Five Reasons to Review Your Job Architecture Today
Job architecture—having the right job functions, families, levels, and pay structures across the organization—is increasingly a critical piece of the talent puzzle. For some companies, the criticality arises from a special one-time event such as a new human resources information system (HRIS) or a large acquisition requiring a tricky integration. For others, it’s simply due to growth. As companies get larger, a few things happen:
- The organization gets more complex, requiring new roles due to expansion into new markets or service areas
- The employee population becomes more tenured, which might require infrastructure for new career levels or management positions
- The size alone requires more structure than it did when the company was a tight-knit startup where mission alignment was automatic
This evolution means it’s important to keep tabs on your job architecture over time to make sure it’s keeping up. If it isn’t, problems will eventually surface.
When we help our clients with their job architecture, these are some of the most common themes we run into.
1. Give employees room to grow
One benefit of a good job architecture is that it can produce career paths that are motivating to employees. The first step is to decide how many levels there are for a given job family. For example, for software engineers, there might be 10 levels between entry and executive. Next is to document what each level entails so employees understand how to advance in the organization. Establishing this infrastructure also makes it possible to talk about the compensation trajectory. Together, these data points throw a spotlight on the future, which keeps employees engaged and motivated.
What happens if your job architecture is missing levels or career documentation? Returning to the software engineer example, let’s say the original architecture only had the first five levels since there were no software engineers more senior than a manager at the time. In that scenario, it would not be uncommon for career path documentation to stop at or just above the manager level. How would the manager determine how to reach the senior vice president level? Do they know if that’s even a possibility? If they don’t see a path forward, do they have less motivation to stay? The best way to mitigate this is to future-proof your career paths. Even if you don’t have employees at all 10 levels, creating them still gives employees room to grow.
2. Avoid the unintended consequences of pay structure decisions
There are many ways to create pay structures due to the many philosophical decisions that creating a job architecture entails. For example, should pay structures be created for each individual job, each level as a whole, by level and job function, or some other way? Regardless of which approach you choose, you’ll run into some type of imprecision or inconsistency, so be ready to handle exceptions. Since no approach will be perfect, implement the framework that fits your compensation philosophy best.
For example, you might decide to create a pay structure for each individual job so that each job is perfectly matched to market data. The downside? Now you might have hundreds of structures and vastly different pay levels for jobs in the same job family. On the other end of the spectrum, let’s say you create pay structures based on level and job function. But some job families in a particular function might command a premium in the market (e.g., software engineers versus quality control engineers), so with this approach you might be underpaying some jobs and overpaying others.
No approach is perfect. Before you implement any changes to your framework, consider whether the cons are worth it given your compensation philosophy. You might decide it’s okay to have some job families be overpaid or underpaid for the sake of consistency across the function. On the other hand, maybe your compensation philosophy is to be perfectly matched to the market, so it’s okay to have some inconsistency within a job family.
3. Take the subjectivity out of compensation and career decisions to improve pay equity
Job architecture can create a lot of good structure around compensation decision making. It creates a salary range that can be used to determine raises. It also supports the development of performance bonus and equity grant guidelines that can help guide decisions for those forms of pay. Without structure and guidelines, there is more subjectivity in decision making, which can open the door for pay equity issues. While a good job architecture won’t be a perfect solution for avoiding pay equity issues, it creates boundaries that can help mitigate extreme outlier cases.
As mentioned before, an effective job architecture will have complete career paths for each job family and good documentation around what each level entails. This creates an objective framework that not only helps employees understand how to advance in the organization, but mitigates diversity or equity problems stemming from promotions. Similar to compensation, subjectivity in the promotion process opens the door to risk, and good job architecture can help.
4. Bring compensation levels in sync with the market
Perhaps one of the most important objectives of job architecture is ensuring that your pay levels remain competitive in the market. If you can’t compete for talent, it will be hard to continue achieving your business goals. This issue will start to dominate when job offers are consistently declined or when employees start to leave more frequently for other opportunities.
Most companies purchase market data annually to budget for merit increases and promotions during the annual compensation cycle, but they may not use the granular details of this data to check the validity of pay levels for every individual role within a function or family. What happens if companies establish certain aspects of the grades or pay structures based on market data at the time of the implementation, then fail to revisit them for years?
For example, let’s say you decided that HR and finance would have the same pay structures because current market data suggests they should be similar. Five years later, the market data has changed drastically and now finance jobs command significantly higher wages. Now you’re underpaying your finance employees and have to overhaul your pay structures.
Another example would be if you determined a job’s grade or level based on market data at a specific point in time. If left unchecked for years, that job could require significant adjustment. It’s important to maintain a regular interval of comprehensive reviews so that you can avoid issues like this.
5. Seamlessly integrate new roles
Over time, the employee population will grow. Some of this growth will be organic and some will be through acquisitions or mergers. In any case, it will mean new jobs, families, and functions. Reviewing and updating your job architecture framework at regular intervals will make it much easier to integrate these changes as they arise. Maybe the new job will fit into a family or function that already exists, which makes downstream pay decisions easier.
If the job architecture is outdated or nonexistent, adding these jobs could require more ad hoc decision making. This might lead to forcing the job into a family where it doesn’t quite fit, or creating a new family or function on the spot without using the same process or criteria. In either case, pay levels will likely be inconsistent with other families and might also be disconnected from the market.
Job Architecture Review Best Practices
A good job architecture can solve many problems, including a solid foundation for career paths and compensation decision-making so that your company can continue to scale. But a job architecture can also create many problems if left unchecked. Compensation levels can become out of sync with the market, making it difficult to attract and retain talent. Or the career framework may be too vague and provide for too little advancement, causing employees to explore other opportunities where their career goals seem more achievable.
It can be daunting to implement your first formal job architecture or to do a comprehensive review of your existing one, especially if it hasn’t been revisited for a long time. From discovery meetings with human resources business partners and business leaders, to Excel modeling and number crunching, to socialization and implementation, the process is long and involves collaboration across the firm. As with most tricky projects, repetition leads to process and process leads to more speed and efficiency.
We typically recommend low-scope reviews at least once every year or two and a comprehensive review at least once every three to five years. A low-scope review might entail looking through a job list or the HRIS to flag jobs that need a more in-depth review. These could be newly created jobs or those where managers have flagged problems such as complaints about poor advancement opportunities or high candidate offer rejection rates. A comprehensive review would involve repeating most of what you would do when implementing a brand-new architecture. This would entail validating job matches for market data, checking to see if job families and functions make sense, stress-testing pay structures and pay grades, and more.
In addition to speed and efficiency gains, more frequent job architecture reviews can lead to fewer, smaller issues per review cycle. If you wait too long between reviews, issues tend to multiply and minor ones snowball into more significant ones. For example, let’s say the company hires a machine learning engineering team for the first time. For simplicity, they decide to assign these new roles to the same job family, function, and pay grades as software engineers. Five years later, the team is struggling to scale due to high turnover and a high percentage of rejected job offers. When they finally revisit the architecture, they discover machine learning engineers in their region are paid significantly higher than other software engineers and are typically leveled higher in the organization.
There’s no perfect job architecture framework that will solve all of your compensation and talent problems. However, with enough modeling and discussion, you can make most of those problems easier to solve. We’re pleased to be of assistance either formally or informally. Please contact us if you’d like more information on any of the points reviewed here, or simply an objective sounding board. We look forward to hearing from you.