Personnel grading: methodology for determining official salaries

The grading system, like many other effective methods of remuneration, was developed in the last century in the USA. The purpose of creating a methodology for grading positions was to create a remuneration scheme for government employees who performed tasks of different degrees of responsibility, having the same professional level. Today, Russian companies have actively begun to switch to this system, having realized all its positive aspects. The Total recruitment agency is ready to develop and implement grades for your company.

The concept of personnel grading in an organization

Grading of positions in wages is the payment of different wages to employees occupying the same positions. Literally translated into Russian, “grading” means class or degree. The essence of the system is that employees of one organization receive wages depending on the grade they are in, and not on their position.

In the process of evaluating available positions in an organization, a class system is created. Their level depends:

• the presence and number of people subordinate;
• usefulness for the organization;
• qualifications;
• level of responsibility.

Each class has its own minimum and maximum salary and corresponding benefits package. The principle of remuneration becomes absolutely transparent, employees know why they receive a salary, what opportunities a transition to another level will give them, and what the consequences of failure to fulfill their duties may be.

Grading is a method of remuneration that takes into account the interests of both the employer and the employee. They will allow an employee to increase their salary level without promotion: it is enough to move to another higher grade, having proven their usefulness to the company based on the results of a comprehensive assessment. As a result, a lower-level employee may have higher wages than an administrative employee.

For which enterprises is the grading system suitable?

Personnel grading is suitable for medium and large companies, since such organizations have many employees and, therefore, a large number of positions. There are two main reasons why this is beneficial for such businesses.

1. Grading allows an employee to build a career horizontally without changing position, increasing the quality of work and, accordingly, the size of the salary.
2. This system eliminates the need to create additional positions that should determine salary levels. This is especially true in large companies with many employees.

Documenting

The introduction of a grading system at an enterprise is formalized by the regulations on remuneration. Additionally, a concept or regulation on grades may be drawn up, but such documents are not mandatory. If the organization has a trade union body, it is necessarily involved in the approval of the new form of calculation of remuneration. Based on the local act, changes are made to the collective agreement and employment contracts. The requirements for assigned grades must be reflected in job descriptions.

Methods for grading positions in remuneration

The introduction of a grading system makes the enterprise more competitive in the market and attracts highly qualified specialists and top managers to cooperate. Two methods of structuring grades are used:

• job classification;
• job evaluation using mathematical calculations.

The organization, implementing the method, selects the number of levels, the width of the grades, and determines which positions are grouped together. The range of wages within it depends on the option of the selected grade:

• narrow grades – 10%;
• average – 15-20%;
• wide – more than 20%.

When using narrow grades, to increase pay, the employee will have to move to another level. The broad grade includes a large number of positions; the emphasis is not on hierarchy, but on the competence of employees. The need for frequent indexation of wages is reduced, while at the same time the need arises to create an additional structure for checking the performance of employees.

Expert opinion

Vladimir Bergman

Lawyer, specializes in labor law and protection of employee rights in disputes with employers.

In broad grades, the status difference between positions is washed away.

Principles of correct grading

1. Involve department heads in the development of the system, this will make it more effective.
2. Establish job evaluation criteria that are clear to employees.
3. Grades must be agreed upon not only by management, but also by ordinary employees.
4. Grading should motivate employees.
5. Periodically update the system and make necessary adjustments.
6. The system should be created directly for the company; it should not be blindly copied from other organizations.

The difference between grades and the tariff system

The grade system has some similarities with the tariff system, since they represent a hierarchical structure of positions. However, there are significant differences between them.

1. To evaluate a position, a larger number of indicators are used:

• management skills;
• communication skills;
• responsibility;
• level of work complexity;
• independence in decision making;
• the cost of a mistake for an enterprise.

1. Allows for the intersection of different grades, thanks to which lower-level employees who are valuable to the company can receive a higher salary than administrators.
2. Calculation of the system using the scoring method;
3. The hierarchy is built depending on the value of the position for the company.

The procedure for developing a grading system

The introduction of a new methodology at an enterprise is a very labor-intensive process .

