A Compensation Program Must Control Job Titles

by on June 18, 2009 · 0 Comment POSTED IN: HR Info Center

How you Title a Job is Critical to the Compensation Program

Let’s talk about the first one, failure to control job titles. At the basis of any good compensation program is the job titling scheme that you use. And no two companies actually make decisions exactly the same in this area of the compensation program. There is no formula for determining how many jobs you have or what the titles of those jobs are. But if you have a titling system that’s out of control, it’s one of the two big cancers of a compensation program.

Job titles generally should be generic but descriptive. And there’s a rule of thumb that if you have skill sets for employees that have approximately a 70% or greater overlap, they are the same job. You also might want to consider looking at the ratio of job titles to the number of employees that you have. On average, one to three for a medium size company is about right. If you’re a smaller company, you may have a ratio of one to two. And if you’re a larger company, you may have something like a one to ten kind of a ratio.

Something else that companies need to understand is they actually can deal with a two title system. You have what a system title. These are the titles that you use in your (HRS) system or even if you’re keeping track of all the titles and your employees in an excel spreadsheet. These are the titles that the company uses when they analyze data and matches to the market place.

You can allow your employees to have a working title. Do you really care what the working title happens to be or what they put on their business card? Probably not.

One of the things you have to also consider when discussing the compensation program is career paths. Gallop has done a poll for about the last 30 or 35 years. And they ask people really what they want on their job. And a lot of people would think that its wages or compensation of some sort comes to the top of the list.

Not so, it’s always third or fourth on that list. The number one thing is the chance to gain new skills and advance in the company and to paraphrase it that’s essentially what they’re saying. Most companies don’t do a good job at defining career paths for their employees. Consequently employees feel when they – some companies don’t provide them an opportunity to advance, they look elsewhere. What you might want to consider in your titling system is career paths or a job family kind of a set up. A lot of that’s going to depend on the size of your organization though that you have.

The other thing that happens a lot is the Human Resources Department doesn’t necessarily have responsibility for the titles. They allow their managers to choose whatever title that they want. Human Resources should be the gate keeper for any titling changes.

And if somebody asked for a new title, yes consider it. But try to find out if there isn’t another job that this existing job, that this new job – supposedly new job would fit into before you start creating a new title. If you get your titles out of whack, it makes things really difficult to have a successful compensation program.

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