-step guide and some pointers for the process of creating and implementing job levels and job level descriptions.
Step 1: Review existing level structure
The first step is reviewing your existing job level and salary structure and corresponding gaps and issues. If there already is a structure — great! Understand the status quo and analyze the challenges with it. Interviewing people leaders, hiring managers and recruiting staff will help you understand the issues with the status quo. This is also a great opportunity to get managers on your side for a smooth implementation at a later stage as awareness of the need for change and creating the desire to participate and support in change are the first steps in change management. Typical challenges with a non-existing or outdated job leveling structures might be:
- Existing titles and levels are not linked to a common scheme and not comparable between departments
- No or inconsistent job descriptions for existing employees
- No common guidelines and no governance in determining the correct titles, salaries, bonuses or promotions
- No reference in performance or review talks to expectations and responsibilities
- Sometimes extreme outliers or unfairness in current salaries due to missing pay grades
- Limited transparency and opportunity for career development
Often there is no documentation of job leveling at all. In this case have a look at the existing job titles or existing job descriptions and the company’s organizational chart as a starting point. The existing job titles often reflect job levels to some extent.
Job titles at the same time are a very emotional topic for most people because titles often play an important role in how people perceive or define themselves. Introducing drastic changes in job titles might prove as a hurdle in the last stages of introducing the new leveling structure. Therefore, if bigger changes to existing job titles can be avoided without sacrificing the purpose or clarity of the new structure this should be considered.
Step 2: Design your job level setup
The number of levels required for a company depends on its current size and growth trajectory. Large corporations like Amazon have 10+ levels whilst small companies and startups might be happy with just five levels. Having rather more levels (with smaller salary spreads) will allow for more frequent (level) promotions. However, it is always possible to start out with fewer levels and then adding additional levels over time (e.g. introducing a “Team Lead” level below a “Head of” level could relatively easily be done, if it does not come with demotions at the same time). The important part is being consistent throughout the entire company. The number of available jobs per level is defined by the organizational and business requirements.
Each level is connected to a corresponding job title. These job titles will later be introduced in each department (e.g., “Team Lead Marketing” or “Head of Operations”). The specific wording for job titles strongly varies from country to country. For example, in bigger corporations a “manager” usually is leading people whilst in smaller companies that usually is not the case. Here is one possible example for a mid-sized company with 8 levels:
It is also relevant to consider that there are usually two different tracks people develop in, after they have reached a certain point in their carrier: People manager track vs. expert track. People managers have a strong focus on leading people and managing larger teams. Experts on the other hand are individual contributors and tend to specialize in their field of expertise. For exports people leadership plays a secondary role.
Each Level is assigned to a salary band. These salary bands apply for existing employees and new hires. Salary bands ensure that every employee within a certain level receives a fair salary within a range, that is defined by a minimum and maximum salary. The specific salary ranges depend on (local) market values and the company’s compensation philosophy. Salary bands will most likely overlap from one level to the next to account for salary differences for the different professional fields. If there are employees with significant deviations from those salary bands, then they are either over or underpaid or in the wrong job level.
Changes in job levels (promotions / demotions) usually occur on vertical level (up & down) but are also possible horizontally by switching career tracks. Promotions should be considered if the current role of an employee expands significantly in terms of increased accountability, broader experience and expertise or increase of direct reports. Many people connect the idea of career opportunity with leading more and more people. However, not everyone is or wants to be a leader. This doesn’t mean that those people cannot or don’t want to advance in their career. It is necessary to offer an expert-track as part of your people strategy to retain this very valuable talent.
Step 3: Creating detailed yet generic job level descriptions
For each of the newly defined levels a detailed, yet generic job level description has to be created. These documents will later be publicly available to the entire company and will serve as a reference whenever titles, levels, job descriptions, salaries or promotions are discussed. The job level descriptions contain the following aspects:
- Job Purpose
- Education and work experience
- Job complexity
- Independence in task performance
- Expertise & mastery
- (People leadership)
Following you will find two generic job level description examples:
Example Job Level Description: Director — Level 7
Directors translate the company’s vision and mission into a tangible strategy and specific roadmap for their directs and team. They provide guidance, support and resources. The director position comes with significant responsibility and has a meaningful impact on the company’s culture, customers and future. Directors live the leadership values and company values and are expected to be role models. They consider all aspects of the business and balance long-term thinking with delivery against business KPIs.
- At least six years relevant work experience
- Very extensive expertise in their own field but also surrounding areas
- Extensive understanding of the relevant business processes
- Considered an expert in their field inside and outside the company
- Very strong leadership skills. Understanding what kind of leadership is needed in different situations with different people.