Before making changes, you need to clearly analyze the situation in the team and set specific tasks and goals.

But now let’s look more specifically at how ranking and grading of positions occurs.

Stage 1

Identifying Key Factors

In order for an assessment to be made, it is necessary to determine which criteria will be fundamental . There may be 5-6 , or maybe much more, it all depends on the size of the company. To keep things simple, let's look at an example with several criteria:

1. Is it necessary to manage subordinates, and in what quantity?
2. Does the position have responsibility for the financial results of the company?
3. To what extent can an employee make decisions independently?
4. Does the position require work experience?
5. What qualifications must an employee have to be able to occupy this position?
6. Are there external connections?

Stage 2

This step is intended to highlight sub-items for each factor:

Stage 3

Now each position needs to be assigned points. Since we have 6 letters in each category, we will give ratings from 1 to 6.

Job evaluations should be carried out as objectively as possible. Often companies hire outside consulting firms to solve this problem.

Stage 4

At this stage, we must evaluate each position by assigning point scores. Another important point is the value of each criterion for a given position . This point must be taken into account and added to the assessment. Points for it are given on a five-point scale

Let's start with the chief accountant :

The overall score for this position is 91

Let's evaluate the work of the division director :

The overall score for this position is 155

All positions are assessed in the same way. As an example, we use the following data:

• cleaning lady – 10;
• working mechanic – 37;
• secretary – 65;
• master – 75;
• lawyer – 115;
• occupational safety engineer – 100;
• marketer - 70.

Stage 5

Based on the results obtained, you need to distribute grades. If the enterprise is large, they make a gradation of about 10 groups . But this is optional. The approximate distribution is as follows:

• 1st grade – from 8 to 25 points;
• 2nd grade – from 26 to 40 points;
• 3rd grade – from 41 to 65 points;
• 4th grade – from 66 to 85 points;
• 5th grade – from 86 to 100 points;
• 6th grade – from 101 to 125 points;
• 7th grade – from 126 to 160 points;
• 8th grade – from 161 to 180 points;
• 9th grade – from 181 to 190 points;
• 10th grade – from 200 points and above.

Stage 6

Only after going through all the previous stages can we talk about the procedure for forming wages , which consists of two main parts.

The first - stable - is calculated by summing up the official salary and bonuses guaranteed by law.

The second part consists of various bonuses of a personal and corporate nature.

Stages of implementation of personnel grading

1. Appointment of a working commission, choice of methodology.
2. Collection of information about company employees.
3. Analysis of the information received. Studying positions to determine a universal set of factors suitable for each employee. According to Art. 22 of the Labor Code of the Russian Federation, the level of remuneration is influenced by:

• experience;
• education;
• profession and specialty.

Each employer has the right to independently choose factors that are significant for the company.

1. Development of a salary system after the following activities:

• distribution of identified factors by levels;
• determination of the average salary in the labor market for similar positions;
• calculation of the number of levels;
• determination of the maximum and minimum salary for each grade.

1. Documentation of the grader system developed based on the work performed. Familiarization of company employees with the new rules of remuneration against signature.
2. Analysis of the introduced system to identify errors and shortcomings.

Types of grading systems that are usually implemented

In modern practice, many methods of personnel grading are used, which can be divided into three types.

1. The first type is the ranking of personnel activities depending on the complexity of the tasks assigned to them. Its implementation does not require mathematical calculations and it can be put into operation by the company's management. The system is far from original grading methods and is suitable for small and medium-sized businesses.
2. The second type is based on the point-factor method, the classical system of Edward Hay. It is used to organize official salaries. The applied grading system may have a different number of levels depending on the staff of the company.
3. The third type is original author’s grading systems. They are based not only on the point-factor method, but also use other mathematical calculations.

Efficiency mark

The practical application of grading enterprise employees has its pros and cons. System advantages:

• effective regulation of employee remuneration;
• transparency of remuneration calculations;
• simple calculation of salary indexation;
• positive staff motivation;
• no need to come up with reasons for charging additional payments to individual employees;
• productive distribution of personnel.

