Fixing pay inequities only treats a symptom of a greater systemic problem. Job levels are one of the most persistent challenges in many organizations, and how they are created, used, and shared across organizations can reinforce inequity.
Proactive companies work hard to ensure pay parity for men, women, and minorities. Yet, fixing pay inequities only treats a symptom of a greater systemic problem: Do all employees have the same opportunities to develop the business-critical skills that will open professional doors for them in the future? Job levels are one of the most persistent challenges in many organizations, and how they are created, used, and shared across organizations can reinforce inequity:
Many companies use comp benchmarks to develop salary bands, which become the basis for their levels. Generic frameworks are typically limited to five levels, which translates to wide pay bands, increasing the risk of bias in comp decisions. Additionally, in many organizations with these generic leveling approaches, many employees are stuck at level three, regardless of their performance or growth indications.
Companies tend to keep job levels discreet because sharing them might disclose salary bands or create expectations for promotion. That often means only HR and executives see the complete picture. Even the hiring managers’ view is partial, limited to hiring and salary raise events, and individual contributors don’t have any visibility. That means the critical function of job levels – setting role expectations – is often unfulfilled, and promotion decisions are impacted by real or perceived bias and favoritism.
Different job leveling approaches for various functions within the same company create tremendous pay disparities because some functions have more opportunities to advance their careers and compensation. The situation reinforces the gender pay gap in some functions. For instance, engineering might suffer from a larger gender-based pay gap than the marketing department because the former typically has more male employees than the latter.
Not all employees want to become managers, so when the only path for growth is managerial, they’ll miss the opportunity for growth and comp increase. Additionally, the limited growth opportunities create an environment of competition prone to bias, even for those interested in the managerial path.
The issue with a generic approach doesn’t end with a limited number of levels. Typically, the levels are vague and don’t include functional competencies, example behavior, and criteria for growth. Without clarity, managers can’t give meaningful feedback to their employees to support growth.
Companies can turn job leveling into an equitable growth mechanism by prioritizing these areas:
Creating more levels democratizes progression in two ways. First, it allows for more narrow compensation bands, so everyone at the same level is paid fairly. Second, it creates smaller, more iterative opportunities for employees to progress in the organization – which reduces biased or emotional decision-making regarding up-leveling and promotions.
Define levels to include both the IC and the manager path, so every employee has a choice: go into people management or continue to master their domain. Creating pay parity between IC and manager levels can reduce the emphasis on title and authority and empower employees to find career alignment is more meaningful and impactful.
By clearly communicating the levels of a given role, employees are no longer chasing an unknown target. Instead, they know what is next and what’s expected of them to be able to get there. With clarity around leveling frameworks, employees see they have a path and don’t leave to up-level but stay and develop themselves at your company. This kind of transparency is not a business risk – it’s an agent of change.
Transparent levels helps employees see what is expected of them, and work toward filling potential gaps.
Many companies postpone the job leveling initiative because it takes a lot of time and effort to define job levels that include role- and department-specific competencies, example behaviors, and tasks. There is also an incorrect assumption that you have to be a certain size before rolling out job levels. The reality is that there is no risk of doing it too early. Job levels and competencies -when done correctly- create clear role expectations for employees to perform better, recognize potential skills gaps, and work towards filling them. Without clear job levels, employees don’t see a progression path and might leave for better opportunities.
Cyclical reviews are based on a timetable rather than growth, achievement, or impact, so they artificially hold the company and its employees back. At Pando, we advocate for a new paradigm called just-in-time progression. It puts the individual ahead of the need to check the box and highlights the mastery of core competencies and impact on the business through achievements regularly, rather than a once- or twice-per-year meeting.
Context is the missing link to fair, just-in-time progression. Today, employees receive feedback from their manager and peers, but without helpful context related to the role, level, competency mastery, or impact. Feedback is a gift, but feedback about a specific competency and in the context of what that means for a particular role at a specific level is much better. Using levels and competencies to create a context for employees enables us to make what used to be a completely qualitative process more quantitative. It ensures a structure allowing employees to get better feedback and iteratively move towards the next level.