Employee Growth

What Is Job Leveling and How Does It Work? 

Job leveling, also known as job classification, is a system HR and People leaders use to define a job role, develop career pathways and internal mobility processes, and create clear levels or job hierarchies within an organization. According to an article on the Society for Human Resource Management (SHRM) website, job leveling is a “process that defines and evaluates the knowledge and skills that are necessary to perform the job and establishes the job’s duties, responsibilities, tasks, and level of authority within the organization’s job hierarchy.”

Job leveling helps candidates and employees understand exactly what’s expected of them in a particular role, how they fit into an organization, and what they need to do in order to get a promotion. It is more than just a job description, but job descriptions are an important component of job leveling.

Sehr Charania, a startup advisor and former head of People at high-growth startups, said that job leveling is especially relevant when you’re scaling an organization. She has scaled companies like the beauty subscription service IPSY from 50 to 200 employees, and advises venture-backed companies that are beginning to build out their teams.

“If you don’t have job titles buttoned up or your job leveling is not systematic, it creates a situation where employees feel less than engaged. If you have no standardization around your job leveling it feels arbitrary,” Charania said. “Job levels are super important — you can’t build the job title until you know what the needs of the organization are. It’s almost like a nested doll situation, and you need all of these components to have a good job leveling architecture.”

Done correctly, job leveling enables your organization to prevent employee dissatisfaction and confusion around job roles and responsibilities, and instead, boost retention and employee engagement because your employees know exactly what’s expected and needed of them in order to reach the next level. 

How to Start Creating Your Job Leveling System

There is no set structure for job leveling — it works differently for companies of different sizes and in different stages of growth, and for national versus global teams.

For smaller startups, there are often fewer job levels and less hierarchy; employees are expected to juggle many different roles and responsibilities and operate in a flat structure, with less job classifications and more shared responsibilities across departments. Conversely, in larger companies, job leveling can be very complex, with many different types of levels and clear delineation between roles and responsibilities.

“When you’re thinking about job leveling I always consider: What is the culture of your organization?” Charania explained. “As you add more people to specific departments or roles, employees start to ask, ‘What are the next steps I need to grow, and how can I develop?’ So from an HR perspective, we need to look at what equitable frameworks we can develop to not disadvantage anyone.”

Sarah Dabby, head of People at ClickTime, an online timesheet platform, had a similar perspective. There are four main components to consider when creating an equitable framework for job leveling, she said.

According to Dabby, HR leaders should think about the main factors employees consider in relation to their jobs and workplace: pay, purpose, progress, and people. She further broke this down as follows: “With pay: Am I not only compensated fairly but in a way that meets individual needs? With purpose: Do I know why I’m showing up? With progress: Do I know what I’m making strides toward in the workplace and that I’m developing new skills? With people: Do I enjoy being around and working with my colleagues as much as I enjoy my job?”

By keeping these questions in mind as you establish your job leveling framework, you’ll be better equipped to respond to any questions your employees may have about their job title, duties, and compensation. 

Making Job Leveling Easy to Communicate

Another thing to keep in mind as you create your job leveling strategy is that it should be easy to use and also easy to communicate to managers. This enables everyone within your organization to understand their role and know how to discuss this structure with their direct reports, teams, and supervisors.

A few aspects to consider when creating your job leveling system include: 

  • Slotting: job title, description, and pay range
  • Job Ranking: how a title ranks against other similar titles in your organization across departments
  • Market Comparison: how job roles and responsibilities are compensated and described by competitors in your field

There are many other aspects that can inform your approach to job leveling. But, what it boils down to, as a report on job architecture by Deloitte found, is that job leveling is a “sound, easy-to-use system for determining the value of jobs based on talent drivers, business needs, and market practices.”

Additionally, the Deloitte report stated that when done properly, job leveling is a “consistent methodology and decision support for assigning job levels and titles that are based on enterprise-wide criteria, which eliminates guesswork and promotes trust and confidence in the organization’s job assignments and rewards practices.”

Tailoring Job Leveling to Your Organization 

In order for any job leveling structure to be effective, People leaders need to match the job leveling system to the needs of the organization.

“I always like to start with the ‘why,’” Dabby said. “Which means, before we open a job requisition and hire someone new, we have hiring managers complete a hiring scorecard, which covers why we need the position, what our expectations are, what our desired outcomes are, and what key competencies this person needs in order to be successful in this position. Then we design an interview process to reflect what’s in the hiring scorecard.”

“I think in People operations it’s easy to produce work, but without the context it can just be bureaucracy that annoys people,” she continued.

Another important factor to consider is that specific roles within an organization have specific requirements. Dabby explained how this approach worked for her when she was recently recruiting engineers.

“Rather than trying to solve every problem, we knew we needed to be clear in our job leveling framework to give our engineers a sense of progress in our company,” she said. “So we looked at what we were trying to accomplish [in the moment].”

Once Dabby and her team were clear on their goal, the People team worked closely with hiring managers. “From there, I gathered lots of job descriptions on LinkedIn and I looked at similarities and differences and then reviewed these job descriptions with the hiring manager,” she said. “Then we began our evaluation based on the attributes of what makes a great employee for our company. As we had more discussions internally, we learned that good communication was the number one criteria, and now that informs our job leveling and job descriptions for different engineering roles.” 

The Benefits of Job Leveling

Job leveling gives Human Resources a starting point when it comes to building out teams and organizations. “You have a framework you can share with employees — you have a document, and concrete information you can share with them as well. In it, there can be specific requirements for employees, and you can tell that person their strengths, and where they need to develop and how it will get them on the path they want,” Charania said. “This is incredibly valuable as you help someone understand what the concrete things are that they have to focus on.”

With the right job leveling structure in place, you can create an environment that fosters the success of employees within your organization. The more your job leveling is informed by market comparisons, hiring managers, and employee feedback, the more it will be catered to the needs of your specific company and create a more equitable workplace.