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Continue reading to learn more about job classification, why it’s important, criticisms of job classification and how to create a job classification system for your company.
What Is Job Classification?
Job classification is a job evaluation system that groups jobs into categories based on similar tasks, decision-making exercised, pay grade and contribution to the overall goals of the organization. Job classification is one of several job evaluation systems.
Job Title Versus Job Classification
Job classification and job titles are often confused since they both involve analyzing job specifications and requirements.
Job classification is a larger system used to group several jobs into categories based on related skills and abilities or tasks and responsibilities. It is also used to create organizational hierarchy and determine pay ranges.
A job title describes the day-to-day tasks and responsibilities of a specific position.
Why Is Job Classification So Important?
Job classification is essential to creating an organizational hierarchy and establishing how departments work together to achieve company goals. There are other ways that job classification can help your organization, including:
- Determining hiring criteria. By clearly outlining the skills and abilities required for a group of positions, you can incorporate them into your hiring criteria and recruit qualified talent.
- Developing career growth and promotion plans. Creating a defined hierarchy within each department provides clear and concrete opportunities for career growth. Employees can develop their promotion plans based on the skills, tasks and decision-making required to advance to the next “class” within their department.
- Conducting performance reviews. Along with promotion plans, job classification creates a system that you can measure employee performance off of.
- Determining pay ranges. Classifying roles based on decision-making and level of overall contribution to the organization helps you to determine pay ranges for each type of position.
Criticism of Job Classification
There are several reasons that job classification has been criticized as a job evaluation system.
Employees may complete tasks above their classification, often leveling up by taking on responsibilities typically assigned to their superiors. Despite the additional responsibilities, it is impossible to compensate the employee without promoting them to the next “class” in their department.
Additionally, organizations have to assign evaluators to group jobs into similar categories. Because the process is subjective, certain jobs may fall into several categories and similar titles might describe different jobs in different areas.
How To Create Your Job Classification System
Creating a job classification system for your company may be an intimidating task. The following steps can help you establish a strategic, effective job classification system.
1. Identify Organizational Goals and Values
Before you can classify jobs, you need to have clearly defined organizational goals and values. When you have concrete goals and values, you can start classifying jobs based on the specific skills, abilities, tasks and requirements necessary to achieve each goal.
This requires input from larger stakeholders within the company and may require collaboration with executives.
2. Establish Job Categories
Once you understand the specific goals your organization strives to achieve, start separating jobs into categories. Jobs can be classified into different groups, including hierarchy, families and functions.
Hierarchy. This categorization organizes roles based on experience and often plays a major role in determining pay. These categories are not specific to skills or abilities and apply across departments. Examples of hierarchy classification include C-level executives, president, directors, managers and associates.
Families. These are larger categories of jobs that require similar skills and abilities and contribute to the same organizational goal. Examples of families include finance, marketing and human resources (HR) departments.
Functions. These are smaller groups of jobs that share more specific skills and abilities within a family. Examples of functions include digital marketing, accounting, and learning and development.
3. Develop a List of Standards for Each Job Category
Once you have your categories set, begin establishing a list of standards for each category. Break down standards like required skills and abilities, tasks and responsibilities and contribution to organizational goals that are specific to families and functions.
4. Rank Jobs Into a Hierarchy
With clearly defined standards for each job family and function, rank each individual job into a hierarchy. This step is where you will determine what job serves as the entry-level role versus an executive position within each job family and function.
Though it will take time and can be a tedious process, by evaluating and ranking positions in each department you will create a structured organizational hierarchy for your entire company.
5. Link Ranked Jobs to Pay Scale
After creating your job categories and ranking individual roles into an organizational hierarchy, you have a foundation to link each position to a pay rate. Evaluating the hierarchy level, skills, ability, tasks, responsibilities and contribution to the overall company goals, each position can then be classified into the appropriate pay rate.
Typically, executive-level employees will receive the highest compensation while associates and entry-level employees receive the least. Depending on the specific family and function, an entry-level employee in one department may warrant a higher salary than a manager in a department that provides less value to the organization.
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