November 23, 2011

Job Titles, Roles and Salary Bands

Many organizations struggle with parity between job grades, roles and salary bands. If one were to categorize companies they would invariably fall into one of the two categories:

Job Grade Obsessed

In such organizations one would hear conversations like, "how many M4s we have currently?", "let's hire another M5", etc. In these discussions the focus on competencies and responsibilities might get diluted. And as a result such organizations can have a situation like this - three employees work on similar assignment though one might be M3, another M4 and the third one M5.

It is generally the case that Mi will be associated to a certain salary range. And regardless of the value added, actual performance, etc. Mi will generally draw higher salary then Mi-1. In case of salary range overlaps it is possible for a high-end Mi-1 to draw a salary marginally higher (and sometimes significantly higher) than the Mi.

Because of the job grade obsession it is possible in such organizations that the head of department A might be an M4 and the head of department B might be an M7. In terms of accountability in respect of their department's performance both will be treated at par but the M7 will have higher authority than the M4.

For high performers such organizations will prove to be a career trap since one's responsibilities might undergo no or little change when one is "promoted" from M4 to M5 to M6 to M7. This is especially true in case of small sized organizations and is generally amplified due to the "old boys club" (OBC) culture prevalent there (Old Boys Club in Small Companies)

Salary Band Obsessed

These organizations are more direct in terms of using the term salary band explicitly since an employee is seen as nothing more than an expense in pure accounting sense. So higher salary band will mean higher cost. Hiring in such companies will focus on money that is kept on the table for the selected candidate to accept the offer. The mapping of salary band to competencies and responsibilities might be a weak one. One would hear conversations like, "how many B4s we have currently?", "let's hire another B5", etc.

In such organizations an B10 might be a Principal Engineer or a Senior Manager. And this when not seen in terms of the role the B10 will perform might lead to hiring misfires. In such organizations the Job Titles might sound confusing at times.

Because of the salary band obsession it is possible in such organizations that a B10 might have no one reporting into that position whereas another B10 might have 100 people reporting into that position. Obviously the competencies required for both are different and salary band being same doesn't convey much.

For high performers such organizations may be better in terms of career growth. Since the salary bands have a direct correlation to the money on the table, the organization will try to add more work or more complexity to the existing work which will result in ensuring the higher salary spent translates into higher value added to the organization. There exists strong possibility though of no or little change when one is "promoted" from B5 to B6 to B7 to B8.

Why Role is More Important than Job Grade and Salary Band

Somewhere job grades and salary bands are correlated to the years of experience on one's resume and also the loyalty factor as trust scores over talent (What Comes First - Trust or Talent?)

However for professionally managed and progressive organizations, it is imperative to look at role as the driver for career growth and progression of an employee up the organizational hierarchy. If one gets promoted as "Senior Manager" from "Manager" this should also mean the promoted employee does something more, something different or the existing work differently (more complex, more challenging, etc.). If that's not the case then it's difficult to understand what "getting promoted" means.

In the back-end though there has to be salary range so that someone in higher role draws a higher salary. It's justified in this case since "getting promoted" is translated into "contributing more" to the organization.

A flat organization should ideally be defined as a hierarchical arrangement of roles where any role higher in the hierarchy requires "getting promoted" in the real sense. It is ironical to note that in many organizations even the HR promotes the job grade and salary band concept over role concept. It probably allows ego-massaging of the employees where one might perform the same activities over 10 years but as M4/B4 in year 1 and gradually "getting promoted" to M8/B8 in year 10.

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