The labor market and its payment systems are constantly changing. This is due to the development of technologies, redistribution of resources, economic instability and loss-making of budget organizations. During the financial crisis, an objective need is developing to optimize the functioning of commercial, profitable organizations and budget financing enterprises (non-profit sector). Non-profit organizations, even in a stable economy, are an expenditure item in the state budget. In this regard, the innovative wage system is relevant - grading (grading system), widely used in the West.
The essence of grading
By definition, grading is a way to optimize the organization's resource allocation, which allows you to:
- link the system of distribution of benefits and bonuses;
- calculate compliance with expectations for wages and labor market dynamics;
- streamline wages using the principle of internal justice, which is the basis of the system and avoids the spread of salaries within the enterprise;
- to increase the level of employee responsibility and human resources management (each employee of the organization understands that his profit depends on the job appraisal);
- increase the level of transparency of the organization for investors due to management standards and, accordingly, increase its value.
Let's take a closer look at what grading is. This is the level, rank, degree, class, rank (from English). The essence of grading is to divide all posts into grades according to the complexity and intensity of work, skill levels, conditions of work organization, employee value for the organization. In other words, grading is the distribution of posts by position in the hierarchical
structure of the organization according to the value, size and structure of the salary.
When dividing into grades, an assessment is made of the activities performed at each position. For this, the factors considered the most significant are taken as a basis:
- knowledge;
- experience;
- skills needed to solve problem situations;
- level of responsibility.
Grade System
The application of the grading system affects the optimization of the wage fund and needs resources to maintain. The main problem is the assessment of the ratio of implementation costs and expected return in financial terms. Today, the use of a grading system is relevant when calculating rewards based on points (taking into account the factor method) and the matrix-mathematical model. What is the basis of a system that uses grading? This is Hay's guide table technique. Today it is the most common. It is used for ranking and evaluating managerial positions, professionalism and technical level of specialists. It is successfully used in most countries of the world (more than 30).
The system that allows grading posts is familiar to Russia and the entire post-Soviet space. This is an analogue of the well-known discharge system. Now it has undergone modernization and adaptation to modern market conditions. The project requires significant investment and is not the only option for a personnel management system.
Prerequisites for the grading of company personnel
- Lack of an internal fair wage system in the organization.
- The salary system in the company does not reflect its specificity.
- Lack of an understandable and clear reward system and career growth.
- Low level of cost controllability (payroll rate).
- The importance of positioning and creating a positive image of the organization in the labor market, among customers and partners.
Key Management Factors
According to Haye's tables, a top manager can determine wage levels for company employees. All posts are evaluated according to several parameters, divided into three groups:
- The knowledge and skills necessary to fulfill job responsibilities. It assesses the uniformity of the function performed, the presence of contradictions in the functions and the ability to manage them, communication skills. The result depends on the level of communicative features of the employee, as well as whether he has the need to motivate other people. It is worth noting that an assessment is made of the level of requirements for the position, and not the abilities of a particular person.
- Problem solving. Here, the complexity and scale of the tasks are measured (whether restrictions are needed, what exactly, standard and variable characteristics, the presence or absence of ready-made solutions, the need for basic research).
- Responsibility is a complex parameter that shows the ability to freely make decisions in a particular position. It is important to find out how much authority allows you to make decisions. When this factor is taken into account, the degree of direct or indirect influence on financial results and their scale is measured. When it is difficult to single out the financial component, evaluate the relative complexity of the work.
These factors provide versatility for any field of activity. Depending on the structure of the organization, size and scope of activities, the list of factors can be much wider. For example, the level of intellectual activity, professional risk , etc. For different levels of positions, factors may vary slightly.
The main approaches. Where the grading system justifies itself
Depending on the field of activity, there are:
- assessment of the position or competencies of a particular employee;
- job evaluation (at enterprises with production capital);
- the competence of specific specialists (in companies where intellectual capital predominates).
Where is the grade system used:
- when reviewing the structure of the organization;
- to determine the salaries of new employees;
- when reviewing wages;
- to determine the level of career growth of employees;
- when comparing the wage system with the market.
Grading is justified in medium and large companies, where the personnel structure is not always clear, and its optimization is likely to lead to significant benefits in the future. After such a system is implemented, the permanent part of the remuneration of employees will include the salary, allowances and surcharges in accordance with the legislation on labor.
The tool of motivation, advantages and disadvantages of grades
An excellent modern tool for staff motivation is grading. With the introduction of such a system at the enterprise, the positions are distributed so that managers are on the first level, then grades of income-generating posts, and then employees (lawyers, managers, etc.). A person who is an ideological leader in business, his owner or hired manager (professional) is the top manager of the company. It is a perpetual motion machine and does not have the right to feel unwell, mood and other reasons that reduce the effectiveness of the organization. It is logical that the grading system puts this position on the highest bar in remuneration. At the same time, she should have in her hands a system that allows harmonizing salaries and ordering them according to classification. This is a graded approach.
The advantages of the system include:
- transparency;
- justice;
- a way to attract and retain employees;
- good budget management;
- open career prospects;
- increased efficiency of material motivation.
The main disadvantage is the high cost of introducing and maintaining the system, as well as the difficulty in determining the financial return that is expected. As a tribute to the fashion to introduce the system irrationally.
HR management and grading steps
Human resources management is a systematic and systematic impact on the formation and distribution of the organization’s workforce with the help of interrelated organizational, economic and social measures to obtain the maximum effect from the work of the enterprise.
The control system includes a linear management subsystem and specialized functional subsystems of homogeneous functions. A key link in personnel management is the line manager of the organization, who is personally responsible for making and implementing management decisions.
Grading Steps:
- Assessment of strategy, current status, internal justice and external competitiveness of salaries, benchmarking and analysis of the labor market.
- Development of the position, methodology of the grade system, their parameters, the level of salaries, bonuses and benefits, key factors for evaluating posts; job descriptions and evaluations; an implementation plan and a communication plan are being formed.
- Implementation, monitoring and maintenance of developments, recommendations, information materials, corrective actions, training of managers and employees.
What can you expect when implementing planning and management with the help of grades?
Proper salary formation will increase the efficiency of using payroll from 10 to 50 percent. This is especially important in times of crisis. The introduction of an innovative grading system will allow any company to feel competitive both in the domestic and foreign markets.
This is due to transparency for investors and positioning itself as a serious organization. Such an enterprise will be able to attract high-class top managers and specialists from all over the world. Such a system is an alternative for payment in municipal areas, local governments, etc. It motivates employees and increases the effectiveness of the result.