Independence / complexity
- Professional guidance of specialists and teams in their own area and beyond; disciplinary management of individual employees
- Directors work fully independent in a complex environment
- Anticipate internal and external challenges and opportunities
- Develop complex, strategically important concepts that have a direct impact on the company
- People and team development and empowerment
- Budget and P&L accountability for their area
- Ability to recognize risks and opportunities in own and adjacent areas with a long-term horizon; pro-active communication to peers, line manager and team
- Role model for the entire organization as well as externally
Behavioral Expectations — Team
- Empowering others to make decisions, take on new projects and engage with the team
- Manage the tensions and heightened emotions that are part of a high-performance culture
- Working as an enterprise-wide team and not as an independent leader
- Succeeding despite business or personal leadership challenges
- Confront challenges by negotiating and finding mutually beneficial solutions
- Live the company values
- Drive moral and ethical standards through execution of business and ensure inclusive behaviors across all team members
Behavioral Expectations — Business
- Bring an outside in perspective by seeking the demands of the customer and translate them into commercial outcomes
- Implement and live customer centricity across the entire organization
- Turn new ideas into actions that create business results at a global scale
- Driving large scale change/turnaround efforts that impact the organization
- Build cross market and cross functional networks that are used to solve complex business problems
- Use consumer insights, industry trends and emerging technologies to create innovative solutions to current and future opportunities
- Applying technology to increase business performance
Example Job Description: Senior Manager — Level 4
Senior Managers are responsible for executing the roadmap. Their role focuses on operational delivery and translate strategic direction into targets and KPIs. Senior Managers are often experts, with a broad and deep conceptual and practical knowledge of their own functional area. Senior Managers work both independently and collaboratively within their function and cross functionally to deliver against shared objectives. To be successful Senior Managers are expected to develop their leadership skills by identifying opportunities to increase their business impact and apply what they learn in leading or supporting more junior colleagues.
- At least three years relevant work experience
- Special knowledge in own area as well as in related areas
- Fundamental understanding of the relevant business processes
- The application of special knowledge to complex issues
- Excellent written and verbal communication skills
Independence / complexity
- Partly independent work
- Professional management in personal and partly professional development
- Delivering owned projects & meet defined KPIs
- Ability to recognize risks and opportunities in own area; pro-active communication to peers and line manager
- Living the company values
Behavioral Expectations — Team
- If working as an individual contributor, acting as an active member of the team and work to elevate its success
- Promoting team engagement by supporting colleagues and adapting to others’ working styles as necessary
- Collaborating within and across teams, listen to others and build trust
- Employing functional expertise to contribute to joint efforts outside of own team
Behavioral Expectations — Business
- Know how in setting priorities in a high pressure environment with tight deadlines and showing the necessary resilience
- Effectively identifying and managing project risks & stakeholders
- Focusing and driving delivery — having a strong track record of meeting objectives & producing high quality work
- Improving operational processes to meet demands & to increase effectiveness
- Demonstrating a digital mindset & possessing the ability to use technology to drive operational excellence
- Focusing on the customer needs in projects and daily work
Step 4: Map individual employees to new job levels
In a first approach to match employees to their new appropriate job levels the existing resumes/profiles on file can be reviewed. Each employee’s education and related work experience can be compared against the experience and education required by the generic job level descriptions to determine their level.
This first draft will then be shared with the department heads to review the initial job leveling and make appropriate changes. This will be necessary as profiles on file might be outdated and do not fully account for the full range of leveling criteria (e.g. job complexity, independence in task performance or accountability). This process of course requires full support and buy-in from each of the people leaders. This is a delicate phase and comes with a higher risk that emotions might influence the leveling. To maintain a consistent approach to the job leveling a proper introduction, expectation management and most likely even a leveling guidelines are required to ensure personal feelings are left out of the decision making.
Employees should be placed at the level they qualify for and and not higher even if they have been with the company for a long time. In case of performance issues or lack of ability or aptitude employees might be moved down in levels. It is crucial to stick to the generic job level descriptions. That will allowed to fairly assign levels and later also justify to employees who may have been “downgraded” that even with may years’ experience they might lacked the knowledge or ability necessary to perform at a designated level. Once employees are placed into their designated job levels, then the standard promotional practices take over.
Step 5: Communicate and implement the new job levels and titles
During step 2 and the phase of analyzing the status quo in job leveling “awareness of the need for change” and maybe even “the desire to participate and support in the change” was already created for stakeholders. These were the first steps in stakeholder and change management. For a successful implementation of the new job leveling structure you need to ensure all managers have:
- The knowledge of what to do during and after the change
- The ability to realize or implement the change as required
To support the implementing managers a clear communication plan will help ensure a smooth roll-out. Following documents are recommended:
- A presentation / memo to leadership introducing the job leveling project containing: A description of the status quo and the corresponding challenges, the benefits of the new job leveling structure (outlining the benefits to both: the leaders and the employees), implementation plan and timeline, RASCI of implementation.
- Copies of all the job level descriptions, corresponding levels and salary structures and the specific placement of individual employees
- An FAQ / leadership talking points document that covers all likely (critical) questions and corresponding answers