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Job Evaluation – Trends and the Digital Environment

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Job Evaluation – Trends and the Digital Environment Job Evaluation – Trends and the Digital Environment Why does digitalization have an impact on job evaluation? Job evaluation and grading have been a evaluation and grading in order to develop core HR process over many years, whereby a more flexible approach for agile organiza­ organizations typically rely on one single tions on the one hand and enable a digital evaluation method. Those methodologies organization and a digital culture on the have not undergone any significant changes other hand. In this context, digitalization and have not been directly impacted by acts as a catalyst for the development of any other major trend. The HR process of job architectures and grading structures as job evaluation and grading often requires a these have to sustain the digital organiza­ high level of technical expertise and partially tion. Correspondingly, the methods and an ongoing support of resources, depending tools of job evaluation have to also meet on the chosen evaluation method ology. the requirements of digitalization. Job evaluation and grading build the funda­ mental framework for other HR processes What is driving this trend and what role in the talent lifecycle. does job evaluation play in light of the digital transformation? While this implies no real need for change, we observe an emerging trend in the mar­ ket to alter traditional approaches to job Job Evaluation – Trends and the Digital Environment Enabling digital transformation digital culture. The concept of “network of through job evaluation teams” has evolved where employees are Larger projects in the area of job evaluation highly networked and collaborate across and grading are typically triggered either by teams and projects, and goals frequently a single event or by multiple factors – both change. within and outside the organization. Inter­ nal factors often relate to organization (re­) One main aspect to consider in this regard design and transformation whereas exter­ is the reinvention of performance man­ nal factors for job architecture (re­)design agement as one of the critical elements comprise companies’ M&A activity or new and key trends in the market for the shift market strategies. The graphic below pro­ towards agile organizations and networked vides a non­exhaustive list of internal and teams.1 The other key aspect is job evalu­ external factors. ation and grading which has to be flexible and rapid enough to adapt to changes in Nonetheless, one of the key and overar­ the organization. Replacing jobs with roles ching reasons for the currently observed that are described more generically in the change in the market is digital transfor­ context of a harmonized job architecture mation. Since 2010, the market has been can be an effective way to consider frequent steadily racing to the cloud. Many major organizational changes and create less companies have started replacing their lega­ effort in terms of evaluation and re-evalua­ cy systems with cloud technology where tion exercises. Many companies have start­ cloud­based solutions are also changing ed developing broader role­based grading various HR processes. High­performing structures that provide the required flexi­ digital companies at the same time focus bility for agile organizations and reduce the on iterative improvement by promoting overall number of roles to be evaluated. collaboration and teamwork to build a new Internal External • Significant shift in business model or strategy • A merger, acquisition, or divestiture • Organization redesign/ transformation • Increased pressure to reduce costs/ improve efficiency • Implementation of new or modified systems or Internal processes • Increased competition for critical talent and • Unexpected increase in employee turnover external • Changes to regulation/legal compliance Factors • Redundancy and/ or gaps in activities • Organization entering new markets or offering new services • Failure to meet organizational and personal performance objectives Digital Transformation 1Bersin by Deloitte, Perspective 2016, HR Technology Disruptions for 2017: Nine Trends Reinventing the HR Software Market, Deloitte Development LLC 2 Job Evaluation – Trends and the Digital Environment How can job evaluation Before implementing cloud­based solu­ performance data through a consistent job tions and while initiating a digital transfor­ architecture on the one hand and digital enable digital mation across the workforce, in the first HR processes and tools, in particular com­ transformation? place a structured approach to streamlin­ pensation and performance management, ing job architecture is required. Compen­ on the other hand. sation and performance management, organi zational levels, job grades, career Hence, job evaluation and grading are the paths, and job families have to be deter­ core enabler to changing nature of jobs and mined, in order to structure and harmonize making alterations to digital compensation the organization. This enables organiza­ and performance management practices. tions to make efficient use of digital pro­ A harmonized job structure and model cesses and improve the above­mentioned enables an efficient and transparent trans­ approach to networking teams. From formation into the digital environment for an HR perspective, the organization will the entire organization including HR pro­ benefit from a consistent management cesses and is thus a major milestone in this and efficient analysis of compensation and context. How, in turn, is job evaluation affected by digitalization? Job evaluation and grading methods and tools themselves need to fit into the digital setting. These methods and tools are in turn affected by digitalization. On the methods side, job evaluation and On the tools side, the systems have to be grading have to be flexible enough in order embedded in cloud­based solutions that to match and adapt to agile organizations allow for interacting technologies, data, and and their network and project­ and role­ processes. Utilizing these technologies in based structures, unlike methodologies an efficient way as well as having access to that have predefined criteria. Roles and organizational data, such as organizational jobs in agile organizations are typically charts, role profiles, or job descriptions, driven by a shifting business context and a reduces administrative costs, improves the changing complexity that requires the ca­ efficiency of evaluation and grading pro­ pacity to continuously adapt and the agility cesses, and increases data accuracy. More­ to activate technical and behavioral skills by over, it may unlock the link to organizational jobholders. Methods should therefore be design and operating model questions as able to reflect the changing complexity and well as strategic workforce planning and context of jobs and roles in order to avoid analytics. Finally, running evaluation tools continuous and costly job evaluation and on mobile and cloud technologies will allow grading efforts. for greater centralization and governance. 3 Job Evaluation – Trends and the Digital Environment Selecting the appropriate job Selecting an appropriate job evaluation evaluation system system is not a simple task. Possible ap­ Analytical methods are usually the more proaches generally range from complex well­known and widely spread systems analytical methods to mere market­oriented in the market. In general, these methods methods. These methodologies are devel­ are highly complex, require a lot of effort, oped according to a different set of criteria resources and knowledge to maintain the and include more formal and quantifiable systems and merely show an apparent systems on the one hand and more informal, objectivity and accuracy of the results. qualitative systems on the other hand. Due to the complexity of the systems, Examples include point­scoring methods, companies also see themselves in a rela­ factor comparison, ranking order methods, tionship of dependence on consultancies paired comparison, or grading based on in which ongoing evaluation and grading external market weights. support from those providers is often in­ evitable. The further main disadvantage to Some key guiding questions for selecting these systems is that they may not fit well the job evaluation system are: enough into the above­mentioned context of agile and flexible organizations that want to promote the concept of a “network of teams” and project­based environments. 1 2 3 4 5 What are the corporate How does job evaluation What are the expected How adaptable is the job What are the require- vision and business priori- support the HR strategy? opportunities and re- evaluation and grading ments regarding trans- ties in the next 3–5 years? How much digital inte- sulting benefits through system to organizational parency, governance, and What are the key strategic gration with other HR digital compensation, and market changes as understanding of the job objectives of job evalua- systems and processes is performance, and HR well as digital transfor- evaluation approach with- tion and grading? required? management? mation? in the organization? 4 Job Evaluation – Trends and the Digital Environment Based on our project experience serving various clients in the market, we often Client case Description advise our customers in selecting the ap­ propriate job evaluation system. Deloitte, Chemical Products Client background: for example, offers different job evaluation The company is a mainly independent European sub­ systems, thus allowing a best-fit solution sidiary of a global
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