At the same time, the use of this system in domestic companies has revealed a number of negative aspects:

• significant costs at the stage of system implementation;
• lack of specialists in this field, additional costs for attracting experts;
• difficulties in evaluating positions;
• subjectivity when assessing an employee’s performance;
• Insufficient awareness of staff about the essence of the system can lead to appeals to the labor inspectorate with a complaint of discrimination.

Is it legal to establish grades in the light of Art. 3 Labor Code of the Russian Federation?

According to Art. 3 of the Labor Code of the Russian Federation, it is impossible to limit an employee’s rights or provide him with advantages based on the origin, language, gender or other qualities of the employee, with the exception of business. In paragraph 10 of the resolution of the Plenum of the Supreme Court “On the application by the courts of the Russian Federation of the Labor Code of the Russian Federation” dated March 17, 2004 No. 2, it is explained that the business qualities of an employee are understood as his ability to perform a labor function, taking into account certain qualities:

1. Personal:

• work experience;
• health conditions;
• education, etc.
• Professional qualifications:

• professions;
• qualifications;
• specialties, etc.

The grading system does not always seem fair to workers, since they may receive different salaries under similar or even identical working conditions. This situation is often interpreted by dissatisfied employees as discrimination. As a legal basis for this, the workers refer to Art. 22 of the Labor Code of the Russian Federation, by virtue of which the employer is obliged to pay equally for work of equal value.

A lawsuit with a similar basis was considered by the Isakogorsky District Court of Arkhangelsk, which, in decision No. 2-169/2012 dated May 28, 2012, indicated that establishing the official salary is the right of the employer. At the same time, the employee ignored Art. 132 of the Labor Code of the Russian Federation, according to which the salary is determined not only by the complexity of the work and the labor expended, but also by the qualifications of the employee, therefore the employer has the right to determine the amount of the salary on an individual basis. Since the different salary amounts were due to different length of service and, accordingly, different business qualities of the plaintiff and his colleague, the court did not find discrimination in this case.

Thus, the establishment of a grading system is not discrimination if the grades are established on the basis of the business qualities of employees.

Structuring the remuneration system through job grading

Using job grading to determine wages has the following advantages:

1. Fairness in the distribution of remuneration for work.
2. Equal pay for positions of equal importance to the company is achieved by applying a single reward system.
3. Uniform principles of remuneration guarantee the stability of salaries when there is a change in management or changing circumstances.
4. Employees' understanding of payroll principles and what factors influence them.

What is the difference between the tariff system and grades?

1. The amount of remuneration depends on professional skills, knowledge and work experience. The grade system applies broader criteria for assessing an employee’s performance.
2. The hierarchical structure of positions is incremental, while grading allows an employee to increase their salary level without building a vertical career.
3. Salary calculation according to the tariff schedule is based on the minimum salary multiplied by various coefficients. In the grading system, calculations are made based on the weight of the position, which is calculated in points.
4. Strict hierarchy of positions in the tariff system. Grading determines an employee's place depending on his usefulness to the company.

Which companies make sense to introduce grades?

First of all, large and medium-sized companies should turn to such a system. If a company has many employees, a complex structure and many departments, then grading will help to divide salaries equally. Among those who successfully use this approach are Gazprom, Rusal, Rosatom, RusHydro, Aeroflot and others.

Small companies with a small staff of up to 50 people should not choose this method, because the costs of its implementation may be greater than the expected expectations from its results.

How to avoid problems during grading

1. When agreeing on salary levels, you should take into account the market value of the specialist, his contribution to the company and the size of the payroll. If an experienced employee is not satisfied with the salary, he will find another job.
2. All factors affecting the amount of remuneration should be taken into account. Errors in calculations can lead to incorrect calculation of points and assignment of a grade, resulting in a decrease in the employee’s value to the company. An undervalued employee may later quit and go to work for competitors.
3. Employee evaluations must be objective and not based on personal preferences.
4. The use of complex grading systems leads to financial waste without bringing much benefit. It is better to simplify some methods, for example, instead of the classic 32 grades, use 10-20.

The introduction of job grading requires caution - underestimating staff can lead to staff turnover. When developing a system, you should correctly build the concept of employee motivation in order to increase the efficiency of their work. The employee must have the opportunity to develop both within the grade and to provide for a transition to a higher level. The grader system requires large-scale and financially costly work when implemented into an enterprise.

Final word

In modern conditions, the grading system is innovative for remuneration. Appeared relatively recently in Russian conditions. However, many companies have already managed to assess the effectiveness of its implementation.

The big advantage of such a system is the ability to correctly and rationally calculate and determine earnings for an employee of a particular profession. Grading provides an increased level of employee motivation, stimulates them to personal and professional growth, and as a result, to achieve new heights by the organization itself.

Typical employee excuses and manager’s responses to them

• “I don’t have time to study” - Then work 7 hours a day instead of 8 hours. Take 1 hour every day at your own expense and spend this time studying. Got time? As Alexander Friedman says: “To understand what a person really thinks, it’s enough to watch what he does.”
• “I can’t set aside 1 day off, my family won’t understand me” - Split up your time: Set aside 2-3 hours a week, instead of a whole day once a month. Cut the elephant (the big deal) into pieces (subtasks), rather than trying to swallow it whole. Basic rule of time management.
• “My skills will not be in demand on the market” - Let’s compare notes, “where do you plan to develop” and “where is it necessary for the company.” Perhaps our paths diverge?
• “I’m already a professional, and everything suits me” - Mentioned what to do so as not to hear such answers. Invest more time in screening at the interview stage to distinguish “those who are willing and able to learn” from those who are “unwilling” or “unable.” Rule No. 1 when hiring: we don’t need anyone who is not capable of learning.

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What it is?

Road grading is carried out using graders - this is the name of a subtype of bulldozers. You cannot do without this stage when you need to plan and profile:

— slope;

- plot;

— platform;

- the road.

Grading involves ranking by layers. In relation to construction it looks like this. The grader is equipped with knives and blades. By operating them, the bulldozer driver can move layers of building materials vertically and horizontally, which forms the profile of the surface being processed. Graders are equipped with teeth and picks, with the help of which the operator opens dense rocks or destroys the existing coating on the road.

Road grading during private construction is organized as follows: they contact a company offering special equipment for rent and hire an operator. If you have to process a small area (for example, an entrance from the highway within a kilometer), one working day will probably be enough. Specific numbers are determined by the power, productivity of the machine, and the availability of consumables.

“Well, they don’t want to study!”

You often hear leaders say: “Well, they don’t want to learn!” To which they reasonably receive my answer: “If you allow your subordinates to receive a salary and not work at all, then you will see the vast majority at work on the day the corresponding order is published for the last time.”

Conclusion: an employee should not have a choice: to study or do nothing. The possible choice is as follows: “grow” or “leave” (the famous McKinsey principle, which sounds in the original “Up or Out”).

Wait to run and train employees immediately. In modern business, any action must be performed systematically, otherwise it can do more harm than good. Therefore, today I will talk about building a system for training employees, and not about one-time “forays” and “magic tricks”.

conclusions

The grading system of remuneration is considered new. It was introduced into the organization relatively recently. But the heads of many companies managed to evaluate its effectiveness.

Using the graded method, you can correctly calculate wages, focusing on the characteristics of a particular profession.

Sources

• https://sovetkadrovika.ru/organizaciya-biznesa/kadry/oplata-truda/grejdovaya-sistema-oplaty-truda.html
• https://nsovetnik.ru/zarplata/sistema_grejdov_v_oplate_truda_chto_eto/
• https://clubtk.ru/sistema-greydov-v-oplate-truda
• https://trud.guru/zarplata/sistema-grejdirovaniya.html
• https://zakon-dostupno.ru/oplata/greydyi-v-oplate-truda/
• https://BusinessMan.ru/greyd—eto-plyusyi-i-minusyi-vnedreniya.html
• https://BusinessMan.ru/greydyi-v-oplate-truda-primer-rascheta.html
• https://azbukaprav.com/trudovoe-pravo/zarplata/sistemy-oplata-truda/grejdingovaya.html